In separate statements issued Friday, China Life Insurance, PetroChina, Sinopec, Aluminum Corporation of China and Sinopec Shanghai Petrochemical said they had notified the NYSE and applied for voluntary delisting. All five companies cited low turnover in the US and high administrative burden and costs as their reason for the departure.
The news comes after all five were flagged by the US Securities and Exchange Commission in May for failing to meet US auditing standards.
China's securities watchdog, the China Securities Regulatory Commission, said on Friday it was aware of the situation and that it is normal for companies to list or delist from any market. It said that they will keep in touch with foreign regulatory institutions and protect the rights of corporations and investors. The Securities and Exchange Commission has increased its scrutiny of Chinese companies' audits, and the news comes after the Securities and Exchange Commission increased its scrutiny of the companies' audits. The commission can kick companies off the stock exchange if they don't allow US watchdogs to inspect their financial audits for three consecutive years. China has rejected US audits of its firms for years. Chinese companies that are traded overseas are required to hold their audit papers in mainland China, where they can't be examined by foreign agencies. In April of this year, China's securities watchdog proposed to change a decade-old rule that prevents Chinese firms from sharing sensitive data and financial information with overseas regulators. The amendment could allow US regulators to inspect Chinese companies listed in New York. In late July, the Securities and Exchange Commission added Alibaba to a list of more than 150 companies that could face expulsion if their audits could not be inspected in the next three years, joining some of China's largest companies like JD.com and Baidu. Before the commission added Alibaba to its watch list, the company announced it would seek a primary listing on the Hong Kong stock exchange. There is a secondary listing on the Hong Kong stock exchange. A primary listing status in Hong Kong gives Chinese ADRs American Depository Shares the option to diversify their listing risk and retain access to the public equity market if they leave the United States, according to Goldman Sachs analysts.