Bursa Malaysia Securities Publicly Reprimands Appasia Berhad (Formerly Extol MSC Berhad) And Fines 2 Former Directors A Total Of Rm150,000

Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded APPASIA BERHAD (formerly EXTOL MSC BERHAD) (APPASIA) and its 2 former directors for breaches of the Bursa Malaysia Securities ACE Market Listing Requirements (ACE LR).  In addition, the 2 former directors were fined a total of RM150,000.APPASIA was publicly reprimanded for committing the following breaches:-

A.    Breaches of Disclosure Obligations -

(1)    Rules 9.09(1), 2.18(1) and 9.16(1) of the ACE LR for failing to make an announcement to clarify the events that took place at the company's extraordinary general meeting (EGM) on 28 May 2014 and/or outcome of the EGM.

Rule 9.09(1) of the ACE LR prescribes that whenever a listed company becomes aware of any report, true or false, that contain material information, the listed company must make due enquiry and immediately publicly clarify, confirm or deny the said report.

Rules 2.18(1) and 9.16(1) of the ACE LR states that a listed corporation must ensure that:-

(a)    any statement, information or document presented, submitted or disclosed pursuant to the ACE LR is clear, accurate, not contain any material omission and not false or misleading; and
(b)    each announcement must be factual, clear accurate, contains sufficient information to enable informed investment decision, not misleading as well as be balanced and fair.

Based on APPASIA's announcement dated 10 June 2014 and the press statement provided by the requisitionists to Bursa Malaysia Securities on 28 May 2014, it was noted that after the Chairman declared the adjournment of the EGM on 28 May 2014 and left the meeting, the EGM was in fact continued by the remaining shareholders where the resolutions as set out in the Notice of EGM dated 13 May 2014 to remove the former directors and appoint new directors were approved.  

Despite being aware of the continuation of the EGM on 28 May 2014 / the press statement which was sent / highlighted to APPASIA on 28 May 2014 and the request by Bursa Malaysia Securities to clarify the press statement issued by the requisitionists as well as the events that took place at the EGM to the market, APPASIA had insisted to issue an announcement on the cancellation of the EGM to the market.  The position taken by APPASIA resulted in suspension on the trading of its securities with effect from 9 a.m. on 29 May 2014 pending clarification on the outcome of the EGM.  The suspension was only uplifted the next day after APPASIA's announcement on 10 June 2014 when the company announced the decision of the Kuala Lumpur High Court on 9 June 2014 as to the validity of the EGM held on 28 May 2014;
(2)    Rule 9.03(1) of the ACE LR for failing to make an immediate announcement on the receipt of:

•   The special notice dated 19 March 2014 issued and submitted by the requisitionists to APPASIA on the same date to convene an EGM to remove and appoint directors.  APPASIA only announced the same on 20 March 2014, a delay of 1 market day;
• The Notice of EGM (scheduled for 26 April 2014) by the requisitionists to APPASIA via letter dated 9 April 2014.  The announcement of the Notice of EGM was made on 16 April 2014, a delay of 5 market days;
• Errata to the Notice of EGM issued by the requisitionists to APPASIA via letter dated 11 April 2014 on the change of address of Form of Proxy to be deposited. APPASIA only announced the same on 16 April 2014, a delay of 3 market days; and
• Notice of EGM (scheduled for 28 May 2014) issued by the requisitionists to the Company via letter dated 9 May 2014 which was only announced by APPASIA on 12 May 2014, a delay of 1 market day;

(3)    Rule 9.03(1) read together with Rule 9.04(f) of the ACE LR for failing to make an immediate announcement of the following:-

• Procurement of an interim injunction order (Interim Injunction) from the High Court on 23 April 2014 to stop the EGM scheduled on 26 April 2014.  The sealed copy of the court order was served on APPASIA on 24 April 2014 but only announced on 25 April 2014;
• The judgment to set aside the Interim Injunction which was procured by the requisitionists on 7 May 2014 but only announced by APPASIA on 12 May 2014, a delay of 3 market days; and 
• Receipt of the Saman Pemula / Originating Summon dated 3 June 2014 to seek a declaration that the removal of the former directors and appointment of the new directors at the EGM on 28 May 2014 were valid and enforceable.  The Saman Pemula / Originating Summon was served on APPASIA on the same date but the announcement was only made on 10 June 2014, a delay of 5 market days; and

(4)    Rules 9.19(6), (9) and (15) of the ACE LR for failing to make an immediate announcement of the following:-

• The special notice dated 9 April 2014 at least 14 days before the date of the EGM (which was scheduled on 26 April 2014).  APPASIA only announced the notice of EGM on 16 April 2014, which was 10 days away from the date of the EGM; and
• The resignation of the company secretary and change of address of the registered office on 31 March 2014.  The respective announcements was only made on 10 June 2014, after a delay of more than 2 months; and

B.    Breaches of Bursa Malaysia Securities' Directives -

(5)    Rule 2.23(1) of the ACE LR for failing to comply with the numerous directives of Bursa Malaysia Securities issued on 28 & 29 May 2014 and 3 & 5 June 2014 to make an immediate announcement to clarify the events that took place at the EGM and/or outcome of the EGM.  

The 2 directors of APPASIA were publicly reprimanded and/or imposed with the following fines for permitting knowingly or where they had reasonable means of obtaining such knowledge, APPASIA to breach Rules 9.09(1), 2.18 and 2.23(1) of the ACE LR in contravention of their obligations under  Rule 16.13(b) of the ACE LR:-

# The directors were removed on 9 June 2014 upon procurement of the High Court order dated 9 June 2014 confirming the validity of the resolutions of the EGM (including the removal of the directors) held on 28 May 2014.  

The finding of breach and imposition of the above penalties on APPASIA and the directors were made pursuant to Rule 16.19 of the ACE LR upon completion of due process and after taking into consideration all the facts and circumstances of the matter including the following:-

(a)    Notwithstanding that there was dispute / legal tussle for control over the company, there was a necessity for the company to accurately update and clarify to the market the matter / material development in the company in a timely manner including the outcome of the EGM on 28 May 2014. This was particularly crucial in the light of contradictory statements issued by the requisitionists to the market via a press statement on 28 May 2014;

(b)    APPASIA and the directors had blatantly refused and failed to make the appropriate disclosures on the outcome of the EGM on 28 May 2014 notwithstanding the clear provisions of the ACE LR pertaining to the disclosures of the various events and engagements as well as requests / instructions / directives by Bursa Malaysia Securities for the company to do so.  Notwithstanding that the directors were clearly aware of Bursa Malaysia Securities' requests / instructions / directives for immediate disclosures of the outcome of the EGM and they were in a position and/or had control over the preparation and issuance of the requisite disclosures / announcements by APPASIA to Bursa Malaysia Securities, they had failed to ensure such disclosures were made by the company;

(c)    Mohd Faidzal bin Ahmad Mahidin was the only executive director of APPASIA at the material time and was the principal person / director in charge on the preparation and issuance of the announcement in respect of the EGM on 28 May 2014 including liaising with Bursa Malaysia Securities on the same; and

(d)    The failure of APPASIA to adhere to the requests / instructions by Bursa Malaysia Securities pertaining to its disclosure obligations had resulted in the market trading in the dark / without the benefit of comprehensive and timely material information which was crucial towards facilitating informed investment decision. The failure to ensure strict adherence of the relevant disclosure obligations and directives had also resulted in the suspension on the trading of the securities of APPASIA from 29 May 2014 until 10 June 2014.

Bursa Malaysia Securities views the aforesaid contraventions seriously and has reminded APPASIA and its Board of Directors on their responsibility to maintain the appropriate standards of corporate responsibility and accountability to its shareholders and the investing public.