BURSA MALAYSIA SECURITIES PUBLICLY REPRIMANDS AND/OR FINES BERTAM ALLIANCE BERHAD AND 7 DIRECTORS

Bursa Malaysia Securities Berhad [Registration No.: 200301033577 (635998-W)] (Bursa Malaysia Securities) has publicly reprimanded Bertam Alliance Berhad (BERTAM) and 7 of its directors for breaches of the Bursa Malaysia Securities Main Market Listing Requirements (Main LR).  In addition, 2 directors of BERTAM were imposed total fines of RM75,000.

BERTAM was publicly reprimanded for committing the following breaches (Breaches):-

(1)   Paragraph 10.06(1) of the Main LR for failing to make an immediate announcement of:-

• the transaction entered between BERTAM’s wholly owned subsidiary, Sepakat Heights Sdn Bhd (SHSB) with Jumat Bin Laiyo (Jumat) vide the Joint Venture Agreement (JVA) dated 8 January 2015 and Supplemental JVA (SJVA) dated 23 January 2015 in respect of the Lot A Lands (Lot A Lands Transaction) where the percentage ratio of the transaction was 26.59%;
• the transaction entered between BERTAM’s wholly owned subsidiary, Sunrise Avenue Sdn Bhd (SASB) with Rosalia Anthony (Rosalia) vide the JVA dated 21 September 2015 and SJVA dated 30 September 2015 in respect of the Lot B1-B6 Lands (Lot B1-B6 Lands Transaction) where the percentage ratio of the transaction was 9.79%; and
• the transactions entered between SASB with Rosalia vide the JVA dated 1 October 2015 in respect of the Lot B7 Land (Lot B7 Land Transaction) and the JVAs dated 29 February 2016 in respect of the Lot C2 Land, Lot C5(a) Land and Lot C5(b) Land (Lot C Lands Transaction) where the percentage ratio of the transactions upon aggregation was 7.88%.

The Lot A Lands, Lot B1-B6 Lands, Lot B7 Land, Lot C2 Land, Lot C5(a) Land and Lot C5(b) Land (collectively “the Lands”) comprised of 26 adjoining/contiguous vacant agricultural lands all located Off Jalan Pintas-Donggongon, Kepayan, District of Penampang, Sabah measuring an aggregate of 34.275 acres.

BERTAM only announced the Lot A Lands Transaction and Lot B1-B6 Lands Transaction on 22 May 2017 (with amended announcements on 24 May 2017) while the Lot B7 Land Transaction and Lot C Lands Transaction were only announced on 20 November 2017.

(2)   Paragraph 10.07(1) of the Main LR read together with paragraph 8.29(1) of the Main LR for failing to obtain prior shareholders’ approval in respect of the Lot A Lands Transaction where the percentage ratio of the transaction was 26.59%.

BERTAM had only obtained shareholders’ ratification of the Lot A Lands Transaction on 16 November 2018.

7 directors of BERTAM were publicly reprimanded and/or fined or breach of paragraph 16.13(b) of the Main LR for permitting knowingly or where they had reasonable means of obtaining such knowledge, BERTAM to commit the Breaches, as follows:

The finding of breach and imposition of the above penalties on BERTAM and its directors were made pursuant to paragraph 16.19 of the Main LR upon completion of due process and after taking into consideration all facts and circumstances of the matter including the materiality of the breaches; impact of the breaches to BERTAM and shareholders/investors and the roles, responsibilities and conduct of the directors.

Bursa Malaysia Securities views the contraventions seriously as the requirements to make timely announcement and obtain prior shareholders’ approval of material transactions are fundamental to aid informed investment decisions and protect shareholders’ interest.

BACKGROUND

The transactions were essentially an acquisition and/or option to acquire the Lands by SHSB and SASB respectively conditional upon/after approval of the application for amalgamation, subdivision and conversion of the land titles from Native Titles into Country Lease or Town Lease. There was no reasonable justification for the failure of BERTAM and the directors to ensure compliance with paragraphs 10.06(1) and 10.07(1) of the Main LR in respect of the transactions particularly where -

• the Lot A Lands had been transferred to Jumat from 18 August 2015 - 30 June 2016 while the Lot B1-B6 Lands, Lot B7 Land, Lot C2 Land and Lot C5(a) Land had been transferred to Rosalia on 16 October 2015, 1 April 2016, 30 August 2017 and 16 January 2017 respectively; 
• SHSB and SASB had paid the full consideration for the Lot A Lands, Lot B1-B6 Lands, Lot B7 Land, Lot C2 Land and Lot C5(a) Land on 23 June 2016, 1 October 2015, 28 March 2016 and 24 October 2016; and
• the Land & Survey Department had approved Jumat’s application for the amalgamation, subdivision and conversion of the land titles in Lot A Lands from Native Title to Country Lease on 2 December 2016 and the conversion premium was fully settled on 7 December 2016.

Lim Nyuk Foh and Yap Yee May were the executive directors primarily involved in and responsible for/in charge of the negotiation, review and execution of the transactions.  They had blatantly failed to discharge their duties to ensure BERTAM’s compliance with paragraphs 10.06(1) and 10.07(1) of the Main LR and failed to escalate the transactions for the Board’s deliberation and prior approval despite the materiality of the transactions. Further, after BERTAM’s announcements of the proposed ratification of the Lot A Lands Transaction and Lot B1-B6 Lands Transaction on 22 May 2017 (with amended announcements on 24 May 2017), Lim Nyuk Foh had failed to demonstrate that reasonable steps were taken to procure the shareholders’ ratification of the Lot A Lands Transaction expeditiously.

Lee Keh Ting was an executive director of BERTAM (appointed on 8 May 2015 after the Lot A Lands Transaction) who was informed of the transactions during the internal management meetings from 17 April 2015 to 16 November 2016 while Datuk Mohamed Arsad Bin Sehan, Lim Shaw Keong @ Alfred Lim, Chiew Boon Chin and Koo Jenn Man were the Non-Executive Directors and/or members of the Audit Committee who played a crucial role in the corporate governance of BERTAM to protect shareholders’ interest.  They were informed of the transactions and the obligations under the Main LR on 25 February 2016.  However, they had merely relied on the management and failed to discharge their duty particularly to undertake reasonable enquiries and assessment to ascertain the necessity to announce the transactions and obtain shareholders’ approval/ratification for the Lot A Lands Transaction.  In addition, despite their concurrence with the management that the transactions required immediate announcement and the Lot A Lands Transaction required shareholders’ approval, they did not object when Lim Nyuk Foh had at the Board of Directors meeting on 26 May 2016 decided to withhold the announcement.