Public Reprimand: Breaches of Listing Rules
1. The SGX-ST Listings Disciplinary Committee (“LDC”) reprimands Stamford Corporate Services Pte Ltd, the Sponsor (“Sponsor”) of Magnus Energy Group Limited (the “Company”) for breaching Catalist Rule 226(2)(b) by:
i. failing to ensure that the Company disclosed the requisite information in accordance with Catalist Rule 1010, pertaining to the disposal of 9,000,000 shares in GCM Resources plc (“GCM”) through the Company’s wholly-owned subsidiary, MEG Global Ventures Pte Ltd (“MGV”) (the “Block Sale Agreement”). As the consideration under the Block Sale Agreement represented approximately 40.6% of the Company’s market capitalisation at the material time, the Block Sale Agreement constituted a discloseable transaction under Catalist Rule 1010, which requires immediate disclosure of specific information relating to the transaction, such as rationale for the Block Sale Agreement, material terms and conditions of the disposal and financial effects of the Block Sale Agreement; and
ii. failing to ensure that the Company disclosed the requisite information in accordance with Catalist Rule 1010, pertaining to a deed of assignment between Revenue Anchor Sdn Bhd (“Revenue Anchor”) and MGV (the “Deed”) pursuant to which MGV acquired a convertible loan from Revenue Anchor (the “Convertible Loan”), which allowed it to convert the Convertible Loan into shares in GCM. As the consideration for the Company’s acquisition of the Convertible Loan represented approximately 16.4% of the Company’s market capitalisation at the material time, the acquisition constituted a discloseable transaction under Catalist Rule 1010, which requires immediate disclosure of specific information relating to the transaction, such as material terms and conditions of the Deed and financial effects of the Deed.
2. The LDC also reprimands Lui On Chee Bernard, a registered professional (“RP”) with the Sponsor, for breaching Catalist Rule 229(2) by:
i. failing to exercise skill care and diligence when carrying out the Sponsor’s obligations under Catalist Rule 226(2)(b) to ensure that the Company disclosed the requisite information pertaining to the Block Sale Agreement in accordance with Catalist Rule 1010; and
ii. failing to exercise skill care and diligence when carrying out the Sponsor’s obligations under Catalist Rule 226(2)(b) to ensure that the Company disclosed the requisite information pertaining to the Deed in accordance with Catalist Rule 1010.
3. In addition, the LDC has required:
a. the Sponsor (which previously made an independent business decision to exit the sponsorship business) to provide a signed written undertaking to the Exchange not to re-enter the sponsorship business for a period of 15 months from 2 October 2024; and
b. the RP (who has de-registered as a registered professional in view of the Sponsor’s independent business decision to exit the sponsorship business) to provide a signed written undertaking to the Exchange not to undertake any activities of a registered professional and/or sponsor as set out under the Catalist Rules for a period of 15 months from 2 October 2024.
4. On 27 January 2022, the Exchange initiated disciplinary action SGX-LDC-2022-002 and proceeded with nine charges against the former CEO and four former directors of the Company (collectively, the “Former Relevant Persons”). The Exchange and the Former Relevant Persons entered into a resolution agreement wherein the latter accepted liability for seven of the nine charges against them and consented for the remaining two charges to be taken into consideration by the LDC for the purposes of determining the sanctions. On 13 March 2023, the LDC issued its grounds of decision for SGX-LDC-2022-002 and found that the charges were made out against the Former Relevant Persons.
5. With respect to the Block Sale Agreement, the LDC panel for SGX-LDC-2022-002 noted that the Company had failed to disclose the requisite information with respect to the disposal of 9,000,000 GCM shares under the Block Sale Agreement, in breach of Catalist Rule 1010. Further, the Company’s SGXNet announcements regarding the Block Sale Agreement on 8 March 2017, 21 June 2017 and 12 October 2018 were not factual and clear as to whether the 9,000,000 GCM shares were completely sold by the Company, in breach of Catalist Rule 703(4)(a).
6. With respect to the Deed, the LDC panel for SGX-LDC-2022-002 noted that the Company had failed to disclose the requisite information pertaining to the Deed, in breach of Catalist Rule 1010. Further, the Company had breached Catalist Rule 703(1)(a) by failing to disclose that GCM’s consent for the assignment of debt, a condition precedent for the Deed, was not obtained and that GCM lacked the requisite regulatory permits to commence coal production at its major asset in Bangladesh, which was a piece of material information necessary to be disclosed to avoid the establishment of a false market in the Company’s securities.
7. Regarding the breaches committed by the Company, the LDC panel for this case SGX-LDC-2023-004 noted that the Sponsor and the RP had relied heavily on the judgment and opinions of the management and directors of the Company in respect of its compliance with the Catalist Rules. While carrying out checks on the draft announcements prepared by the Company prior to their release, the Sponsor and the RP could have and should have identified the Company’s non-compliance with the Catalist Rules had they exercised due care and diligence. It should have been apparent that both transactions triggered the Company’s disclosure obligations under Chapter 10 of the Catalist Rules, but the Sponsor and the RP failed to recognise the same.
