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Law360 (February 4, 2020, 5:25 PM EST) -- Hong Kong's securities regulator and its stock market exchange told its public companies on Tuesday it was easing some rules on disclosing otherwise required financing information for businesses affected by the coronavirus from China and responses to the outbreak.
The Securities and Futures Commission and the Stock Exchange of Hong Kong Ltd. in a joint statement advised public companies to contact the exchange as soon as they believe their financial reporting may be delayed, given the travel and other restrictions put in place in an attempt to contain the spread of the virus, a close cousin to the SARS and MERS viruses that have caused outbreaks in the past.
The securities regulator and stock market also asked businesses affected by the outbreak to explain exactly how and why travel restrictions and other measures have limited their ability to comply with reporting requirements. Public companies are expected to turn over what financial information they are still able to produce, and explain whether the accuracy of the information has been impeded, and to what extent.
Companies are urged to still try to meet deadlines to turn over accurate financial statements, even if the documents can't be confirmed by auditors. In such a case, the exchange may still allow the company to trade shares, according to the statement.
The SFC and the exchange will coordinate on whether the information affected companies turn over is sufficient to maintain a fair marketplace so trading can continue, they said.
"It is the overall objective of the exchange and the SFC to minimize disruptions to trading while ensuring that the investing public continues to receive sufficient information to make informed investment decisions," the statement said.
Late last month, Chinese regulators urged firms to respond "rationally" to the coronavirus outbreak, even as it postponed reopening two of the country's main stock exchanges, in Shanghai and Shenzhen, in response to the outbreak.
The China Securities Regulatory Commission said in a Jan. 28 statement that brokerages should "guide rational investment" when trading continues.
Securities firms should "actively guide investors to rationally and objectively analyze the impact of the epidemic, adhere to the concept of long-term investment and value investment and carry out investment activities in accordance with laws and regulations," the CSRC said at the time.
Chinese regulators said all market participants should "take epidemic prevention and control as the most urgent task at present," including cleaning and disinfecting business premises. They also said trading facilities should submit application materials for administrative licenses over the internet.
On Tuesday, the World Health Organization reported more than 20,600 confirmed global cases of the deadly coronavirus. Nearly all those cases, 20,471, are in China, it said; Hong Kong has only 15 confirmed cases.
Also on Tuesday, The Washington Post said Chinese officials announced the first death in Hong Kong from the virus.
--Additional reporting by Tom Zanki. Editing by Alanna Weissman.
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