KUALA LUMPUR (Sept 30): Bursa Malaysia Securities on Friday (Sept 30) publicly reprimanded and fined six directors of Brem Holding Bhd for failing to take reasonable care over advances totalling RM26.46 million made to a private company.

The directors had breached the Main Market Listing Requirements for failing to ensure that the advances from August 2014 to August 2019 were fair and reasonable to the company and not to the detriment of the company and its shareholders, Bursa said in a statement.

The exchange imposed a fine of RM200,000 on Brem’s managing director Tan Sri Khoo Chai Kaa, and RM50,000 each on executive directors Khoo Chai Thiam and Low Yew Hwa, independent director Wong Miow Song, and non-independent directors Khoo Hui Keam and Khoo Hui Giok.

While the developer was delisted on July 20 following its privatisation, Bursa said the penalty is applicable, as the directors committed the breach while the company was listed.

“The board of directors had failed to undertake proper deliberation and reasonable care and diligence to make an informed assessment and decision on the advances,” it added.

Bursa noted that Brem had in November 2014 acquired a 49% shareholding in GJH Prestige Sdn Bhd (GJHP) from GJH Holdings Sdn Bhd (GJHH).

Prior to that, Brem had made an advance totalling RM14,217,750 to GJHP. This amount represented 102.7% of Brem’s cash and bank balances of RM13,835,320 as at March 31, 2014.

Bursa noted that Brem continued to make advances, and GJHP had only repaid RM1.6 million to Brem in August 2017. The remaining advances amounting to RM24,863,650 remained unpaid, nearly eight years after Brem had first provided the advances in 2014.

“It was an understanding by all shareholders of GJHP that the repayment of the advances would be made once there was excess cash flow, which depended on the selling of properties and the success of the property development in the future,” the exchange said.

However, Bursa noted that there was no written agreement or documentation to formalise the arrangement or transaction between Brem and GJHP or GJHH and the advances, including the refund and or repayment of the advances, which was crucial to safeguard the interests of the company and its shareholders.

“There was also no proper documentation attesting the purpose and utilisation of the advances and Brem’s external auditors had highlighted that there was an internal control weakness, where there was no documentation on the approval in relation to the rationale or basis for advances and further investments in Brem’s associates and joint ventures,” it said.

Bursa said that managing director Khoo was imposed a higher penalty compared to the other directors, as he had a primary role or involvement in the negotiations and acquisition of GJHP, as well as the authorisation or approval of the disbursement of the advances to GJHP.