Bursa Malaysia Securities Publicly Reprimands And/Or Fines Maxwell International Holdings Berhad And 4 Directors

Bursa Malaysia Securities Berhad [Registration No.: 200301033577 (635998-W)] (“Bursa Malaysia Securities”) has publicly reprimanded Maxwell International Holdings Berhad (MAXWELL) and 4 of its directors for breaches of the Bursa Malaysia Securities Main Market Listing Requirements (Main LR). In addition, 4 directors of MAXWELL were imposed total fines of RM1,744,800. 

MAXWELL was publicly reprimanded for committing breaches of paragraphs 9.22(1) and 9.23(1) of the Main LR where MAXWELL had failed to announce or issue the following financial statements within the stipulated timeframes :-

• the annual reports that included the annual audited financial statements together with the auditors’ and directors’ report for the financial year ended (FYE) 31 December 2017 (AR 2017) and 31 December 2018 (AR 2018); and
• the quarterly reports from the financial period ended 30 September 2018 (QR Sept 2018), 31 December 2018 (QR Dec 2018), 31 March 2019 (QR March 2019) and 30 June 2019 (QR June 2019). 

The AR 2017, QR Sept 2018, QR Dec 2018, AR 2018, QR March 2019 and QR June 2019 (collectively referred to as “the Outstanding Financial Statements”) were not announced or issued as at the date MAXWELL was de-listed on 7 October 2019. 

Notwithstanding that MAXWELL had been de-listed, the breaches were committed while the company was listed on the Official List of Bursa Malaysia Securities. 

4 directors of MAXWELL were publicly reprimanded and fined for breaches of paragraph 16.13 of the Main LR as follows:  

The finding of breach and imposition of the above penalties on MAXWELL and its directors were made pursuant to paragraph 16.19 of the Main LR upon completion of due process and after taking into consideration all facts and circumstances of the matter including the materiality of the breaches; impact of the breaches to MAXWELL and shareholders/investors; the roles, responsibilities and conduct of the directors and the fact that MAXWELL and Li Kwai Chun had previously committed similar breaches in respect of the delay in the issuance of the annual reports for FYE 31 December 2015 and/or 31 December 2016.  

Bursa Malaysia Securities views the contraventions seriously as the timely submission of financial statements is one of the fundamental obligations of listed companies and is of paramount importance in ensuring a fair and orderly market for securities traded on Bursa Malaysia Securities and necessary to aid informed investment decisions.

BACKGROUND 

MAXWELL had announced that the failure to issue or announce the Outstanding Financial Statements was essentially due to the company experiencing cash flow problems. However, MAXWELL had failed to provide reasonable explanations and demonstrate reasonable and expeditious steps/actions taken to resolve the purported cash flow problems including to address the audit issues highlighted in the external auditors’ disclaimer opinion in the company’s audited financial statements for FYE 31 December 2015 and 31 December 2016 (Audit Issues) to enable timely issuance or announcement of the Outstanding Financial Statements. 

Notwithstanding that Li Kwai Chun was re-designated as a Non-Independent Non-Executive Director with effect from 31 July 2017, it was noted that:

• she was the President and Executive Director responsible for overseeing the day-to-day operations and management of the Group and preparation of the company’s financial statements and the chief financial officer who was primarily responsible for the financial management of MAXWELL reported to her;
• she had essentially caused the Audit Issues and was in a position and primarily responsible to resolve the Audit Issues;
• she was also responsible to channel the funds to the holding company in Malaysia and make arrangement for the settlement of all outstanding audit fees to enable commencement of the audit and issuance of the AR 2017;
• however, she had abdicated her duties and there was blatant failure/disregard/ neglect of her duties as evident from her non-action/lackadaisical attitude in resolving the Audit Issues, the purported cash flow problems and settlement of the outstanding audit fees despite numerous reminders from, amongst others, the external auditors. The Audit Issues remained unresolved/outstanding for more than 3 years since they were highlighted in the audited financial statements for FYE 31 December 2015 until the date MAXWELL was de-listed on 7 October 2019.  

You XiLiang and Yung Chi Man, being the Executive Directors were also responsible for overseeing the day-to-day operations and management of the Group and preparation of the financial statements. The chief financial officer who was primarily responsible for the financial management of MAXWELL also reported to them.   However, they had failed to –

• demonstrate reasonable and expeditious efforts taken to settle the outstanding audit fees and address/resolve the company’s purported cash flow problem; and
• monitor, supervise and follow-up with the management including to ensure Li Kwai Chun resolved the issues. Instead, they had merely relied on Li Kwai Chun who had been lackadaisical and ineffective in addressing/resolving the issues.