source http://www.bursamalaysia.com/market/listed-companies/company-announcements/6152421

BURSA MALAYSIA SECURITIES PUBLICLY REPRIMANDS WINTONI GROUP BERHAD (IN LIQUIDATION), THE LIQUIDATOR AND FINES 7 FORMER DIRECTORS A TOTAL OF RM165,400

Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded Wintoni Group Berhad (In Liquidation) (WINTONI or the Company), 7 of its former directors and the Liquidator of WINTONI for breaches of the Bursa Malaysia Securities Ace Market Listing Requirements (ACE LR).  In addition, the 7 former directors of WINTONI were imposed total fines of RM165,400.

(A) WINTONI was publicly reprimanded for committing the following breaches:-

(B) The following penalties were imposed on 7 former directors of WINTONI for breach of Rule 16.13 of the ACE LR where they had caused and permitted WINTONI’s failure to announce/issue the QR3 2015, AR 2015 and/or AR 2016:-

(C) The Liquidator, Datuk Mohd Afrizan bin Dato’ Husain was publicly reprimanded for breach of Rules 2.22(3)(a) and (b) of the ACE LR where he had caused and permitted WINTONI’s failure to announce/issue the AR 2016, QR3 2017, QR4 2017, AR 2017, QR1 2018 and QR2 2018 which have yet to be announced/issued as at to-date.   In addition, the Liquidator was directed to make the necessary arrangement including working with and/or delegating the function to the directors of WINTONI to ensure announcement/issuance of the AR 2016, QR3 2017, QR4 2017, AR 2017, QR1 2018 and QR2 2018 and any other outstanding financial statements within 3 months.

The finding of breach and imposition of the above penalties on WINTONI, its directors and the Liquidator were made pursuant to Rule 16.19 of the ACE 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 WINTONI and shareholders/investors and the roles, responsibilities, knowledge and conduct of the directors and the Liquidator.

Bursa Malaysia Securities views the contraventions seriously as the timely and accurate submission of financial statements and the corporate governance requirements on composition of the BOD, AC and internal audit function are fundamental obligations of listed companies and of paramount importance in ensuring a fair and orderly market for securities traded on Bursa Malaysia Securities and necessary to aid informed investment decisions. 

BACKGROUND

A.  Enforcement Actions against WINTONI and its Directors

(1) Delay in Announcement of the QR3 2015

The delay was essentially caused by the failure of the Company and directors to undertake proper and reasonable assessment to ascertain the impairment of an asset.  There was no reasonable justification for the failure to provide for a full impairment of the asset particularly as:–

• the asset had been stolen and could not be restored due to the break-in incidents at the Company’s premises on 12 September 2015 and 12 November 2015 (i.e. prior to the due date of the QR3 2015 on 30 November 2015); and
• the directors were informed during the AC and BOD meetings on 25 November 2015 that the asset was worthless, could not be used to generate revenue, was not usable and the Company’s plan to commercialize/market the asset the asset did not materialize.

Further, having decided to engage an independent review to substantiate the impairment on 25 November 2015, the Company and directors had failed to take reasonable efforts to ensure the independent review was finalized expeditiously for the timely announcement of the QR3 2015. 

When the Company subsequently announced the QR3 2015 on 26 February 2016, it had fully written off the asset amounting to RM32 million without any change of circumstances and without completion of the independent review which was terminated on 27 January 2016.  Upon announcement of the QR3 2015 on 26 February 2016, the Company had triggered the prescribed criteria in paragraph 3.1(a) of Guidance Note 3 where the shareholders’ equity on a consolidated basis was 25% or less of the Company’s issued and paid-up capital.

(2) Delay in Issuance of the AR 2015 and AR 2016

The delays were essentially due to the purported lack of funds towards payment of the outstanding audit fees to enable commencement of the audit for FYE 31 December 2015 and/or appointment of new external auditors for FYE 31 December 2016.

In this regard, the directors were not absolved from their duty to ensure the Company’s compliance with the ACE LR particularly as they had failed to take any action including to enquire, follow up, monitor and supervise the management with regard to the preparation of the AR 2015 and AR 2016 and address/resolve the issues (including the purported lack of funds) expeditiously to enable timely issuance of the AR 2015 and AR 2016 as follows:-   

(a) In respect of the AR 2015:–

• the directors had failed to take any action including deliberation/discussion and making enquiries on the audit of the financial statements for the FYE 31 December 2015 and the preparation and issuance of the AR 2015 before the due date of issuance of the AR 2015 on 30 April 2016.  The Company had only paid all the outstanding audit fees on 12 May 2016 and the BOD only first discussed the issuance of the audited financial statements during the meeting on 17 May 2016 i.e. after the due date.  Even though Suaran Singh, Haflil Feiruz and Dato’ Muzaffirah had resigned on 1 April 2016 (i.e. prior to the due date), they were not absolved particularly as they were also members of the AC who had the specific function under Rule 15.12 of the ACE LR to, amongst others, review the audit plan, the external auditors’ audit report and financial statements,but they had failed to discharge their responsibilities in this regard; and
• Ahmad Amryn (the director in charge of Finance and primarily responsible for the financial management of the Company for the FYE 31 December 2015 and preparation of the AR 2016), DS Mohd Shariff and Raja Kamarudin had failed to demonstrate reasonable efforts taken after the due date to expedite finalisation of the financial figures, resolution of outstanding matters for audit and preparation of information for the annual report to ensure the timely issuance of the AR 2015. The directors had merely relied on the update from the financial adviser on the finalisation and issuance of AR 2015.  The AR 2015 was only issued on 29 November 2016 eventhough the AFS 2015 had been issued on 24 August 2016.

(b) In respect of the AR 2016, DS Mohd Shariff, Ahmad Amryn and Raja Kamarudin had merely noted/accepted that the Company did not have sufficient funds. They failed to take any reasonable/expeditious effort including to address/resolve the purported lack of funds and source/appoint new external auditors despite being informed of the resignation of the external auditors since November 2016 (i.e. more than 5 months before the due date of issuance of the AR 2016 on 30 April 2017) and reminded by the Company’s Sponsor of the obligation to issue the AR 2016 during the BOD meeting on 22 March 2017.     

(3) Delay in Announcement/Issuance of the QR1 2016, QR4 2016, QR3 2017, QR4 2017, AR 2017, QR1 2018 and QR2 2018

All listed companies are required to maintain the resources necessary including sufficient and available finance/accounting staff to facilitate the preparation of their financial statements and to put in place all the necessary controls, governance and procedures to procure their subsidiaries’ accounts to enable the timely preparation of the financial statements and discharge of the obligations under the listing requirements.  Hence, the delay in the announcement of the QR1 2016 due to the resignation of the finance manager at the end of March 2016 and the delay in the announcement of the QR4 2016 due to the subsidiary’s failure to provide its financial statements to the Group did not absolve the Company’s culpability. 

Further, all listed companies have the obligation to comply with the ACE LR so long as the company remains listed pursuant to Rule 2.05(2)(a) of the ACE LR.  Hence, the winding-up order against WINTONI on 17 August 2017 (Winding-Up Order) did not absolve the Company’s obligation to ensure timely announcement/issuance of the QR3 2017, QR4 2017, AR 2017, QR1 2018 and QR2 2018 which remained outstanding as at to-date.

B.  Enforcement Action against the Liquidator of WINTONI

Pursuant to the Winding-Up Order against WINTONI and the letter of undertaking dated 20 September 2017 provided by the Liquidator to comply with the ACE LR (LOU), the Liquidator (being the person who took possession or control over the assets of WINTONI) would act for and on behalf of WINTONI including to ensure compliance with the ACE LR.  In this regard, the Liquidator has the power to make the necessary arrangements operationally, including working with WINTONI’s directors or delegating the function/task to the directors/other person to ensure compliance with the ACE LR in particular, the disclosure obligations in areas such as making announcements and releasing financial statements.  However, the Liquidator had failed to do so and it was not acceptable for the Liquidator to do nothing/disregard compliance of the ACE LR. The Liquidator’s contention that he cannot/had not assumed the responsibility to ensure timely submission of the financial statements in accordance to the ACE LR was untenable.