Bursa Malaysia Securities Publicly Reprimands And/Or Fines Meridian Berhad

Bursa Malaysia Securities Berhad [Registration No.: 200301033577 (635998-W)] (Bursa Malaysia Securities) has publicly reprimanded Meridian Berhad (MERIDIAN) and 5 of its directors for breach of the Bursa Malaysia Securities MAIN Market Listing Requirements (MAIN LR).  In addition, the 5 directors were imposed total fines of RM350,000.  

MERIDIAN was publicly reprimanded for breach of paragraph 8.03A(3)(a) read together with paragraphs 8.03A(2)(b) and 8.03A(7)(b) of the MAIN LR for failing to make an immediate announcement that the company had an insignificant business or operations (First Announcement) upon announcement of the unaudited quarterly report for the financial period ended (FPE) 30 June 2023 (QR4 2023) on 29 August 2023.

In this regard, MERIDIAN had an insignificant business or operations based on the QR4 2023 where the company’s revenue of RM2.738 million on a consolidated basis represented 0.93% of the company’s share capital of RM294.021 million as at 30 June 2023. 

MERIDIAN only made the First Announcement on 26 September 2023, after a delay of 28 days.

5 directors of MERIDIAN at the material time had breached paragraph 16.13(b) of the MAIN LR for permitting MERIDIAN to commit the breach for which the following penalties were imposed on them: -  

The finding of breach and imposition of the above penalties on MERIDIAN and the 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 breach, impact of the breach to MERIDIAN and its shareholders/investors, and the roles, responsibilities, knowledge and conduct of the directors.  

Bursa Malaysia Securities views the breach seriously where the First Announcement was crucial to shareholders and investors as it related to MERIDIAN’s level of operation to warrant continued trading or listing on the Official List. There would be possible suspension and delisting if MERIDIAN fails to regularise its level of operations within the timeframes prescribed in paragraph 8.03A of the MAIN LR. Hence, information pertaining to triggering of paragraph 8.03A of the MAIN LR is significant to the market and timely disclosure is important towards facilitating informed investment decision.

Bursa Malaysia Securities has also reminded MERIDIAN and its Board of their responsibilities to maintain the appropriate standards of corporate responsibility and accountability to its shareholders and the investing public.  

BACKGROUND

MERIDIAN had an insignificant business or operations based on the QR4 2023 where the company’s revenue of RM2.738 million on a consolidated basis represented 0.93% of the company’s share capital of RM294.021 million as at 30 June 2023. 

However, MERIDIAN only made the First Announcement on 26 September 2023 i.e. a delay of 28 days and after Bursa Malaysia Securities’ engagement with the company on 25 September 2023. 

There was no reasonable explanation for MERIDIAN’s failure to make the First Announcement upon announcement of the QR4 2023.  Paragraph 8.03A(7)(b) of the MAIN LR clearly defined “insignificant business or operations” to mean business or operations which generates revenue on a consolidated basis that represents 5% or less of the share capital of the listed issuer (5% Threshold) based on its latest annual audited or unaudited financial statements.  In this respect, MERIDIAN’s latest annual financial statements were the QR4 2023 announced on 29 August 2023 which reported a revenue of RM2.738 million for the 12 months period ended 30 June 2023 and clearly below the 5% Threshold.  The subsequent change of MERIDIAN’s financial year end from 30 June 2023 to 30 November 2023 which was announced on 27 October 2023 did not unwind or negate the fact that the company had triggered paragraph 8.03A(2)(b) of the MAIN LR on 29 August 2023 based on the QR4 2023 and was required to make the First Announcement.

The directors had failed to discharge their duties to undertake reasonable assessment and enquiry to ascertain the triggering criteria under paragraph 8.03A(2)(b) of the MAIN LR and ensure the First Announcement was made despite their knowledge of the following during the Audit Committee and/or Board meetings on 24 May 2023 and 26 August 2023: -

• The company secretary had advised the Audit Committee and Board of the obligations under paragraph 8.03A of the MAIN LR.  
• The directors had approved the QR4 2023 which reported the Group’s revenue of less than the 5% Threshold. However, there was no further mention/deliberation/approval by the Board to make the First Announcement.  There was also no reasonable basis for the impression/assumption of MERIDIAN and the directors that the company’s revenue would increase from 0.93% for the FPE 30 June 2023 to meet the 5% Threshold for the FPE 30 November 2023.  In fact, MERIDIAN had only reported a revenue of RM3,796 million which represented 1.29% of the company’s share capital for the FPE 30 November 2023.

ADDENDUM

• Paragraph 8.03A(3) of the MAIN LR states that a listed issuer that triggers paragraph 8.03A(2)(a) or (b) of the MAIN LR (“affected listed issuer”) must comply with the following, failing which the Exchange may suspend the trading of listed securities of such listed issuer or de-list the listed issuer, or both:  

(a)     immediately announce to the Exchange of its condition and provide such information from time to time for public release in accordance with the disclosure obligations set out in paragraph 4.0 of Practice Note 17, with the necessary modifications;  

(b)     regularise its condition by complying with the requirements set out in paragraph

8.04(3) and paragraph 5.0 of Practice Note 17, with the necessary modifications; and  

(c)     comply with such other requirements or do such other acts or things as may be prescribed or required by the Exchange.  

• Paragraph 8.03A(2) of the MAIN LR states that the following are circumstances which indicate that a listed issuer may not have a level of operations that is adequate to warrant continued trading or listing on the Official List:  (a) the listed issuer has suspended or ceased –  (i) all of its business or its major business; or  

(ii) its entire or major operations,  

for any reason whatsoever including, amongst others, due to or as a result of –  

(aa)    the cancellation, loss or non-renewal of a licence, concession or such other rights necessary to conduct its business activities;  

(bb)   the disposal of the listed issuer’s business or major business; or  

(cc)    a court order or judgment obtained against the listed issuer prohibiting the listed issuer from conducting its major operations on grounds of infringement of copyright of products etc; or  

(b) the listed issuer has an insignificant business or operations.  

• Pursuant to paragraph 8.03A(7)(b) of the MAIN LR, “insignificant business or operations" means business or operations which generates revenue on a consolidated basis that represents 5% or less of the share capital (excluding any redeemable preference shares and treasury shares) or the unit holder capital of the listed issuer based on its latest annual audited or unaudited financial statements.

• Paragraph 16.13 of the MAIN LR states that a director of a listed issuer must not –  (a) cause, aid or abet a breach of these Requirements by such listed issuer; or 

(b) permit, either knowingly or where he had reasonable means of obtaining such knowledge, such listed issuer to commit a breach of these Requirements.