Bursa Malaysia Securities Publicly Reprimands SMTRACK Berhad For Breach Of Ace Market Listing Requirements

Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded SMTRACK BERHAD (SMTRACK) for committing the following breaches of the Bursa Malaysia Securities ACE Market Listing Requirements (ACE LR):-

(1)   Rule 9.22(1) of the ACE LR for failing to announce the company’s quarterly report for the 3 month period from 1 April 2016 to 30 June 2016 (“QR5 2016”) on or before 31 August 2016.  SMTRACK only announced the QR5 2016 on 30 September 2016, a delay of 1 month;

(2)   Rule 9.22(3) of the ACE LR where the company had on 20 July 2016 announced the change of its financial year end from 31 March 2016 to 31 July 2016 but failed to consult Bursa Malaysia Securities as to the period to be covered in the quarterly report; and 

(3)   Rule 9.23(1) of the ACE LR for failing to issue the company’s annual report for the financial period ended 31 July 2016 (“AR 2016”) on or before 30 November 2016.  SMTRACK only issued the AR 2016 on 29 December 2016, a delay of approximately 1 month. 

The public reprimand was imposed pursuant to Rule 16.19(1) of the ACE LR after taking into consideration all facts and circumstances of the matter including materiality of the breaches and upon completion of due process.

SMTRACK is also required to ensure all its directors and the relevant personnel of the company attend a training programme in relation to compliance with the ACE LR particularly pertaining to financial reporting.  In addition, SMTRACK is required to ensure its Board of Directors review and assess the adequacy and competency of its finance and accounting resources and adequacy, comprehensiveness and effectiveness of the company’s policies and procedures in respect of financial reporting and implementation of the same. 

While Bursa Malaysia Securities has not found any of SMTRACK’s directors to have caused or permitted the breaches by the company, Bursa Malaysia Securities wishes to highlight and remind that it is the duty of the directors to maintain appropriate standards of responsibility and accountability in ensuring compliance of the Main LR.  The Board of Directors of SMTRACK at the material time was as follows:- 

1. Mohd Anuar Bin Mohd Hanadzlah
2. Datuk Tan Choon Hwa (JP, JMK)
3. Chang Chee Ching
4. Datin Sri Noraini Binti Abdul Jalil
5. Anthony Goh Shee Hiang
6. Chow Hung Keey

Bursa Malaysia Securities views the contraventions seriously as the timely and accurate submission of financial statements to enable investors to make informed investment decisions is one of the fundamental obligations of companies listed on the Official List of Bursa Malaysia Securities.

Background

SMTRACK had on 20 July 2016 announced the change of its financial year end from 31 March 2016 to 31 July 2016 and proceeded to prepare the 4 month quarterly results from April - July 2016 for announcement by 30 September 2016.  However, the company was notified by Bursa Malaysia Securities that the company needed to submit 2 sets of quarterly results, i.e. April – June 2016 and July 2016.  As a result, the company had to redo the quarterly results which led to the delay by approximately 1 month in the announcement of the QR5 2016 which was made on 30 September 2016.  SMTRACK’s representation that it was not aware that the change of the financial year end would affect the announcement period of the quarterly results and the need to consult Bursa Malaysia Securities was unacceptable in view of the clear wordings under Rule 9.22(3) of the ACE LR.

SMTRACK had also failed to issue the AR 2016 on or before 30 November 2016 and only issued the same on 29 December 2016, a delay of approximately 1 month.  In this respect, the company had explained that the delay was principally due to the following:-

• change of auditors which was only approved during the extraordinary general meeting on 27 October 2016;
• the company’s accountant who handled the group accounts had passed away on 15 October 2015 and apart from continuing with the efforts to tidy up the accounts left over by the previous management since March 2016, the accounting staff and the newly appointed external auditors had spent time reconciling the various items in the management accounts; and
• time required by the auditors to complete their work, including obtaining satisfactory explanations and confirmations from various parties.

These explanations were not acceptable and did not absolve the company’s obligation to ensure timely issuance of the AR 2016 particularly as SMTRACK had failed to demonstrate reasonable efforts / steps taken to expedite the change of auditors and/or address / resolve the issues with the auditors to ensure the timely completion of audit and issuance of the AR 2016.  Further, all listed companies have an obligation to establish a proper and effective finance function including the necessary resources, procedures and processes and the proper maintenance of such accounting and other records to facilitate the audit to enable timely submission of the financial statements in accordance with the listing requirements.