SFC, AFRC and the Exchange join forces to address disclaimers of opinion solely relating to going concern
AI Analysis
On 2026-10-08, the SFC, AFRC and HKEX issued a joint statement responding to the sharp increase in Hong Kong-listed issuers receiving audit disclaimers solely related to going concern. The statement does not immediately amend the Listing Rules, but signals heightened supervisory scrutiny and warns that HKEX may introduce mandatory trading suspensions if the position does not materially improve.
Key dates
- 2019-09-01
- The HKEX suspension framework applies to annual results announcements for financial years commencing on or after this date; the framework generally covers disclaimer or adverse audit opinions but excludes cases relating solely to going concern, subject to disclosure requirements.
- 2026-10-08
- The SFC, AFRC and HKEX joint statement was issued and the regulators publicly signalled enhanced monitoring and possible future Listing Rule amendments.
Suggested considerations
- Compliance teams at listed issuers should consider inventorying current and prospective going-concern uncertainties, disclaimer risks and the status of related remediation plans before the next annual reporting cycle.
- Management may wish to strengthen cash-flow forecasts, liquidity analyses, financing assumptions, covenant assessments and downside scenarios, ensuring that key inputs are supported by reliable evidence and that proposed mitigating actions are realistically executable.
- Audit committees should consider documenting robust challenge of management’s assumptions, including the feasibility, timing and funding of proposed actions, and monitoring delivery against approved milestones.
- Issuers may wish to review annual results and financial-reporting disclosures to ensure that the circumstances giving rise to any audit modification, management’s actions and remaining uncertainties are explained clearly and consistently.
- Auditors and issuer compliance functions should consider escalating deficiencies in going-concern evidence or action plans promptly to management, the audit committee and relevant governance bodies.
- Listed issuers with existing going-concern-only disclaimers should consider preparing for increased engagement with HKEX and the possibility of a future Listing Rule amendment requiring suspension; no immediate suspension deadline was created by this statement.
- Compliance teams should monitor subsequent SFC, AFRC and HKEX communications, enforcement outcomes and any consultation or rule amendment concerning suspension of issuers with going-concern-only disclaimers.
What changed
The regulators set out coordinated expectations rather than new binding rules. Issuer management should support going-concern assessments with reasonable assumptions, reliable data and feasible action plans; audit committees should challenge those assessments and oversee remedial actions; and auditors should critically evaluate the assessments, communicate deficiencies and explain clearly the basis of any disclaimer. The regulators will monitor conduct and may take regulatory, disciplinary or enforcement action for misconduct or non-compliance. HKEX may amend the Listing Rules to require suspension where an issuer has a disclaimer solely relating to going concern. Independent market commentary indicates that the immediate concern is the effectiveness of the September 2019 framework, which
Compliance impact
The publication increases the regulatory and enforcement risk for issuers, directors, audit committees and auditors that rely on weak going-concern evidence, unrealistic remedial plans or inadequate disclosure. Although no immediate rule change or suspension requirement applies, HKEX has expressly identified possible mandatory suspension as a future consequence, while the regulators may already pu
Who is affected
Related regulations
References
AI-generated analysis. May contain errors or omissions — verify with the original SFC source before acting. Full disclaimer.
What the SFC said
No description available.
Published by SFC . Read the full notice at the source for the authoritative text.