Kuala Lumpur, 15 June 2010

Destruction of Company Documents – SC warns PLCs

The Securities Commission Malaysia (SC) today issued a stern reminder  to directors and principal officers of PLCs of the severe consequences of destroying or causing loss of company documents.

Under the Capital Markets and Services Act 2007, it is an offence to destroy, conceal, mutilate or alter any record or account with the intent to defraud any person, or to prevent, delay or obstruct investigations. Upon conviction, offenders are liable to a fine of up to RM10 million or imprisonment for up to 10 years or both.

The SC is extremely concerned that in  some of the cases under investigation, documents that are central to the investigations have been reported lost, destroyed or even stolen.

While recognising that  there could be genuine cases of loss, there appears to be losses which seem to have occurred under extremely questionable circumstances. The SC therefore calls for heightened vigilance on the part of company directors, auditors and key company officials with regard to the safeguarding of all company documents. 

“It is completely unacceptable that a company that is under investigation suddenly turns around and claims that documents are lost or stolen” SC Chairman Tan Sri Zarinah Anwar said. “I am reminding directors of PLCs that they are ultimately responsible for the safe custody of company documents and can be held liable for the loss of such documents.”

“Someone who assists another person to destroy documents also commits a wrong. So I am sending a strong warning to company employees and others who act on the instructions of those further up the corporate chain” Tan Sri Zarinah said. “We will not hesitate to take action against anyone who is responsible for the destruction, loss or removal of any company records.”

The SC would also like to remind auditors that they have a duty to report any breaches of securities laws or rules of the stock exchange or any matters which may adversely affect the financial situation of a PLC  to the authorities. This is a critical role of auditors who are expected to bring a level of independence and professionalism to the process of financial disclosures.