HKEX, SFC, AFRC raise alarm over surge in ongoing concern disclaimers

Cases have risen nearly eightfold in eight years.

The Securities and Futures Commission (SFC), the Accounting and Financial Reporting Council (AFRC), and The Stock Exchange of Hong Kong Limited (HKEX) have flagged a surge in listed issuers publishing financial statements with a disclaimer of opinion solely relating to a going concern, saying that it raises questions about their reliability.

In a joint announcement on 8 October, the regulators urged listed issuers' management, audit committees, and auditors urged listed issuers' management, audit committees, and auditors to properly discharge their responsibilities, such as preparing assessments and action plans, implementing those plans, and providing detailed disclosures on implementation, progress, deviations, and revisions

HKEX said it will consider amending the listing rules if no significant improvement is observed, such as requiring issuers with a disclaimer of opinion solely relating to going concern to be suspended.

A disclaimer of opinion solely relating to a going concern means that an auditor did not express an opinion on the issuer’s financial statements.

The number of said disclaimers rose from 12 in 2017 to 95 in 2025, according to official data. Of these, 65 have had a disclaimer for over one year. The most extreme case is 14 years.

The SFC, AFRC, and HKEX said that the increase follows the exchange’s introduction of a regulatory framework in 2019, which exempted issuers from trading suspension requirements if their disclaimer of opinion or adverse opinion relates solely to going concern.

They said that a disclaimer of opinion raises questions about the reliability of the financial statements, such as whether there are underlying financial reporting issues, and whether said issues have been appropriately evaluated and reported.

They said that the disclaimer is expected to be resolved within a reasonable period and should not be used indefinitely.

The joint statement said that managements should prepare robust going concern assessments supported by reasonable assumptions, reliable data and feasible action plans.

Audit committees should also critically review management’s going concern assessments and actively oversee the implementation of action plans, it said.

Auditors are expected to critically evaluate the assessments, communicate identified deficiencies and clearly explain the basis for any disclaimer of opinion.

“A disclaimer of opinion, even when it relates solely to going concern, can have significant implications for market quality and investor confidence,” Katherine Ng, head of listing at HKEX, said.

"Upholding the integrity of our markets requires listed issuers to take ownership of the underlying issues, pursue credible actions to address them, and keep investors informed through timely and transparent disclosures," she added.