Wednesday 24 Apr 2024
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KUALA LUMPUR (Nov 23): Bursa Malaysia Securities Bhd is seeking a court order to force Serba Dinamik Holdings Bhd to disclose the factual findings of the special independent review conducted by Ernst & Young Consulting Sdn Bhd (EY Consulting) on its financial accounts.

Bursa Securities has initiated a new legal action against Serba Dinamik by filing an originating summons at the Kuala Lumpur High Court against the company, it said in a statement.

This is "to order Serba Dinamik to make an immediate public announcement of the factual findings update on the special independent review as at Sept 30, 2021", Bursa Securities said.

The legal action was taken due to Serba Dinamik's "failure to comply" with the stock exchange's directive on Oct 22 for the disclosure. Shares of Serba Dinamik have since been suspended from trading as a result.

"The court application is brought, in discharge of the role and responsibilities of Bursa Securities in regulating the conduct and enforcing compliance with the continuing obligations of listed issuers pursuant to the Main Market Listing Requirements (MMLR).

"This is necessary for the purpose of upholding and upkeeping the integrity of the capital market, inter alia, maintaining a level playing field, advancing the 'blue sky' principle and facilitating equal access to material information affecting a listed issuer," Bursa Securities said.

"This is paramount to enable Bursa Securities, who is entrusted with its statutory duties, to ensure an orderly and fair market in the securities that are traded through its facilities and to take all appropriate actions to secure compliance with its rules," it added.

The originating summons was filed by Bursa Securities under Sections 360(1)(c)(i) and/or (ii) (J) and/or (K) and/or (M), 360(1)(4) and 360(13)(b) of the Capital Markets and Services Act 2007.

"Bursa Securities wishes to reiterate that a listed issuer must make immediate public disclosure of any material information under the MMLR and the factual findings update is material information in accordance with the MMLR.

"All investors must be well informed of and given equal access to material information in order to be able to trade on equal footing," Bursa Securities said.

The latest lawsuit by Bursa Securities added to the series of legal actions related to the alleged audit issues regarding Serba Dinamik's financial accounts for the 12-month period ended Dec 31, 2020 (FP20). Serba Dinamik is currently suing the stock exchange, its former auditor KPMG, which flagged the audit issues, and EY Consulting.

In June, Serba Dinamik was directed by Bursa Securities to appoint EY Consulting to undertake a special independent review to assess the veracity and accuracy of the matters raised by KPMG.

In May, KPMG raised several issues involving Serba Dinamik's FP20 accounts involving transactions, receivables, payables and materials on site amounting to over RM4.6 billion, and that it was not able to identify counterparties in the transactions.

The auditor alerted the Securities Commission Malaysia on the audit issues, prompting an investigation by the regulator, which it said last week was still ongoing.

A month later, Serba Dinamik sued KPMG, alleging that the external auditor had been negligent and breached its contractual and statutory duties.

When Bursa Securities ordered Serba Dinamik to reveal the findings on Oct 22, the oil and gas engineering firm said "there were no documents or copy of any documents that fit the description of 'factual findings update as at Sept 30, 2021' given to the independent non-executive directors as at Oct 22, 2021".

Serba Dinamik added that "any document or report from EY Consulting does not fall within paragraph 9.03 and 9.35A of the MMLR".

"EY Consulting is still in the midst of performing the special independent review," it added at the time.

Serba Dinamik soon proceeded to sue Bursa Securities for acting "in excess of power" when instructing the company to appoint an auditor to conduct the special independent review, and when instructing the company to disclose EY Consulting's update.

The company later also sued EY Consulting, and sought court declaration that EY Consulting misrepresented that it could be appointed to conduct the review. An initial attempt to block EY Consulting's release of the findings was, however, dismissed in court.

Edited ByKathy Fong
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