Bursa Malaysia Securities Berhad (Bursa Malaysia Securities) has publicly reprimanded Can-One Berhad (CANONE) and its seven directors for breaching the Bursa Malaysia Securities Main Market Listing Requirements (Main LR). In addition, the seven directors were fined a total of RM350,000.
CANONE was publicly reprimanded for breaching paragraph 9.16(1)(a) of the Main LR in respect of CANONE’s announcement dated 5 January 2012 which was issued by the Company in response to the unusual market activity query (UMA Query) from Bursa Malaysia Securities.
On 5 January 2012, the Federal Court had communicated its decision to allow the appeal by the Liquidator of Kian Joo Holdings Sdn Bhd (In Liquidation) (KJHSB) to proceed with the completion of the sale of 146,131,500 ordinary shares of RM0.25 each held by KJHSB in Kian Joo Can Factory Berhad (KIANJOO) at RM1.65 per share for an aggregate consideration of RM241,116,975 to Can-One International Sdn. Bhd., a wholly-owned subsidiary of CANONE (the Proposed Acquisition). On the same day, unusual market activity query (UMA Query) was issued by Bursa to CANONE arising from the increase in the price and volume traded in the shares of CANONE on that day. Despite CANONE and its directors being aware of the Federal Court’s decision, in response to the UMA query, the Company in its announcement dated 5 January 2012 had represented that:
- There was no corporate development relating to CANONE Group’s business and affairs that had not been previously announced that might account for the unusual market activity including those in the stage of negotiation/discussion;
- The Board of Directors was not aware of any rumour or report concerning the business and affairs of CANONE Group that might account for the unusual market activity; and
- CANONE was not aware of any other possible explanation to account for the unusual market activity.
As such, CANONE’s announcement dated 5 January 2012 (issued at 7.20 p.m.) was inaccurate, not factual and hence, in contravention of its disclosure obligation under the Listing Requirements.
The following directors of CANONE at the material time were found to have breached paragraph 16.13(b) of the Main LR for permitting knowingly, or where they had reasonable means of obtaining such knowledge, CANONE to release the inaccurate announcement and commit the above breach. The penalties imposed are as follows:
No | Name | Penalties |
---|---|---|
1 | William Maurice Samson Independent Non-Executive Chairman |
Public Reprimand & Fine of RM50,000 |
2 | Yeoh Jin Hoe Managing Director |
Public Reprimand & Fine of RM50,000 |
3 | Chee Khay Leong Executive Director |
Public Reprimand & Fine of RM50,000 |
4 | Ooi Teik Huat Executive Director |
Public Reprimand & Fine of RM50,000 |
5 | Yeoh Jin Beng Non-Independent Non-Executive Director |
Public Reprimand & Fine of RM50,000 |
6 | Razmi bin Alias Non-Independent Non-Executive Director |
Public Reprimand & Fine of RM50,000 |
7 | See Ewe Lin Independent Non-Executive Director |
Public Reprimand & Fine of RM50,000 |
Bursa Malaysia Securities views the contravention seriously in view of the importance of timely and accurate disclosure of material information to enable the market to be fully apprised of the state of affairs of the listed company to enable proper informed investment decision which is critical to preserve and sustain market integrity and investor confidence.
The finding of breach and imposition of the above penalties on CANONE 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 following:
- The materiality of the breach as follows:
- The Federal Court’s decision was material vis-à-vis CANONE particularly as it affected CANONE’s ability to proceed with the completion of the Proposed Acquisition which was material to investors and shareholders to facilitate informed investment decision as:-
- CANONE would be KIANJOO’s largest shareholder upon completion of the Proposed Acquisition;
- The Proposed Acquisition was expected to contribute positively to the earnings of the CANONE Group for the future financial years; and
- The purchase consideration of RM241 million for the Proposed Acquisition represented 184% of CANONE’s net assets as at 31 December 2007 and the balance purchase consideration of RM217 million to be paid for completion of the Proposed Acquisition in the light of the Federal Court’s decision represented 114% of CANONE’s net assets as at 31 December 2010;
- CANONE’s share price and volume traded as follows:
- There was high volume of CANONE’s shares traded on 5, 6 and 9 January 2012 i.e. from the day of the Federal Court’s decision until the day after CANONE’s announcement of the decision on 6 January 2012; and
- In aggregate, CANONE’s share price had increased significantly by 71.7% or RM0.76 from RM1.06 on 4 January 2012 to RM1.82 on 9 January 2012; and
- The importance of accurate and timely disclosures by listed companies to its shareholders and investors including a listed company’s response / announcement to an UMA Query which would be relied upon by shareholders and investors in making informed investment decision. In particular, with regards to CANONE, the negative implication and detrimental impact on the shareholders and investors who might have taken certain trading positions based on the announcement dated 5 January 2012 which was inaccurate and misleading.
- The Federal Court’s decision was material vis-à-vis CANONE particularly as it affected CANONE’s ability to proceed with the completion of the Proposed Acquisition which was material to investors and shareholders to facilitate informed investment decision as:-
- The knowledge, role, responsibilities and conduct of the directors including that:
- The directors were all aware of the Federal Court’s decision, the unusual market activity, the UMA Query from Bursa Malaysia Securities and CANONE’s response to the UMA Query vide announcement dated 5 January 2012; and
- As such, it was unreasonable and unacceptable for the directors to proceed to approve or authorised the release of the response / announcement dated 5 January 2012 which denied knowledge of any corporate development / rumour / possible explanation relating to the company’s business and affairs that may account for the unusual market activity.