Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded Nakamichi Corporation Berhad (NAKA or the Company) and its former executive director, Lo Man Heng for breaches of the Bursa Malaysia Securities Main Market Listing Requirements (Main LR). In addition, Lo Man Heng was fined a total of RM1,432,000 as at 8 October 2014.
NAKA was publicly reprimanded for failing to announce the following financial statements within the stipulated timeframes, in contravention of paragraphs 9.22(1) and 9.23(2) of the Main LR:-
No. |
Financial Statements |
Due Date of Announcement |
1. |
Second Quarterly Report for the financial period ended 30 June 2013 (2nd QR 2013) |
31 August 2013 |
2. |
Third Quarterly Report for the financial period ended 30 September 2013 (3rd QR 2013) |
30 November 2013 |
3. |
Fourth Quarterly Report for the financial period ended 31 December 2013 (4th QR 2013) |
28 February 2014 |
4. |
Annual Audited Accounts for the financial year ended 31 December 2013 (AAA 2013) |
30 April 2014 |
As at to-date, NAKA has yet to announce the above financial statements.
Lo Man Heng, the former executive director of NAKA was found to have breached paragraph 16.13(a) of the Main LR for causing NAKA’s failure to announce the 2nd QR 2013, 3rd QR 2013, 4th QR 2013 and AAA 2013 within the stipulated timeframes resulting in the breaches of paragraphs 9.22(1) and 9.23(2) of the Main LR. A public reprimand and fine of RM2,000 per market day for each delay of the financial statements (subject to a maximum fine of RM500,000 for each financial statement) until the relevant accounts, information / documents of the subsidiary, Tamabina Sdn. Bhd. (Tamabina) was furnished to NAKA to enable preparation and finalisation of the 2nd QR 2013 were imposed on Lo Man Heng. The fines imposed on Lo Man Heng computed as at 8 October 2014 was as follows:-
No. |
Breach |
Total fine imposed
|
1. |
Failure to announce the 2nd QR 2013 on or before 31 August 2013
|
RM500,000 |
2. |
Failure to announce the 3rd QR 2013 on or before 30 November 2013 |
RM418,000
|
3. |
Failure to announce the 4th QR 2013 on or before 28 February 2014 |
RM300,000
|
4. |
Failure to announce the AAA 2013 on or before 30 April 2014
|
RM214,000
|
|
|
RM1,432,000 |
Bursa Malaysia Securities views the contraventions seriously as the requirement for listed companies to ensure timely submission of financial statements was of paramount importance in ensuring a fair and orderly market of securities traded on Bursa Malaysia Securities.
BACKGROUND
The delay in submission of NAKA’s 2nd QR 2013, 3rd QR 2013, 4th QR 2013 and AAA 2013 was essentially due to the Company’s failure to obtain the management accounts of its 51% owned subsidiary, Tamabina as at 30 June 2013 for consolidation in view of the board / legal tussle with its Chief Executive Officer and director, Lo Man Heng. Lo Man Heng who was removed as a director of NAKA on 29 July 2013 was also a director of Tamabina, NAKA's only operating subsidiary which was contributing to the entire revenue of NAKA Group based on NAKA's latest financial statements for the financial period ended 31 March 2013. The management accounts of Tamabina were necessary towards the preparation and issuance of accurate consolidated financial statements of NAKA Group.
NAKA has an obligation to ensure timely submission of all its financial statements including establishing all the necessary controls and governance to enable it to adhere to its obligations under the Main LR at all material time.
Lo Man Heng has breached paragraph 16.13(a) of the Main LR for causing NAKA’s failure to announce the 2nd QR 2013, 3rd QR 2013, 4th QR 2013 and AAA 2013 within the stipulated timeframes. Lo Man Heng had not only failed to demonstrate efforts as a director of NAKA (prior to his removal on 29 July 2013) to ensure compliance by NAKA of its financial reporting obligations under the Main LR but had in fact showed blatant disregard of his duty as evident from his conduct / actions to frustrate NAKA's efforts to procure the relevant accounts of Tamabina.
The fact that the 2nd QR 2013 was due on 31 August 2013 after the removal of Lo Man Heng as a director of NAKA on 29 July 2013 did not absolve his breach of paragraph 16.13 of the Main LR particularly as his conduct / his failure to discharge his obligation as a director to NAKA was the cause/primary cause/reason for the failure on the part of NAKA to finalise the 2nd QR 2013 which further resulted in NAKA’s inability to prepare and announce the other outstanding financial statements.
The finding of breach and imposition of the above penalties on NAKA and Lo Man Heng were made pursuant to paragraph 16.19 of the Main LR upon completion of due process and after taking into consideration all the facts and circumstances of the matter including the following:-
- the aggravating conduct of Lo Man Heng; and
- the materiality / impact of the breach vis-à-vis the material price and volume movement of NAKA’s securities upon the announcement that the Company would not be able to submit its 2nd QR 2013 within the timeframe stipulated and the non-submission of the 2nd QR 2013 had led to the suspension in the trading of NAKA’s securities from 9 September 2013 pursuant to paragraph 9.28(5) of the Main LR.