ITA Shares Suspended by HoSE After 30 Auditors Refuse to Work with Tan Tao

Overview

ITA shares of Tan Tao Investment & Industry JSC were suspended from trading by the Ho Chi Minh City Stock Exchange (HoSE) due to the company’s failure to publish audited financial reports for 2023 and a reviewed semi-annual report for 2024. The company cited an inability to secure an auditor after 30 firms refused, attributing this to regulatory actions against its previous auditor. This suspension marks an escalation from prior trading restrictions and underscores significant compliance and governance challenges.

Key Facts

• HoSE announced the suspension of ITA shares on September 4, 2024, moving them from restricted to suspended trading status.
• The suspension is due to delays in publishing audited financial statements for 2023 and a reviewed semi-annual report for 2024, exceeding the 45-day regulatory deadline.
• Tan Tao Investment & Industry JSC reported that 30 audit firms, all approved for public-interest entities in securities for 2023, refused to work with the company.
• The company attributes auditor refusals to the State Securities Commission’s (UBCKNN) suspension of the auditor who handled its 2021, 2022, and 2023 semi-annual reports.
• As of June 30, 2024, the company’s consolidated capital totaled VND 12,244 billion, with Q2 2024 revenue of VND 70.8 billion and net profit of VND 44 billion, up 84% year-over-year.
• Chairman Đặng Thị Hoàng Yến received zero salary in the first half of 2024, as per the company’s disclosures.

What Happened

HoSE transferred ITA shares from restricted to suspended trading on September 4, 2024, due to Tan Tao Investment & Industry JSC’s continued failure to publish required financial reports. The company had been under trading restrictions since July 9, 2024, for missing the 45-day deadline to submit audited 2023 financial statements. In a filing dated August 27, 2024, the company requested a postponement from UBCKNN and HoSE for publishing its audited 2023 financial report, 2023 annual report, and reviewed semi-annual 2024 financial report, citing force majeure.

Tan Tao explained in its disclosures that it had contacted 30 audit firms over several months but all refused to engage. The company linked this to UBCKNN’s suspension of its previous auditor, which it claims has made other firms wary. HoSE had issued reminders, including one on September 4 regarding the delayed semi-annual 2024 report, but the company has not complied, leading to the suspension.

Market Context

ITA is listed on HoSE and operates in industrial real estate and residential property development. The suspension follows a period of regulatory scrutiny, with the stock previously restricted since July 2024. This action may exacerbate liquidity concerns and investor uncertainty, particularly given the company’s reported challenges in securing financing and negotiations due to a 2018 bankruptcy proceeding. The broader Vietnamese real estate sector has faced headwinds, but ITA’s specific governance issues set it apart.

Strategic Significance

The suspension highlights critical governance and compliance failures at Tan Tao, potentially eroding investor trust and limiting access to capital markets. The inability to secure an auditor—a basic requirement for listed companies—suggests deep-seated issues that could affect future regulatory standing and business operations. For long-term investors, this raises red flags about financial transparency and management’s ability to navigate regulatory environments, which are essential for stability in Vietnam’s evolving market.

What to Watch

• Publication of the overdue audited 2023 financial report and reviewed semi-annual 2024 report, which could lead to a lifting of the suspension.
• Any regulatory updates from UBCKNN regarding the company’s compliance status or potential penalties.
• Announcements from Tan Tao on securing a new audit firm or addressing governance concerns.
• Q3 2024 financial results, expected later in the year, to assess ongoing operational impacts.
• Changes in trading volume or price upon any potential resumption of ITA shares on HoSE.