KUALA LUMPUR (July 15): Zetrix AI Bhd (KL:ZETRIX), formerly MyEG Services Bhd, said on Tuesday it will challenge Bursa Securities’ public reprimand for breaking Main Market listing rules.
“The company and its board of directors, after consultation with the company's lawyers, will be seeking a judicial review on the public reprimand,” it said in a filing with Bursa Securities. It added that further announcements would be made when necessary.
Bursa Securities on Monday issued a public reprimand to Zetrix AI and seven directors because announcements made on July 7, Sept 13, and Sept 14, 2023, were inaccurate, misleading and without a proper factual basis. Each director was also fined RM150,000.
Trading in Zetrix AI was halted for an hour before resuming at 10am on Tuesday. The stock fell as much as 7.1% to an intraday low of 91.5 sen within the first hour after resuming trading.
At the closing bell, the stock had pared some losses and ended at 93 sen, still a 5.58% or 5.5 sen drop compared to the previous day’s closing price of 98.5 sen.
The counter was the most actively traded stock on the local bourse, with 166.39 million shares changing hands, surpassing its 200-day average volume of 45.63 million shares.
Among the directors fined were group managing director Wong Thean Soon and executive chairman Datuk Dr Norraesah Mohamad, RM100,000 each for misleading disclosures and RM50,000 each for not complying with the directive.
The breaches were in relation to Zetrix’s July 7, 2023 announcement that it had received a letter from the Ministry of Home Affairs confirming approval from the Ministry of Finance to continue as the government's agent for collecting fees and providing online services for the Immigration Department.
Bursa Securities said the announcement was false and misleading because the letter did not support these claims. The company and its directors also failed to quickly correct this mistake as required by Bursa Securities. Instead, they kept repeating the false claims in announcements on Sept 13 and 14, even though news reports had raised concerns about the company illegally charging fees for worker permits despite its contract being suspended.
Bursa Securities also said the directors had failed in their duties despite knowing the discrepancies, stressing that accurate, timely disclosures are vital for market integrity and investor confidence.
Governance red flags, potential penalties cloud outlook
BIMB Securities in a research note said Bursa Securities’ action against Zetrix raises concerns about possible fines for unauthorised revenue collection between May 23, 2023, and Jan 31, 2024. This could cause more legal and financial problems. They also warned of serious management issues that could hurt investor confidence, damage Zetrix’s reputation, and limit its access to ESG funding, especially since it provides public services.
In September 2023, Zetrix denied illegally collecting fees for foreign worker permit renewals, saying it followed government rules and did not mislead anyone. This was in response to claims by Kota Melaka Member of Parliament Khoo Poay Tiong in the Dewan Rakyat that Zetrix (then known as MyEG) was still charging fees online despite its contract with the Immigration Department being suspended since February.
The research house in its note to clients revised Zetrix’s Governance (G) score from 1.4 to 1.1, lowering its overall ESG score to 3.6/5.0 from 3.9 previously.
All five analysts covering Zetrix AI, including BIMB, have a "buy" call on the stock. None have a "hold" or "sell" recommendation. The 12-month target price stands at RM1.42 a share, according to Bloomberg data.