According to the Zhitong Finance App, Honghai Holding Group (08020) announced that on September 4, 2023, the company received a letter from a shareholder to the board of directors (letter from the ambassador to the shareholder). The shareholder is the Goodwill Ambassador (Ambassador Shareholder) of the Palau Embassy in Taiwan.

According to the ambassador's shareholder letter, the ambassador's shareholders stated that as a company with annual revenue of HK$100 million and a relatively balanced balance of income and expenditure, the company's value should be higher than its current value, that is, the company's market value before the suspension of trading.

Ambassador shareholders agree that the company has a large amount of business and is actively seeking new business. Although the company has provided evidence, it has not been accepted and has been notified that it will soon be delisted.

Ambassador shareholders expressed concern about the company's progress in resuming trading. When taking note of the GEM Listing Committee's decision, ambassador shareholders were not only disappointed and helpless by the Board of Directors, but also extremely angry at the absurdity of the GEM Listing Committee's decision.

As stated in the ambassador shareholder letter, ambassador shareholders believe that regulators should protect investors. However, as far as the company is concerned, the Stock Exchange, as the entity responsible for supervising listed companies, has become the perpetrator of damage to investors' assets. Should the company eventually be delisted in accordance with the Stock Exchange's decision, the company's minority shareholders would have nothing. Ambassador shareholders would be outraged if they suffered losses due to the Stock Exchange's subjective judgment to force the delisting of the listed company.

At the same time, the ambassador's shareholders were even more shocked that the GEM Listing Committee ignored the company's complaints and evidence (which were also stated in the company's announcement dated July 10, 2023).

Ambassador shareholders agree that the board of directors and group management are unwavering in their commitment to protect shareholders' assets and interests during the pandemic, while actively promoting the continuous development of the Group's business. The company's diversified and active IP automation and entertainment business in recent years has further consolidated the company's overall business foundation.

Unfortunately, the Exchange questioned the substance of such operations. The message the ambassador shareholders want to convey is that the GEM Listing Committee should reflect on its delisting decision rather than simply following procedures, ignoring actual operating conditions, and arbitrarily delisting a listed company.

Ambassador shareholders said that as a free port, Hong Kong's success comes from freedom of trade and the spirit of the rule of law. The essence of the rule of law includes “presumption of innocence” and “no suspicion”. The Stock Exchange is only a supervisory authority for listed companies. Whether the power to delist a company is equivalent to the power to decide the life or death of a company. However, members of the GEM Listing Committee have the power to suspend or delist a listed company, usually without considering objective factors, including the impact of the COVID-19 pandemic or the company's sufficient business. Such actions can be considered an abuse of power because they do not take into account the relevant factors and act unilaterally.

From the perspective of ambassador shareholders, the delisting mechanism is tantamount to sentencing a listed company. Ambassador shareholders emphasized that compared to other penalties, delisting a listed company can also be viewed as cruel and irreversible, and lead to more serious consequences. Therefore, regulators should be careful and prudent in using delisting.

Ambassador shareholders believe that delisting listed companies would be of no benefit to the Stock Exchange or Hong Kong. The ambassador shareholder further pointed out that the Stock Exchange's GEM and Main Board have lost appeal to small and medium-sized companies requiring listing financing. In recent years, companies with a large number of businesses and a certain size have abandoned Hong Kong and are eagerly seeking overseas listings.

As a diplomatic ambassador for a small country, the ambassador's shareholders have always viewed the development of Hong Kong's financial market as a valuable experience. However, as the market continues to change, ambassador shareholders believe that the Stock Exchange has been lagging behind in the past few years. Ambassador shareholders believe that the Stock Exchange is paying too much attention to enterprises in emerging economies and gradually reducing support for local enterprises and small and medium-sized enterprises, and that such enterprises have always been the cornerstone of the Exchange's success. In other words, it is time for the Exchange to reflect deeply and take the first step to exercise its power wisely.

The company thanked the ambassador shareholders for acknowledging the positive growth in its financial and operating performance and the increase in profitability, as well as the company's efforts in the process of resuming trading. Furthermore, the successful diversification and expansion of the Group's business, along with the development of a sustainable and viable business model, has been recognized by a shareholder with international standing.

At the same time, the company strongly believes that the positive actions taken by these shareholders (including the shareholder letter described in the company's announcement dated August 15, 2023) emphasized that the delisting of the company was not in the best interests of shareholders and did not receive shareholders' support. Therefore, the company hopes that, in addition to delisting proposals, the Listing Review Committee should explore alternatives that prioritize the best interests of shareholders and investors of the general public.

The Board will present its opinion to the Listing Review Committee during the hearing and also stated that it does not agree with the GEM Listing Committee's decision. The board of directors believes that the Group has the above operating scale and should comply with section 17.26 of the GEM Listing Rules. The company will make every effort to protect the interests of shareholders and push for the resumption of trading of the company's shares.

Furthermore, trading of the company's shares continues to be suspended.