Regulators issue joint statement on going concern disclaimers
Hong Kong regulators have issued a joint statement addressing the rising number of listed issuers with going concern disclaimers, rising from 12 in 2017 to 95 in 2025. They clarified expectations for management, audit committees and auditors, warning of possible Listing Rules amendments if improveme
Hong Kong's regulators on Thursday issued a joint statement addressing growing concerns about the rising number of listed issuers publishing financial statements with a disclaimer of opinion solely relating to going concern, hoping to bring about positive changes in the behaviour of all relevant parties and improvements in disclosure.
The statement, jointly issued by the Accounting and Financial Reporting Council, the Securities and Futures Commission, and The Stock Exchange of Hong Kong, clarifies the regulators' expectations of listed issuers, their management and audit committees, as well as auditors, regarding going concern assessments in listed issuers' financial statements and the related conduct.
This came as the exchange introduced a regulatory framework in 2019 that requires trading in a listed issuer's securities to be suspended where it publishes financial statements with a disclaimer of opinion or an adverse opinion, except where these two opinions relate solely to going concern. A disclaimer of opinion means that the auditor has not expressed an opinion on the listed issuer's financial statements, while it raises questions about the reliability of the financial statements.
Since the change, there has been a significant increase in the number of listed issuers receiving a disclaimer of opinion solely relating to going concern, rising from 12 in 2017 to 95 in 2025, of which 65 have had such a disclaimer of opinion for more than one year, and in the most extreme case, 14 years.
The joint statement emphasises that addressing these concerns is a shared responsibility across the financial reporting ecosystem, and that management should prepare robust going concern assessments supported by reasonable assumptions, reliable data and feasible action plans.
Audit committees should critically review management's going concern assessments and actively oversee the implementation of action plans, while auditors should critically evaluate the assessments, communicate identified deficiencies and clearly explain the basis for any disclaimer of opinion, the regulators said.
If no significant improvement is observed, the exchange said it will consider amending the Listing Rules as necessary, including requiring listed issuers with a disclaimer of opinion solely relating to going concern to be suspended.