KUALA LUMPUR (Dec 20): Auditing firm HLB Ler Lum Chew said on Friday that a special notice for a resolution to remove the firm as the external auditor of Smile-Link Healthcare Global Bhd (KL:SMILE) had been immediately retracted, and that is the reason why the firm had not made any written representation on the matter.
HLB Ler Lum Chew was responding to an announcement by Smile-Link on Thursday that its major shareholder Smile Link Resources (M) Sdn Bhd, holding 46.36% in the company, had proposed to remove the auditing firm, following significant delays in the company's financial reporting, which have led to trading suspensions and regulatory scrutiny.
Smile-Link went on to claim, in its filing with Bursa Malaysia, that HLB Ler Lum Chew did not make any representation regarding the proposed removal.
In a letter to Smile-Link on Friday sighted by The Edge, HLB Ler Lum Chew said it had received the special notice on Dec 12, but this was immediately retracted following another email from the company secretary on the same day.
"As at to-date, we have not received from the company and/or the board of directors and/or the company secretary any special notice for the resolution to remove us as the auditor," the letter read.
"As there was no subsisting notice for the resolution to remove us as the auditor under Section 277(2) of the [Companies] Act at all material times, therefore no written representation was made by us under Section 277(3) of the Act," it added.
Smile-Link, in its filing, also claimed that HLB Ler Lum Chew had withheld the release of its financial results due to an outstanding audit fee of RM180,000, which Smile-Link was unable to settle.
Responding to this claim, HLB Ler Lum Chew said in the letter on Friday that it will issue a legal notice in relation to the "untrue" statement.
"We therefore demand that you immediately make the necessary retraction and correction," the letter read. "We have appointed solicitors to take the appropriate legal action against you for the impugned statement."
Smile-Link had failed to submit its annual audited financial statements for the period ended June 30, 2024, by the Oct 30 deadline.
The company attributed the delay to an outstanding audit fee of RM180,000, which it was unable to settle, resulting in the auditor withholding the release of the financial results.
The company, however, did not elaborate on the reason for not being able to settle the outstanding audit fee.
Consequently, Bursa Malaysia suspended the trading of Smile-Link's shares on Nov 8, due to the company's non-compliance with financial reporting requirements.
The suspension will remain in effect until the necessary statements are submitted, with the exchange warning of potential delisting if compliance is not achieved within six months.
Prior to the suspension, Smile-Link last traded at 13 sen, giving it a market capitalisation of RM32.8 million.