Shanghai bourse bars chip maker S2C from listing for 5 years for falsely inflating profit

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It is the first ban since the watchdog rolled out the registration-based IPO system to encourage new listings and increase corporate financing

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It comes three months after the mainland bourse fined the company and its executives a total of 16.5 million yuan for the rule violation. Photo: EPA-EFE

Yuke Xiein Beijing

Published: 9:45pm, 11 Jun 2024

The Shanghai Stock Exchange has barred S2C, a local chip maker, from listing its shares in the next five years, the first such moratorium since China rolled out its registration-based initial public offering (IPO) system across the board in 2023.

S2C, which is focused on integrated circuits electronic design automation (EDA), inflated its profits for 2020 by 12.5 million yuan (US$1.7 million), or 118.5 per cent, the Shanghai Stock Exchange said in an announcement on Tuesday.

It comes three months after the mainland bourse fined the company and its executives a total of 16.5 million yuan for the rule violation.

The chip maker fabricated its results by forging transactions, confirming its earnings in advance, and reporting lower costs for the period, the exchange said on Tuesday, adding that the actions were “obviously subjective and intentional,” and in clear violation of the country’s securities law.

The stock exchange said it will not review the company’s IPO documents in the next five years, and deemed its executives unfit for appointment in similar roles in the next three years.

In August 2021, S2C applied for an IPO on Shanghai’s Nasdaq-style Star market. The application was withdrawn in July 2022, after the China Securities Regulatory Commission (CSRC) led a probe into the company and found that it may have falsified financial results.