Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded MALAYSIAN AE MODELS HOLDINGS BERHAD (In Liquidation) (MAEMODE) and 6 of its directors for breaching the Bursa Malaysia Securities Main Market Listing Requirements (Main LR). In addition, the Managing Director, Datuk Dr Lim Kee Sinn was fined RM100,000.
MAEMODE was publicly reprimanded for breaching paragraphs 9.03(1) and 9.04(l) of the Main LR read together with paragraphs 2.1(c) and/or (d) of Practice Note 1 (PN1) for failing to make an immediate announcement of the default in payment of the Syndicated Working Capital Facilities of up to RM400 million from RHB Bank Berhad (RHB) and Malayan Banking Berhad to MAEMODE and its subsidiaries, AE Automotion (M) Sdn. Bhd. and Matromatic Handling Systems (M) Sdn. Bhd. (the Syndicated Facility).
Notwithstanding that MAEMODE was de-listed on 2 July 2014, the breach had been committed while MAEMODE was listed on the Official List of Bursa Malaysia Securities.
The following directors of MAEMODE 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, MAEMODE to commit the above breach. The penalties imposed are as follows:
No. |
Director |
Penalty |
1. |
Dato' Seri Lokman Hakim Bin Md Jasan Chairman / Independent Non-Executive Director |
Public Reprimand |
2. |
Datuk Dr Lim Kee Sinn Managing Director |
Public Reprimand and Fine of RM100,000 |
3. |
Lim Kee Yin Non-Executive Director |
Public Reprimand |
4. |
Low Peng Lum Non-Independent Non-Executive Director Audit Committee member (resigned on 6 August 2013) |
Public Reprimand |
5. |
Taza Bin Razali Ismail Independent Non-Executive Director Audit Committee Chairman |
Public Reprimand |
6. |
Ting Siew Haw Independent Non-Executive Director Audit Committee member |
Public Reprimand |
Bursa Malaysia Securities views the 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.
BACKGROUND
MAEMODE had breached paragraphs 9.03(1) and 9.04(l) of the Main LR read together with paragraphs 2.1(c) and/or (d) of PN1 for failing to make an immediate announcement of the default in payment of the Syndicated Facility.
Based on the evidence procured, it is noted that MAEMODE had defaulted in payment of the Syndicated Facility which was secured under a debenture as early as / prior to RHB’s letter dated 16 April 2013 which had, amongst others, highlighted the arrears/ overdue position of the Syndicated Facility to MAEMODE.
Subsequently, vide letter dated 4 June 2013, RHB had informed MAEMODE that the financiers had declared the occurrence of an event of default and demanded MAEMODE to pay the total outstanding sum of RM96,082,818.51 due as at 31 May 2013 which represented 39.3% of the Group’s net assets at the material time.
However, MAEMODE only announced the default in payment of the Syndicated Facility on 20 June 2013.
The finding of breach and imposition of the above penalties on MAEMODE and its directors were made pursuant to paragraph 16.19(1) of the Main LR upon completion of due process and after taking into consideration all facts and circumstances of the matter including the following:-
a. The materiality of the breach as follows:
i. The default in payment had led to the appointment of a Receiver and Manager (R&M) on 19 June 2013 and MAEMODE triggering the prescribed criteria under paragraph 2.1(b) of Practice Note 17 (PN17) as announced on 20 June 2013. Further, MAEMODE was unable to provide the solvency declaration and triggered another prescribed criteria under paragraph 2.1(f) of PN17;
ii. Following MAEMODE’s PN1 announcement and the First Announcement pursuant to PN17 on 20 June 2013, MAEMODE’s share price had dropped significantly by 49.2% or 15 sen from RM0.305 on 20 June 2013 to RM0.155 on 21 June 2013. Subsequent to MAEMODE’s announcement on 25 June 2013 that MAEMODE was unable to provide the solvency declaration and triggered paragraph 2.1(f) of PN17, the price declined further by 33.3% from RM0.15 on 25 June 2013 to RM0.10 on 26 June 2013. MAEMODE’s shares were suspended from trading with effect from 28 June 2013 due to the appointment of the R&M; and
iii. The requirement for a listed issuer to make an immediate announcement of material default in payment of credit facilities is fundamental to enable investors to make informed investment decisions concerning the listed issuer’s financial condition.
b. The knowledge, role, responsibilities and conduct of the directors:
i. Datuk Dr Lim Kee Sinn was the Managing Director and the only executive director at the material time. He was also the director who handled the banking operations of MAEMODE and its subsidiaries, was involved in the discussions / meetings with the financiers and had knowledge of the default in payment of the Syndicated Facility. Despite his awareness/knowledge of the default in payment, he had failed to take reasonable efforts to discharge his duties to ensure MAEMODE make an immediate announcement of the default in payment of the Syndicated Facility in accordance with the Main LR;
ii. The non-executive directors were / should be aware or in a position to ascertain the default in payment particularly where it was noted that they were informed of MAEMODE’s difficulty in the repayment of the Syndicated Facility and the restructuring and reorganisation of the Syndicated Facility including RHB’s letter dated 16 April 2013. They had failed to undertake reasonable enquiries to ascertain and disclose the default in payment of the Syndicated Facility in accordance with the Main LR.