Bursa Malaysia Securities Publicly Reprimands Autoair Holdings Berhad And Fines Its Directors A Total Of RM160,000

Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded Autoair Holdings Berhad (AUTOAIR or the Company) and its directors for breaching the Bursa Malaysia Securities Main Market Listing Requirements (Main LR). In addition, the directors of AUTOAIR were fined a total of RM160,000.

AUTOAIR was publicly reprimanded for breaching paragraph 8.04(3)(b) of the Main LR read together with paragraph 4.1(a) of Practice Note 17 (PN17) for failing to make the First Announcement pursuant to PN17 on an immediate basis upon the Company triggering the prescribed criteria under paragraph 2.1(e) of PN17.

AUTOAIR had on 31 October 2013 announced the Company’s annual audited accounts for the financial year ended 30 June 2013 (AAA 2013) where the Company’s external auditors had expressed an emphasis of matter on the Company and its subsidiaries’ ability to continue as a going concern (Emphasis of Matter) and the Company’s shareholders’ equity on a consolidated basis of RM15.758 million was less than 50% (i.e. 35.8%) of the Company’s issued and paid-up capital of RM44 million as at 30 June 2013.  However, AUTOAIR only made the First Announcement on 15 November 2013, after a delay of 15 days.

The following directors of AUTOAIR at the material time were found to have breached paragraph 16.13(b) of the Main LR for permitting knowingly, or where they had reasonable means of obtaining such knowledge, AUTOAIR to commit the breach of paragraph 8.04(3)(b) of the Main LR read together with paragraph 4.1(a) of PN17. The penalties imposed on the directors are as follows:-

Bursa Malaysia Securities views the above contravention seriously as timely disclosure of material information is one of the fundamental obligations of listed companies to preserve and sustain market integrity and investor confidence.

The finding of breach and imposition of the above penalties on AUTOAIR 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 role, responsibilities and conduct of the directors and materiality of the breach as follow:-

1. The directors were and/or should be aware of the Company’s deteriorating financial condition and should have been more vigilant in the assessment as to whether the Company triggered any of the prescribed criteria under PN17. It was not acceptable that the Company and directors failed to comprehensively assess the prescribed criteria under PN17. In this regard, the directors merely focused on only one of the prescribed criteria of PN17 and relied on the external auditors’ alleged confirmation that the PN17 criteria was not triggered without more. The directors should be aware that the Company had triggered the criterion under paragraph 2.1(e) of PN17 in light of their knowledge of:-
   
   
   1. The Emphasis of Matter which had been highlighted by the external auditors in the Audit Committee and/or Board of Directors meeting; and
      
      
   2. The Company’s shareholders equity on a consolidated basis of RM15.758 million was less than 50% (i.e. 35.8%) of the Company’s issued and paid-up capital of RM44 million as at 30 June 2013 in approving the AAA 2013;
      
      
2. Despite Bursa Malaysia Securities informing AUTOAIR that it had triggered PN17 and required / reminded the Company to make the necessary announcement, the Company and directors had delayed in issuing the First Announcement; and   
   
   
3. There was material share price movement of the Company’s securities upon the First Announcement on 15 November 2013 at 1.51 p.m. where the Company’s share price had in aggregate decreased by RM0.09 / 50% from the closing price after the morning session of RM0.18 on 15 November 2013 to RM0.14 on 18 November 2013 (i.e. the next market day) and RM0.09 on 22 November 2013.