KUALA LUMPUR (June 29): Bursa Malaysia Securities Bhd has publicly reprimanded Khee San Bhd and nine of the candy maker’s directors for its delayed announcement of default in payments, inaccurate solvency declarations, as well as breaches in regards to corporate governance.
In addition to the bourse operator’s public reprimand, a total of RM885,000 in fines have been imposed on the nine directors, Bursa Malaysia said.
In a statement, Bursa Malaysia said the company breached Paragraph 9.19A(1)(a) of the Main Market Listing Requirements (Main LR), as the latter failed to make an immediate announcement on its defaults in payment to various credit facilities.
Khee San only completely disclosed its default in payment to creditors on July 6, 2020 — a year after the first default in payment which occurred around April 16, 2019 to July 30, 2019, it added.
“The total amount outstanding of the defaulted credit facilities of RM73.16 million as at June 30, 2019, represented 55.38% of Khee San’s net assets and Khee San had only made a complete disclosure of the defaults in payment to all creditor banks on July 6, 2020, after a delay of more than one year,” it said.
While Khee San had shared its plan to restructure and engagement with banks, Bursa Malaysia said it has clearly clarified that a listed issuer must make an immediate announcement of default in payment, even if negotiations are pending.
“The numerous delays in making an immediate announcement of the defaults displayed blatant disregard of the Main LR and reflected poor governance of the company,” it added.
Khee San also breached Paragraphs 9.35A(1)(a) and (b), as well as 2.18(1)(a) and (c) of the Main LR for its failure to ensure the representation that the company was solvent were accurate, not false or misleading, Bursa Malaysia said.
Despite Khee San issuing five announcements since Aug 8, 2019, which represented that the company was solvent, the company had triggered Practice Note 17 (PN17) on July 10, 2020, after being unable to provide a solvency declaration to the bourse operator.
There was no proper basis for the solvency declaration by Khee San, which was mainly predicated on a proposed and preliminary corporate exercise, Bursa Malaysia said.
Further, Khee San had breached Paragraph 9.16(1)(a) and (b) of the Main LR for failure to ensure that the designation of Datuk Seri Liew Yew Chung as the company’s non-executive chairman in its 2017 and 2018 annual reports was accurate and not misleading.
Khee San had on Jan 5, 2017 announced Liew’s resignation as CEO of the company, and represented him as non-executive chairman till his subsequent resignation on Sept 13, 2019.
Despite this, Liew continued to perform a fundamental executive role, as well as had full decision-making authority in its operations, Bursa Malaysia said.
Furthermore, the bourse operator also noted that Khee San breached Paragraph 15.09(1)(b) of the Main LR, as Liew was a member of its audit committee from Jan 6, 2017 till Sept 13, 2018, despite performing the executive role.
In view of Liew’s subsequent disqualification as a committee member based on the above, Khee San also breached 15.09(1)(a) of the Main LR — in ensuring that its audit committee had no fewer than three members.
“The directors disregarded their duties by permitting the company to misrepresent and mislead on Liew’s roles, which was fundamental to investors to make informed [an] investment decision in approving the [annual reports],” Bursa Malaysia said.
In September 2020, Khee San said its investigations into its financing drawdown revealed fictitious sale and purchase invoices, and discrepancies in invoices submitted for its credit facility applications signed by Liew.
In November 2020, Khee San filed a police report against Liew and undisclosed concerted parties, for alleged fraudulent schemes including forgery, misappropriation and embezzlement of the company's funds for their personal use.
Shares in Khee San last traded at 9.5 sen, giving it a market capitalisation of RM13.04 million.