BURSA MALAYSIA SECURITIES PUBLICLY REPRIMANDS PERAK CORPORATION BERHAD AND ITS DIRECTORS AND FINES 7 DIRECTORS

KUALA LUMPUR, 6 MAY 2019 – Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded Perak Corporation Berhad (PRKCORP or the Company) and 7 of its former directors for breaches of the Bursa Malaysia Securities Main Market Listing Requirements (Main LR). In addition, the 7 former directors of PRKCORP were imposed total fines of RM237,500.

PRKCORP was publicly reprimanded for breach of:-

(1)         paragraph 9.23(1) of the Main LR for failing to issue its annual report that included the annual audited financial statements together with the auditors’ and directors’ reports for the financial year ended (FYE) 31 December 2016 (AR 2016) on or before 30 April 2017. The AR 2016 was only issued on 6 June 2017;

(2)         paragraph 2.23(1) of the Main LR for failing to comply with Bursa Malaysia Securities’ directive vide letters dated 28 April 2016 and 26 August 2016 for the Company to carry out a limited review on the Company’s quarterly reports for the financial period ended 30 September 2016 (QR3/2016), 31 December 2016 (QR4/2016), 31 March 2017 (QR1/2017) and 30 June 2017 (QR2/2017) and ensure the quarterly report announcements stated that it has been reviewed by the Company’s external auditors (the Limited Review Directive); and

(3)         paragraph 9.16(1)(a) of the Main LR for failing to ensure that the QR4/2016 announced on 28 February 2017 took into account the adjustments as stated in the Company’s announcement on 1 June 2017.

PRKCORP was also required to review and ensure the adequacy and effectiveness of its financial reporting function and carry out a limited review on its quarterly report submissions. The limited review must be performed by the company’s external auditors for four quarterly reports commencing no later from the quarterly report for the financial period ended 31 March 2019. In addition, PRKCORP must ensure all its directors and relevant personnel attend a training programme in relation to compliance with the Main LR pertaining to financial statements.

7 former directors of PRKCORP at the material time had breached paragraph 16.13(b) of the Main LR for permitting knowingly or where they had reasonable means of obtaining such knowledge, PRKCORP to commit the above breach of paragraph 9.23(1) and/or 2.23(1) of the Main LR and the following penalties were imposed on them:-

The finding of breach and imposition of the above penalties on PRKCORP 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/impact of the breaches to PRKCORP and shareholders/investors and the roles, responsibilities, knowledge and conduct of the directors.

Bursa Malaysia Securities views the contraventions seriously as the timely and accurate disclosure of material information and submission of financial statements are fundamental obligations of listed companies. These obligations are of paramount importance in ensuring a fair and orderly market for securities traded on Bursa Malaysia Securities and necessary to aid informed investment decisions. 

Bursa Malaysia Securities has also reminded PRKCORP and its board of directors of their responsibility to maintain the appropriate standards of corporate responsibility and accountability to its shareholders and the investing public.

BACKGROUND

Delay in issuance of the AR 2016

The delay was essentially due to the Company’s failure to:-

·             maintain/provide such accounting and other records that would sufficiently explain the transactions and financial position of the Company on a timely basis and/or in such manner as to enable them to be conveniently and properly audited by the external auditors;

·             establish a proper and effective/adequate finance function; and

·             monitor and address/resolve all issues with the external auditors expeditiously.

Dato’ Aminuddin who was the CEO and only Executive Director at the material time had failed in the discharge of his duties particularly to exercise reasonable supervision over the finance function/management and to take reasonable efforts to enquire, follow up, monitor, supervise and address/resolve the issues with the external auditors expeditiously to enable timely issuance of the AR 2016.

Non-Compliance with Bursa Malaysia Securities’ Limited Review Directive

In contravention of the Limited Review Directive, the Company and directors had approved, authorized, allowed and/or acquiesced to:-

·        the announcement of the QR3/2016, QR4/2016, QR1/2017 and QR2/2017 (collectively referred to as the 4 QRs) without prior completion of the limited review; and

·        the external auditors to complete and issue the limited review report for both the QR3/2016 and QR4/2016 together with the audit report for the annual audited financial statement for the FYE 31 December 2016 (AFS 2016).

The directors had failed to discharge their supervisory duty over management where they had merely relied on the management and failed to demonstrate reasonable steps taken to monitor, follow-up and enquire on the status of the completion of the limited reviews. The directors’ mere reliance on the management was unacceptable particularly in view of the repeated failures by the management to ensure completion of the limited review for the 4 QRs and Bursa Malaysia Securities had in fact initiated enquiries into the delay in completion of the limited review for the QR3/2016 and QR4/2016.  Further, there was no clear evidence/the Company had failed to appoint external auditors to carry out a limited review on the QR4/2016, QR1/2017 and QR2/2017.

In addition, Dato’ Aminuddin who was in charge of overseeing compliance with the Limited Review Directive had failed to resolve the issues with the external auditors to ensure completion of the limited review for the QR3/2016 and ensure the appointment of the external auditors to carry out the limited review for the QR4/2016, QR1/2017 and QR2/2017.

Deviation between the Unaudited and Audited Results for the FYE 31 December 2016

PRKCORP had reported an unaudited loss after tax and minority interest of RM10,861,000 in QR4/2016 announced on 28 February 2017 as compared to an audited loss after tax and minority interest of RM15,580,000 in the AFS 2016 announced on 1 June 2017. The difference of RM4.719 million between the QR4/2016 and the AFS 2016 represented a variance of 43%.

The deviation was mainly due to the accounting effects on the change from an associate to subsidiary, impairment loss on investment in and advance to an associate and additional prior years’ tax (the Adjustments). In this regard, the circumstances giving rise to the Adjustments were in existence prior to the announcement of the QR4/2016 and there was no reasonable justification for failing to take into account the Adjustments in the QR4/2016.