Singapore Exchange (SGX) backed down from a rare move to force textile maker China Sky Chemical Fibre to appoint a special auditor, the latest tussle that has disappointed investors, reported Reuters.
The bourse operator said late on Monday it had withdrawn its application to the Singapore High Court, following a meeting with China Sky’s lawyer, who is seeking further instructions from the company.
SGX had wanted the court to enforce its directive that the company appoint a special auditor to investigate transactions involving the Chinese company, after it missed a deadline set by SGX to do so.
“It definitely sheds a very negative light on SGX. Both SGX and China Sky have nothing to gain by going head on with each other so both should take a step back and think for investors at the end of the day,” said Roger Tan, chief executive at SIAS Research.
China Sky’s shares have been suspended from trading since November, after the company requested a halt. It has since asked for trading to resume but SGX has declined its request.
In a rare display of defiance, China Sky in December said it would not appoint a special auditor as the move was unwarranted and not in the best interests of the company and its shareholders.
The company also released a string of responses to SGX’s reprimand, including email exchanges with the bourse.
SGX had requested a special auditor to look China Sky’s repairs and maintenance costs totalling 72 million yuan ($14.6 million) in the first quarter of the company’s 2009 fiscal year.
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