In line with Bursa Malaysia's (Bursa) continuing commitment to improve effectiveness of its enforcement actions, we will be reporting on and publishing the enforcement actions taken against listed companies and directors for breaches of the Listing Requirements (LR) on the website of Bursa (LR Enforcement News). The LR Enforcement News contain information about the breach and circumstances of the breach, the decision and key factors considered by Bursa in dealing with these cases without identifying the directors and the listed companies involved as the information includes cases where the sanctions imposed were private in nature.
The LR Enforcement News set out a selection of cases premised on their features which carry wider regulatory implications in terms of, amongst others, the actions which Bursa expects to have been taken in the circumstances of these cases and are regarded to have "high educational" value as the information therein can serve to enhance the understanding of the listed companies and directors in particular as to their obligations under the LR. Subsequent updates of the LR Enforcement News will be posted on the website as and when there are key updates in the enforcement front.
We wish however to highlight that the details of these cases set out are intended to serve as information and guidance to listed companies and directors only and while the information provided will generally indicate the enforcement approach we take to particular types of non-compliance, this is not conclusive. We reiterate that Bursa retains the discretion to deal with any particular case as its sees fit based on the peculiar facts and circumstances of each case and hence, different outcomes may result from cases of non-compliance that may appear to be similar.
Bursa is empowered to take enforcement actions against listed companies and directors for contraventions of the LR. Where there is breach of the LR by the listed company and the breach is material (in terms of, amongst others, conduct and impact), enforcement may be taken under paragraph 16.13 of the LR against director(s) who have caused, aided, abetted or permitted the listed company to contravene the LR. Other than under paragraph 16.13 of the LR, enforcement may be taken against a director for contravention of specific obligation or requirement imposed under the LR on the director regardless of whether there is a breach by the listed company.
In determining the culpability of each director in the company under the LR, one of the factors taken into consideration is whether a director has discharged his duties owed to the company and in particular the duty of care, skill and diligence. In this regard, Bursa is guided by the legal duties imposed on directors under the Companies Act, 1965 (CA) including Section 132(1A) of the CA, the principles derived from decisions of the courts of law/legal cases and principles and best practices set out in the Corporate Governance Code. These include the following duties/principles:-
Directors are under a continuing obligation to ensure that they acquire and maintain sufficient knowledge and understanding of the company's business to enable them to properly discharge their duties as directors.
Directors may delegate and trust the competence and integrity of the delegate to a reasonable extent (unless they are aware of circumstances that could indicate otherwise). This however does not absolve the directors from a continuing care obligation of supervision in relation to those officers and employees to whom responsibilities have been delegated as well as a continuing obligation to ensure that the necessary control structures are put in place in the company to effect such supervision.
In this regard, in assessing a director's discharge of the obligations under the LR, records /evidence which would provide an insight as to the steps/actions taken by the director would be pertinent and considered as follows :-
Necessary steps were taken to ensure compliance/prevent contravention of the LR such as:
Ensure that company has established, maintained and implemented an effective governance system and processes including risk management and internal control systems.
Timely scheduled board and audit committee meetings and required sufficient notice and distribution of papers and information in advance of meetings.
Updated on company's business and operation, undertake proper inquiry and follow up on inquiry made.
Refrain from rushing into decision-making and ensure proper assessment and deliberation and to make informed decisions based on information provided/requested and necessary advices.
Ensure proper record of deliberations on key decisions including stating in the minutes dissenting views and maintenance of the said records (including financials and minutes of meetings) by the listed company.
Maintain records of steps taken to address a compliance issue (eg. to address compliance with obligation to issue financial statements).
Effective and expeditious steps were taken to resolve issues upon knowledge of the said issues to enable/ensure compliance.
Directors could get more insights and guidance as to how they can effectively discharge their role and duties under the LR from the Corporate Governance Guide "Towards Boardroom Excellence" issued by Bursa which is available on Bursa's website. In addition, whenever in doubt as to the application of the LR, listed companies and directors are encouraged to seek clarification from Bursa.
Inaccurate Disclosures / Announcements [As at 27 Feb 2013]
Provision of Financial Assistance [As at 27 Feb 2013
Failure to Comply with Bursa's Directives [As at 27 Feb 2013]