Home' A Plus Magazine : May 2013 Contents NEWS
12 May 2013
IPO candidates withdraw
amid CSRC investigations
A total of 76 Chinese companies lining up for
initial public offerings withdrew their applica-
tions between 25 and 29 March amid the lat-
est round of IPO investigations by the China
Securities Regulatory Commission. Most of
the IPO candidates, who pulled out before a
31 March deadline, are from the machinery
manufacturing, solar, software and chemical
industries, the Xinhua news agency reported.
Appetite for acquisitions
weakening, says report
New research from Grant Thornton found
that just 18 percent of Hong Kong businesses
plan to grow through acquisition in the next
three years, down from 26 percent last year.
According to the Grant Thornton Interna-
tional Business Report, 80 percent of local
businesses confirmed that they have no plan
to execute an acquisition, which is signifi-
cantly higher than their counterparts in the
Mainland (60 percent).
Housing deal collapses
over bank, tax changes
A US$1.7 billion deal between Lennar Corpo-
ration, a home builder based in the United
States, China Development Bank and Chinese
Railway Construction Corporation collapsed
last month after changes in bank leadership
and U.S . tax laws that complicated nego-
tiations. Lennar had been in talks with China
Development Bank for more than a year
about a loan to finance about 20,000 new
homes and offices at two former naval bases
in San Francisco, the South China Morning
Municipal debt total might
be double the official figure
Local governments in China may have 20 tril-
lion yuan of debt, almost double the official
2011 audit figure, former finance minister
Xiang Huaicheng said on 6 April at the Boao
Forum in Hainan. The combined debt of the
central government and the provinces and cit-
ies might now be more than 30 trillion yuan,
Xiang said at the forum.
China’s State Council announced last month that the value-added tax pilot pro-
gramme, which replaces a business tax, will be expanded across the country from
The expansion will complete the first stage of the VAT pilot programme being
carried out across China to the transport and ser vices sectors. The programme
will expand to include enterprises in the radio, film and television industries,
Premier Li Keqiang said during an executive meeting of the council.
It is estimated that the widened reform will reduce tax burdens by around 120
billion yuan this year, according to a statement issued by the council after the
meeting. The reform is intended to further boost business vitality, help enterpris-
es find new growth and increase employment and residents’ income to promote
sustainable and healthy development, the statement said.
China introduced the reform in Shanghai last year to avoid double taxation. It
was later expanded to another 11 regions, including Beijing, Tianjin and Shenzhen.
The reform programme “sends a signal that the government is speeding up fiscal
reform,” Liu Shangxi, a researcher with the Ministry of Finance, told China Daily.
VAT reform trial set to be rolled
out nationwide from 1 August
Firm “noisily” quit after uncovering fraud
Deloitte’s China unit won the dismissal of a securities fraud claim that accused
it of inadequate audits of Longtop Financial Technologies, a Chinese software
company listed in the United States.
In a federal court in Manhattan last month, Judge Shira Scheindlin
dismissed allegations brought by investors in the Chinese company against De-
loitte, which claimed that the firm issued audit opinions giving Longtop a clean
bill of health even though it was aware of potential problems, reported Reuters.
The judge concluded that the investors had not provided enough evidence to
prove that the accounting firm had any motive to commit fraud or that it made
any material misstatements in its audit opinions of Longtop. In her 40-page
opinion, Scheindlin w rote that the plaintiffs’ complaint “reveals that [Deloitte]
was a target of Longtop’s fraud and that [Deloitte] ultimately uncovered Long-
top’s fraud, and noisily resigned.”
According to Reuters, Daniel Berger of Grant & Eisenhofer, a law yer for the
plaintiffs, expressed disappointment with the ruling.
Longtop has been at the centre of an accounting scandal since May 2011, when
Deloitte quit as the Chinese company ’s auditor. The accounting firm alleged that
Longtop had tried to forge its financial statements and stop Deloitte staff from
leaving the company ’s premises when the discrepancies were discovered.
In September 2011, the Securities and Exchange Commission asked a fed-
eral court to force Deloitte to produce its audit work papers related to the case.
However, Deloitte resisted, citing Chinese secrecy laws.
Judge dismisses claim against
Deloitte over audit of Longtop
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