KUALA LUMPUR (Feb 14): Bursa Malaysia Securities has publicly reprimanded Waja Konsortium Bhd (KL:WAJA) and fined two of its directors RM100,000 each for the construction company's failure to disclose its financially distressed status on time.

Waja was found to have breached the ACE Market Listing Requirements (ACE LR) by delaying the announcement on the company triggering the prescribed criteria of Guidance Note 3 (GN3) following its quarterly report for the financial period ended June 30, 2023.

Despite releasing the quarterly results on Aug 24, 2023, Waja only made the announcement on its GN3 status one and a half months later on Oct 10, 2023, following an intervention by Bursa Malaysia.

"Bursa Malaysia Securities views the breach seriously as the first announcement was crucial to shareholders and investors as it was in relation to Waja’s financial condition and the consequences of being classified as a financially distressed company pursuant to GN3 include possible suspension and delisting if the company fails to regularise its financial condition within the timeframe prescribed under Rule 8.04 of the ACE LR and GN3," the regulator said in a filing on Friday.  

"Hence, timely disclosure of such information pertaining to classification/triggering of GN3 is important towards facilitating informed investment decisions," it added.

Bursa Malaysia held managing director Peh Lian Hwa and executive director Peh Jia Yau responsible for the oversight, noting their key roles in the company’s operations and compliance with ACE LR. Both were fined RM100,000 each.

The regulator emphasised that both directors should have acted on the red flags, including alerts from auditors and prior loss-making trends.

"The managing director and executive director had failed in the discharge of their duties to be more vigilant and undertake reasonable assessment and enquiry to ascertain whether Waja had triggered any of the prescribed criteria under GN3 and ensure compliance with the GN3 obligations," it said.

Waja triggered the GN3 criteria due to significant losses which exceeded its shareholder equity. According to its quarterly report, Waja incurred a RM44.03 million loss for the 18-month financial period ended June 30, 2023, exceeding its shareholder equity of RM37.20 million.

Additionally, the company's accumulated losses of RM68.59 million over the two consecutive financial years ended December 2021 and June 2023 also surpassed its shareholder equity.

Bursa Malaysia also noted that external auditors had raised concerns regarding Waja’s financial condition, which the directors failed to address adequately.

Waja shares closed unchanged at six sen on Friday, with a market capitalisation of RM66.9 million.