In a move to hedge against potential delisting from the NYSE Tencent Music has opted for a second listing in the Hong Kong Exchange. Requests of auditing papers from US-listed companies from Washington have turned into an almost decade-long stand-off with Bejing, causing many Chinese-based companies to list in Hong Kong as a countermeasure.
According to Paul Gillis, professor at Peking University’s school of management on the Talking Tax podcast, “China is taking advantage of the U.S. and there’s not much doubt that Chinese companies listed in the United States are subject to lower standards than American companies.”
Tencent Music reported in August that its music subscription revenue rose 18 percent in the second quarter that ended June 30. Amid a regulatory crackdown on the sector, negative sentiment toward Chinese tech stock has caused TME shares to slide 30 percent this year, giving the company a market value of $8.1 billion. This gives credence to investor speculation about the validity of revenue claims. By listing in Hong Kong, Tencent follows a trend of many NYSE-listed Chinese companies opting for a second listing due to potential regulatory audits.
As Tencent prepares to list in Hong Kong the board announced a change to its membership. Mr. Liang Tang announced his resignation from the board of directors and the compensation committee of the Board, effective immediately. Upon his resignation, the Board approved the appointment of Ms. Jeanette Kim Yum Chan as an independent director and Ms. Edith Manling Ngan as a member of the compensation committee. Ms. Ngan will continue to serve as an independent director and a member of their audit committee.
“On behalf of our Board, we would like to sincerely thank Mr. Tang for his remarkable eight years of service as a member of TME’s Board. Since joining the Board in 2014, Mr. Tang has consistently made invaluable contributions to TME’s strategic direction and development. After his resignation, Mr. Tang will continue to provide us with strategic advice as an honorary advisor,” commented Mr. Cussion Pang, Executive Chairman of TME. “Meanwhile, we are thrilled to welcome Jeanette as a new independent director to our Board. Jeanette brings over three decades of corporate law experience focused on cross-border transactions and investments. We look forward to benefiting from Jeanette’s expertise and insights as we continue to contribute to the sustainable development of China’s music industry.”
Ms. Jeanette Kim Yum Chan commented, “I am honored to have this opportunity. TME’s leadership in China’s online music and entertainment is incredibly impressive. I look forward to working with Cussion and the Board on TME’s next exciting phase as the Company continues to drive quality growth through product and technological innovations while creating long-term value for the music industry as a whole.”