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BURSA MALAYSIA PUBLICLY REPRIMANDS ECOFUTURE BERHAD AND FIVE DIRECTORS AND FINES MANAGING DIRECTOR RM100,000

Bursa Malaysia Securities Berhad (Bursa Securities) has publicly reprimanded Ecofuture Berhad (EFUTURE) and five of its directors for breaches of the Listing Requirements of Bursa Malaysia Securities Berhad for the Mesdaq Market (MMLR). The Managing Director of EFUTURE was also fined RM100,000.

EFUTURE had breached Rule 9.03(1) of the MMLR for failing to make an immediate announcement on the Lease Agreement dated 17 April 2009 between EFUTURE’s wholly-owned subsidiary, Stable-Win Sdn. Bhd. and a third party mill operator in respect of EFUTURE’s only palm oil mill, commencing from 1 May 2009.

The lease was material as it contained information which concerned EFUTURE’s business, financial condition and prospects. The lease resulted in the cessation of EFUTURE’s milling operations which was EFUTURE’s major business, contributing 97% of EFUTURE Group’s revenue based on the annual audited accounts for the financial year ended 31 December 2008 (AAA 2008) and hence, triggered the criterion under paragraph 2.1(i) of Guidance Note 3 (GN3). EFUTURE had also failed to make the First Announcement pursuant to GN3 on an immediate basis in contravention of Rule 8.16(2)(b) of the MMLR read together with paragraph 3.1(a) of GN3.

The lease was only disclosed in the AAA 2008 and quarterly report for the financial period ended 31 March 2009 announced on 30 April 2009 and 26 May 2009 respectively and EFUTURE only made the First Announcement on 13 July 2010.

Notwithstanding that EFUTURE had been de-listed on 17 October 2011, the above breaches were committed while EFUTURE was listed on the Official List of Bursa Securities.

Five directors of EFUTURE were publicly reprimanded for breaching Rule 16.11(b) of the MMLR for permitting knowingly, or where they had reasonable means of obtaining such knowledge, EFUTURE to commit the above breaches. The details of the penalties imposed on them are as follows:-:

Bursa Securities views the above contraventions seriously as timely disclosure of material information is one of the fundamental obligations of listed companies to preserve and sustain market integrity and investor confidence.

The finding of breach and imposition of the above penalties on EFUTURE and its directors were made pursuant to Rule 16.17(1) of the MMLR upon completion of due process and after taking into consideration all facts and circumstances of the matter including the materiality of the breach and in relation to the directors, their knowledge of the lease and cessation of the milling operations and their roles and responsibilities in the Company.

The directors of EFUTURE had failed to take reasonable efforts to discharge their duties to ascertain, undertake reasonable assessment and ensure that EFUTURE made the First Announcement pursuant to GN3 on an immediate basis particularly during:-

1. The Board of Directors’ meeting on 25 April 2009 where, in reviewing the Lease Agreement dated 17 April 2009, the directors had failed to properly assess the implications of the leasing of EFUTURE’s only palm oil mill which contributed more than 70% of EFUTURE’s revenue since its listing on 11 January 2005 vis-à-vis the MMLR;
2. The Board of Directors’ meeting on 26 November 2009 where, in approving EFUTURE’s quarterly report for the financial period ended 30 September 2009, the board noted that the significant decrease of 91% in the Group’s revenue of RM1.8 million for the quarter ended 30 September 2009 as compared to RM19.3 million in the preceding year’s corresponding quarter was due to the cessation of the palm oil processing since May 2009. However, the directors had failed to undertake proper assessment of the financial condition and operations of EFUTURE vis-à-vis compliance with the MMLR and GN3; and
3. The Board of Directors’ meeting on 16 January 2010 where the board had specifically undertaken an assessment whether EFUTURE had triggered any of the prescribed criteria under GN3.It was not acceptable for the directors to focus mainly on the financial criteria as the prescribed criteria under GN3 was not limited to financial condition but also included inadequate level of operations. Their mere reliance on the confirmation, information and documents provided by management and the company secretary was also unacceptable and unreasonable in the discharge of their obligations.