BURSA MALAYSIA SECURITIES PUBLICLY REPRIMANDS XINGQUAN INTERNATIONAL SPORTS HOLDINGS LIMITED AND ITS DIRECTORS AND FINES 4 DIRECTORS
| XINGQUAN INTERNATIONAL SPORTS HOLDINGS LIMITED |
Bursa Malaysia Securities Berhad (635998-W) (“Bursa Malaysia Securities”) has publicly reprimanded Xingquan International Sports Holdings Limited (“XINQUAN” or “the Company”) and its 4 directors for breaches of the Bursa Malaysia Securities Main Market Listing Requirements (“Main LR”). In addition, the 4 directors of XINQUAN were imposed total fines of RM3,026,900 as at to-date.
XINQUAN was publicly reprimanded for committing the following breaches of the Main LR (“XINQUAN’s Breaches”):-
|
No. |
Breach |
|---|---|
|
1. |
Financial Reporting Breaches
XINQUAN had breached the following provisions of the Main LR:-
(The QR March 2017, QR June 2017, AR 2017, QR Sept 2017, QR Dec 2017, QR March 2018 and QR June 2018 are collectively referred to as “the Outstanding Financial Statements” where applicable.)
As at date hereof, the Company has yet to announce/issue the Outstanding Financial Statements.
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2. |
Corporate Governance Breaches
XINQUAN had breached the following provisions of the Main LR with regard to the composition of its Board of Directors (“BOD”) and Audit Committee (“AC”):-
As at date hereof, the Company has yet to comply with the above requirements.
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|
3. |
Foreign Listing Requirements Breaches
XINQUAN had breached the following provisions of the Main LR with regard to the requirements for foreign listing:-
As at date hereof, the Company has yet to comply with the above requirements.
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4. |
Non-Compliance with Bursa Malaysia Securities’ Instruction/Directive
XINQUAN had breached paragraph 2.23(1) of the Main LR for failing to comply with the following instruction/directive of Bursa Malaysia Securities:-
(collectively referred to as “Bursa Malaysia Securities’ Instruction/Directive”).
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5. |
Disclosure Breaches
XINQUAN had breached the following disclosure requirements under the Main LR:- (a) paragraph 9.28(3) of the Main LR for failing to make immediate announcements on the delay in the issuance of the Outstanding Financial Statements not later than 3 market days before the expiry of the stipulated timeframes under paragraphs 9.22(1) and 9.23(1) of the Main LR. Other than the announcement on 1 June 2017 that the Company was unable to submit the QR March 2017 by 31 May 2017, the Company did not announce the delay in the issuance of the other Outstanding Financial Statements; and (b) paragraph 9.28(3A) of the Main LR for failing to make the monthly announcements on the status of the issuance of the Outstanding Financial Statements. The Company had only announced the status of the issuance of the outstanding QR March 2017 on 30 June 2017 and 31 July 2017. Thereafter, there was no announcement on the status of the issuance of the outstanding QR March 2017 and the other Outstanding Financial Statements by the Company.
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The following 4 directors of XINQUAN were imposed the following penalties for breach of paragraph 16.13(b) of the Main LR where they had permitted XINQUAN to commit all or some of XINQUAN’s Breaches:-
|
No. |
Director
|
Breach |
Penalties Imposed |
|---|---|---|---|
|
1.
|
Dato’ Wu Qingquan (“Dato’ Wu”) Executive Chairman and Chief Executive Officer (“CEO”) (Appointed on 6 February 2009)
|
paragraph 16.13(b) of the Main LR for permitting XINQUAN to commit the Financial Reporting Breaches
|
Public Reprimand and total fines of RM1,082,500* |
|
paragraph 16.13(b) of the Main LR for permitting XINQUAN to commit the Corporate Governance Breaches, the Foreign Listing Requirements Breaches, the Non-Compliance with Bursa Malaysia Securities’ Instruction/Directive and the Disclosure Breaches
|
Public Reprimand and Fine of RM1,000,000 |
||
|
2.
|
Wu Lianfa Executive Director (Appointed on 6 February 2009) |
paragraph 16.13(b) of the Main LR for permitting XINQUAN to commit the Financial Reporting Breaches |
Public Reprimand and total fines of RM427,400* |
|
paragraph 16.13(b) of the Main LR for permitting XINQUAN to commit the Corporate Governance Breaches, the Foreign Listing Requirements Breaches, the Non-Compliance with Bursa Malaysia Securities’ Instruction/Directive and the Disclosure Breaches
|
Public Reprimand and Fine of RM500,000 |
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3. |
Zhou Liyi Senior Independent Non-Executive Director Audit Committee member (Appointed on 1 June 2009 and resigned on 3 August 2017)
|
paragraph 16.13(b) of the Main LR for permitting XINQUAN’s failure to announce the QR March 2017 on or before 31 May 2017
|
Public Reprimand and total fines of RM8,800
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4. |
Dato’ Haji Ramly Independent Non-Executive Director Audit Committee member (Appointed on 5 June 2015 and resigned on 31 July 2017)
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paragraph 16.13(b) of the Main LR for permitting XINQUAN’s failure to announce the QR March 2017 on or before 31 May 2017
|
Public Reprimand and total fines of RM8,200
|
[*A fine of RM500 per market day was imposed on Dato’ Wu and a fine of RM200 per market day was imposed on Wu Lianfa for each delay of the financial statements (subject to a maximum fine of RM1,000,000 for each financial statement) until the financial statements are issued/announced. The fines imposed on Dato’ Wu and Wu Lianfa were computed as at 29 March 2019.]
The finding of breach and imposition of the above penalties on XINQUAN 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 XINQUAN 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 XINQUAN and its BOD of their responsibility to maintain the appropriate standards of corporate responsibility and accountability to its shareholders and the investing public.
XINQUAN had also committed breaches under the securities laws where actions had been taken by the Securities Commission (“SC”). The media release on actions taken by the SC is accessible here and here.
BACKGROUND
The Company had wholly disregarded and blatantly failed to comply with the Main LR vis-à-vis XINQUAN’s Breaches which have yet to be rectified despite clear obligations under the Main LR. In particular, the delay in announcing/issuing the Outstanding Financial Statements was due to the Company’s failure to:-
- fill the vacancy of the Chief Financial Officer (“CFO”) and the AC Chairman expeditiously to ensure the timely announcement/issuance of the Outstanding Financial Statements; and
- settle the overdue outstanding audit fees to its external auditors to enable commencement of the audit for the FYE 30 June 2017.
In this regard, the Company must maintain the resources necessary to discharge its obligation under the Main LR and the responsibility lies on the BOD to approve and announce/issue the financial statements.
Dato’ Wu, the Executive Chairman and CEO responsible for overseeing and monitoring the Group’s general corporate affairs and to whom the CFO reported to and Wu Lianfa, the Executive Director assisting Dato’ Wu, had blatantly disregarded and/or abdicated their responsibilities to ensure the Company’s compliance with its obligations under the Main LR vis-à-vis XINQUAN’s Breaches. In particular:-
- there was inaction and no evidence that they had taken reasonable and expeditious actions including to source/fill the vacancy of the CFO, independent director(s), AC members and company secretary/agent as well as to settle the overdue outstanding audit fees to the external auditors; and
- they had ignored compliance with Bursa Malaysia Securities’ Instruction/Directive.
Dato’ Haji Ramly and Zhou Liyi, being the Independent Non-Executive Directors and members of the AC who had the specific function under the Main LR to, amongst others, review the financial statements of the Company, had failed to discharge their obligations under the Main LR to ensure the Company’s timely announcement of the QR March 2017 prior to their resignation on 31 July 2017 and 3 August 2017 respectively. In particular, they had failed to demonstrate reasonable steps taken to follow-up, monitor and supervise the management to ensure timely announcement of the QR March 2017 and had merely relied on the executive directors and/or management on the preparation and announcement of the QR March 2017.
The Company and the directors did not respond to/provide any explanations to the numerous queries of Bursa Malaysia Securities on XINQUAN’s Breaches and/or the actions taken by the directors in the discharge of their duties to ensure compliance with the Main LR vis-à-vis XINQUAN’s Breaches.
Announcement Info
| Company Name | XINGQUAN INTERNATIONAL SPORTS HOLDINGS LIMITED |
| Stock Name | XINQUAN |
| Date Announced | 29 Mar 2019 |
| Category | Listing Circular |
| Reference Number | ILC-29032019-00007 |