FangDD Announces Updates on Its Substitution Listing Plan

Rhea-AI Summary

FangDD Network Group (Nasdaq: DUO) has announced updates on its substitution listing plan. The company intends to terminate its ADR facility on September 4, 2024, and list its Class A ordinary shares on Nasdaq under the symbol 'DUO'. A mandatory exchange of ADSs for Class A ordinary shares will occur on the Exchange Date. The company plans to effect a share consolidation on August 12, 2024, consolidating each 5,625 ordinary shares into one share. This will change the ADS ratio from 1:5,625 to 1:1. FangDD faces uncertainty regarding Nasdaq clearance for the Mandatory Exchange and Substitution Listing, and Nasdaq may suspend ADS trading until these processes are completed.

Positive

• Planned listing of Class A ordinary shares on Nasdaq under the symbol 'DUO'
• Appointment of VStock Transfer, as U.S. transfer agent for the Substitution Listing
• No fees charged to ADS holders for the Mandatory Exchange

Negative

• Uncertainty regarding Nasdaq clearance for the Mandatory Exchange and Substitution Listing
• Potential suspension of ADS trading by Nasdaq until the Mandatory Exchange and Substitution Listing are completed
• Complex share consolidation process may confuse some investors

Insights

Financial Analyst

FangDD's announcement of its substitution listing plan marks a significant shift in the company's trading structure, potentially impacting investor accessibility and liquidity. The transition from ADSs to direct Class A ordinary shares trading on Nasdaq could streamline the investment process for U.S. investors, eliminating the need for the ADR facility.

The planned share consolidation of 5,625:1 is particularly noteworthy. This substantial consolidation ratio suggests the company is aiming to boost its share price, possibly to meet Nasdaq's minimum bid price requirement of $1 per share. While this move doesn't change the company's fundamental value, it could affect market perception and trading dynamics.

Investors should be aware of potential short-term volatility around the August 12, 2024 consolidation date and the September 4, 2024 exchange date. The mandatory exchange process seems designed to be seamless for ADS holders, with no fees charged, which is a positive aspect.

However, the company's statement that "There remains uncertainty regarding whether and when the Company will be able to obtain clearance from Nasdaq" is a red flag. This uncertainty could lead to:

• Potential trading suspensions
• Liquidity issues
• Increased volatility

Investors should closely monitor Nasdaq communications and be prepared for possible trading disruptions. The success of this transition will be important for FangDD's continued listing on a major U.S. exchange, which is vital for maintaining investor confidence and access to capital markets.

Legal Expert

FangDD's substitution listing plan involves several critical legal and regulatory considerations that investors should be aware of:

1. Regulatory Compliance: The company must navigate complex SEC and Nasdaq regulations to execute this transition. The uncertainty around Nasdaq clearance suggests potential regulatory hurdles, which could delay or derail the process.

2. Shareholder Rights: The adoption of the sixth amended and restated memorandum and articles of association may alter shareholder rights. Investors should carefully review these changes to understand any impacts on their voting power or other rights.

3. Mandatory Exchange Process: While designed to be automatic, the mandatory exchange of ADSs to ordinary shares could have legal implications, particularly for investors in jurisdictions with specific regulations on foreign share ownership.

4. Disclosure Obligations: FangDD must maintain transparent and timely disclosures throughout this process. Any failure to do so could lead to regulatory scrutiny or shareholder litigation.

5. Listing Requirements: The share consolidation appears aimed at meeting Nasdaq's continued listing requirements. Failure to meet these requirements post-transition could result in delisting, significantly impacting shareholder value.

Investors should closely monitor all company filings and communications to ensure they're fully informed of their rights and any potential risks associated with this corporate action.

SHENZHEN, China, July 31, 2024 (GLOBE NEWSWIRE) -- Fangdd Network Group Ltd. (Nasdaq: DUO) (“FangDD” or the “Company”) today announced updates on its substitution listing plan.

As previously announced on June 3, 2024, the Company intends to terminate the Company’s existing American depositary receipts (the “ADR”) facility on or about September 4, 2024, and list its Class A ordinary shares for trading on The Nasdaq Stock Market LLC (“Nasdaq”) in substitution for the American depositary shares (the “ADS”) (the “Substitution Listing”). The Company expects that, upon the effectiveness of the Substitution Listing, its ADSs will cease to be listed on Nasdaq while the Class A ordinary shares represented by the ADSs will trade on Nasdaq under the symbol of “DUO.” The Company has appointed VStock Transfer, LLC as its United States transfer agent (the “U.S. Transfer Agent”) for the Substitution Listing.

To facilitate the Substitution Listing, the Depositary will call for the surrender of all ADSs to be exchanged into the Company’s Class A ordinary shares on a mandatory basis (the “Mandatory Exchange”) on or after September 4, 2024 (the actual date of the Mandatory Exchange, the “Exchange Date”). For ADSs held by participants of The Depository Trust Company (“DTC”), the Depositary will instruct the U.S. Transfer Agent to register a transfer of the number of deposited shares represented by those ADSs to DTC for allocation by DTC to the participant accounts entitled to them; and for uncertificated ADSs held by owners other than DTC, the Depositary will instruct the U.S. Transfer Agent to register transfers of the number of deposited shares represented by uncertificated ADSs in the names of the respective owners.

ADS holders do not need to take any action, and the Depositary will not charge ADS holders any fees in connection with the Mandatory Exchange. The Depositary has issued a notice to supersede its prior notice issued to ADS holders on June 4, 2024 regarding the ADS termination, and to inform ADS holders of the Mandatory Exchange. A copy of this notice is attached to this press release as Exhibit A.

There remains uncertainty regarding whether and when the Company will be able to obtain clearance from Nasdaq to effectuate the Mandatory Exchange and the Substitution Listing. Prior to the Exchange Date, Nasdaq may suspend the trading of the Company’s ADSs until such time as the Mandatory Exchange and the Substitution Listing shall have taken effect or as otherwise determined by Nasdaq.

In connection with the Substitution Listing, the Company plans to effect, on or about August 12, 2024 (Eastern Time), a share consolidation to consolidate each 5,625 ordinary shares of a par value US$0.0000001 per share of the Company into one ordinary share of a par value US$0.0005625 per share (the “Share Consolidation”), followed by a share capital increase and the adoption of the sixth amended and restated memorandum and articles of association of the Company as set out in the Notice of Extraordinary General Meeting dated June 3, 2024. The Share Consolidation and related matters were previously approved by the Company’s shareholders at the extraordinary general meeting held on July 11, 2024. For detailed information about the Share Consolidation, please see the Company’s current report on Form 6-K furnished to the U.S. Securities and Exchange Commission on July 11, 2024.

The Share Consolidation will change the ratio of the ADSs to the Company’s Class A ordinary shares from (i) one (1) ADS representing five thousand six hundred and twenty-five (5,625) Class A ordinary shares of a par value US$0.0000001 per share to (ii) one (1) ADS representing one (1) Class A ordinary share of a par value US$0.0005625 per share. ADS holders do not need to take any action in connection with the ADS ratio change. 

About FangDD

Fangdd Network Group Ltd. (Nasdaq: DUO) is a customer-oriented property technology company in China, focusing on providing real estate transaction digitalization services. Through innovative use of mobile internet, cloud, big data, artificial intelligence, among others, FangDD has fundamentally revolutionized the way real estate transaction participants conduct their business through a suite of modular products and solutions powered by SaaS tools, products and technology. For more information, please visit http://ir.fangdd.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “hope,” “going forward,” “intend,” “ought to,” “plan,” “project,” “potential,” “seek,” “may,” “might,” “can,” “could,” “will,” “would,” “shall,” “should,” “is likely to” and the negative form of these words and other similar expressions. Among other things, statements that are not historical facts, including statements about the Company’s beliefs and expectations are or contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. All information provided in this press release is as of the date of this press release and is based on assumptions that the Company believes to be reasonable as of this date, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contact

Ms. Linda Li
Director, Capital Markets Department
Phone: +86-0755-2699-8968
E-mail: ir@fangdd.com

Exhibit A accompanying this announcement is available at:
http://ml.globenewswire.com/Resource/Download/540938df-d5ee-4f1f-b045-8d7c2f227fb7

FAQ

When will FangDD (DUO) terminate its ADR facility?

FangDD plans to terminate its ADR facility on or about September 4, 2024.

What is the share consolidation ratio for FangDD (DUO)?

FangDD will consolidate each 5,625 ordinary shares of par value US$0.0000001 into one ordinary share of par value US$0.0005625.

How will the ADS ratio change for FangDD (DUO) after the share consolidation?

The ADS ratio will change from 1 ADS representing 5,625 Class A ordinary shares to 1 ADS representing 1 Class A ordinary share.

What action do FangDD (DUO) ADS holders need to take for the Mandatory Exchange?

ADS holders do not need to take any action for the Mandatory Exchange. The process will be handled automatically.