Melco Resorts & Leisure, a $2.5bn on line casino group run by Hong Kong on line casino mogul Lawrence Ho, is weighing relocating its headquarters to Macau to keep away from being delisted within the US, in response to two folks aware of the matter.
The US Securities and Alternate Fee has stated that about 200 Chinese language and Hong Kong corporations listed in New York can be compelled to delist in 2024 if they don’t adjust to audit disclosure legal guidelines. Macau, a particular administrative area of China, shouldn’t be included within the delisting menace, opening the door to a possible loophole.
“There are a number of corporations considering this by means of proper now, however the phrase is till the person upstairs opines, nobody will make the transfer,” stated one of many folks near the corporate, referring to Chinese language president Xi Jinping.
China has lengthy prevented corporations and auditors from disclosing audit particulars to overseas regulators over nationwide safety considerations. It’s not clear if Beijing would allow overseas regulators to look at the audit recordsdata of corporations based mostly in Macau.
After the introduction of the Holding Overseas Corporations Accountable Act in 2020, regulators can prohibit overseas corporations from being traded within the US if the Public Firm Accounting Oversight Board — the audit watchdog — is unable to examine audits for 3 consecutive years.
In 2021, the PCAOB stated China and Hong Kong weren’t in compliance, giving corporations from these jurisdictions till 2024 to conform or be delisted within the US.
Macau-based corporations audited by accounting corporations exterior China or Hong Kong might in concept proceed buying and selling as a result of the PCAOB has not discovered the area in breach of the principles, in response to an individual near the regulator.
To keep away from being delisted, Melco must change its auditor to 1 based mostly within the US that is ready to be inspected by the PCAOB, one of many folks near the corporate stated. Melco has been audited by the Hong Kong workplace of EY since 2017.
Melco didn’t remark following repeated requests.
The group, whose mum or dad firm has operated from Hong Kong since 1910, is one among six corporations licensed to handle casinos in Macau, a playing hub.
Its properties embrace the Metropolis of Desires resort and on line casino in Macau, which incorporates the Morpheus Resort designed by Zaha Hadid Architects. It raised $1.1bn when it listed on Nasdaq in 2006. Its mum or dad firm, Melco Worldwide, listed in Hong Kong in 1927.
Lawrence Ho, whose father Stanley held a monopoly on playing in Macau for many years, took over Melco Worldwide in 2001 after a profession in funding banking. He launched the subsidiary Melco Resorts in 2004.
The group’s shares have misplaced greater than half their worth this yr after being pummelled by the specter of being delisted from Nasdaq and Beijing’s strict zero-Covid technique.
Negotiations between the US and China on entry to the audit recordsdata of Chinese language teams listed within the US have reached a stalemate.
In April, China modified a decade-long rule that restricted the data-sharing practices of abroad corporations in a concession to the US. Nevertheless, it has not agreed to adjust to Washington’s demand for entry to full audits.
Further reporting by Hudson Lockett in Hong Kong
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