Grant Thornton report: Total number of long-suspended Hong Kong listed companies up 19% year-on-year to 102

Grant Thornton (Hong Kong) report on Hong Kong listed companies facing fraud allegations and trading suspensions shows that as of August 31, 2026, the total number of long-suspended Hong Kong listed companies across the Main Board and GEM increased 19% to 102, up from 86 in 2025 and 80 in 2024. In the 12 months ended August 31, 2026, 35 long-suspended companies were delisted, while only 21 successfully resumed trading (compared with 29 delistings versus 31 resumptions in 2025, and 39 delistings versus 43 resumptions in 2024), marking the first time in three years that delistings outnumbered resumptions. GEM issuers are under particularly heavy pressure. In 2026, 7 GEM companies were suspended beyond the remediation period, a significant increase from single cases in 2025 and 2024, highlighting the growing difficulty smaller issuers face in meeting resumption conditions within the required timeframe. The continuous suspension remediation period is 18 months for Main Board listed companies and 12 months for GEM listed companies. Suspected fraud cases triggered by auditors surged sharply from 46% in 2025 to 66% in 2026, and accounted for 70% of all suspension cases (51% in 2025). As of August 31, all auditor-triggered cases in 2026 remained suspended. The nature of auditor concerns has also shifted. Asset overstatement became the most common concern at 38%, followed by misappropriation of assets at 19%. This reflects heightened scrutiny of asset valuations and the potential misappropriation of company resources. Tang Biao, Head of Forensic Investigation Services at Grant Thornton China, said that fraud problems at some listed companies are becoming increasingly serious, such as forged bank statements and illegal diversion of listing proceeds. In response, regulators have comprehensively tightened resumption requirements, significantly increasing the time cost for companies involved to carry out compliance rectification. With the number of long-suspended companies rising, the delisting ratio increasing, and all auditor-triggered cases still mired in suspension deadlock to date, the rectification environment is becoming more challenging. The focus of market scrutiny has clearly shifted from earnings performance to asset authenticity. When nearly 60% of auditor concerns involve asset overstatement or misappropriation, this is no longer a mere accounting dispute but a fundamental existential question of whether the reported assets actually exist. As for why the total number of long-suspended Hong Kong listed companies rose 19% year-on-year to 102 over the past year, Tang Biao estimated it may be related to strengthened regulatory oversight and a deteriorating external economic environment. In addition, director changes remain frequent. Within 6 months of an auditor trigger, only 46% of companies recorded no director changes, while cases involving changes to both executive directors and independent non-executive directors rose to 18%. The proportion of auditor changes after a trigger rebounded from 17% in 2025 to 44% in 2026. Mainland China remains the primary operating base for most challenged companies. Lin Zhaoji, Partner of Forensic Investigation Services at Grant Thornton Hong Kong, said: "Changing directors or auditors after a company is suspended does not resolve the underlying audit red flags. Given that most suspended companies operate in mainland China, resolving cross-border audit issues requires board stability, genuine on-site asset verification, and comprehensive governance restructuring to rebuild regulatory trust." Suspension cases triggered by shareholders and management rose from 15% in 2025 to 17% in 2026, while cases involving regulators and law enforcement dropped sharply by 21 percentage points to 13%. All regulator- and law enforcement-triggered cases in 2026 were suspended, whereas among related cases in 2025, 50% were suspended for 12 to 18 months and another 33% had been delisted. The Securities and Futures Commission of Hong Kong increased its use of Section 8(1) suspension powers, with three companies suspended under that provision in the first ten months of 2026, compared with one for all of 2025. Section 8(1) empowers the SFC to directly order a suspension of trading when it believes there is false or misleading information, market disorder, or when necessary to protect investors. Regulatory action has also clearly shifted toward more transparent disciplinary measures. The proportion of public statements against listed companies rose from 36% in 2024 to 65% in 2025, while private statements fell 17 percentage points to 25% in 2025. Tang Biao concluded: "The increase in Section 8(1) suspensions and public statements reflects a clear shift by regulators toward immediate intervention and stronger market deterrence. Trading resumption is no longer a mere formality. With delistings rising and asset scrutiny tightening, companies seeking to survive the suspension quagmire must conduct forensic investigations early and comprehensively restructure corporate governance to rebuild market credibility."