BURSA MALAYSIA SECURITIES PUBLICLY REPRIMANDS AND/OR FINES WAJA KONSORTIUM BERHAD AND TWO (2) DIRECTORS

Bursa Malaysia Securities Berhad [Registration No.: 200301033577 (635998-W)] (Bursa Malaysia Securities) has publicly reprimanded Waja Konsortium Berhad (WAJA) and 2 of its directors for breach of the Bursa Malaysia Securities ACE Market Listing Requirements (ACE LR). In addition, the 2 directors were imposed a fine of RM100,000 each.

WAJA was publicly reprimanded for breach of Rule 8.04(3)(b) of the ACE LR read together with paragraph 4.1(a) of Guidance Note 3 (GN3) where the company had failed to make the First Announcement on an immediate basis upon announcement of its quarterly report for the financial period ended (FPE) 30 June 2023 (QR 30/6/2023) on 24 August 2023, which had triggered paragraphs 2.1(b) and 2.1(c) of GN3. The First Announcement was only made on 10 October 2023 i.e., 1.5 months after the announcement of the QR 30/6/2023 and upon engagement by Bursa Malaysia Securities.

2 directors of WAJA at the material time had breached Rule 16.13(b) of the ACE LR for permitting WAJA to commit the breach for which the following penalties were imposed on them: -

The finding of breach and imposition of the above penalties on WAJA and the directors 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 of the breach, impact of the breach to WAJA and its shareholders/investors, and the roles, responsibilities, knowledge and conduct of the directors.

Bursa Malaysia Securities views the breach seriously as the First Announcement was crucial to shareholders and investors as it was in relation to WAJA’s financial condition and the consequences of being classified as a financially distressed company pursuant to GN3 include possible suspension and de-listing if the company fails to regularise its financial condition within the timeframe prescribed under Rule 8.04 of the ACE LR and GN3. Hence, timely disclosure of such information pertaining to classification/triggering of GN3 is important towards facilitating informed investment decision.  

BACKGROUND

WAJA had on 24 August 2023 announced the company’s QR 30/6/2023 and based on the QR 30/6/2023, it was clear that WAJA had triggered 2 of the prescribed criteria under paragraph 2.1 of GN3 i.e. -

(1) paragraph 2.1(b) of GN3 where WAJA had incurred a loss attributable to the owners of the company of RM44.032 million for the 18-months FPE 30 June 2023 which exceeded its shareholders’ equity of RM37.198 million as at 30 June 2023, and the shareholders’ equity was less than 50% of the company’s share capital of RM113.357 million as at 30 June 2023; and

(2) paragraph 2.1(c) of GN3 where –

• WAJA had incurred aggregated losses totalling RM68.59 million in 2 consecutive financial years i.e., the financial year ended (FYE) 31 December 2021 and the 18-months FPE 30 June 2023 which exceeded the amount of its shareholders’ equity of RM37.198 million as at 30 June 2023;
• the loss incurred in the FPE 30 June 2023 of RM44.032 million, was more than 50% of the loss incurred in the FYE 31 December 2021 of RM24.558 million; and
• the shareholders’ equity of RM37.198 million as at 30 June 2023 was less than 50% of the company’s share capital of RM113.357 million as at 30 June 2023.

There was no reasonable explanation for WAJA’s failure to make the First Announcement upon announcement of the QR 30/6/2023.  

WAJA had on 30 September 2022 announced the change of the company’s financial year end from 31 December 2022 to 30 June 2023. Paragraphs 2.1(b) and (c) of GN3 clearly used the term “full financial year” for purposes of determining whether a listed corporation has triggered the prescribed criteria under GN3 and Bursa Malaysia Securities has clarified/provided guidance at paragraph 8.23 of Bursa Malaysia Securities’ Questions and Answers in relation to the ACE LR (since 27 January 2015) (ACE LR FAQ) that “full financial year” covers the entire and/or extended financial year end. As such, there is no basis for WAJA to interpret 1 full financial year to mean 1 calendar year from January 2022 to December 2022 instead of the entire 18-months financial period from 1 January 2022 to 30 June 2023 in determining whether the company had triggered paragraphs 2.1(b) and (c) of GN3.

The Managing Director and Executive Director have the primary obligation to ensure the proper discharge/compliance of the company’s obligations under the ACE LR by virtue of their position, roles and responsibilities for the day-to-day operations, management and financial management or finance function of WAJA including the approval of announcements to Bursa Malaysia Securities. They were and/or should be aware of the requirements under Rule 8.04 of the ACE LR and GN3 which were fundamental requirements of the ACE LR. This was particularly so in view of the alert/advice/concern by the external auditors on the company’s possible triggering of GN3 and the red flags on the company’s financial condition/loss-making position in the past 3 financial years.

The Managing Director and Executive Director had failed in the discharge of their duties to be more vigilant and undertake reasonable assessment and enquiry to ascertain whether WAJA had triggered any of the prescribed criteria under GN3 and ensure compliance with the GN3 obligations in reviewing and approving the QR 30/6/2023 on 23 August 2023.