The Securities Commission (SC) today publicly reprimanded Aktif Lifestyle Corporation Berhad (Aktif Lifestyle) and its Board of Directors and has directed the company to re-issue its financial statements for the year ended 29 February 2004.

The public reprimand, which is also against Aktif Lifestyle’s directors Chan Teik Huat and Faris Abdullah @ Patrick Chen, is in relation to the failure of the company and its directors to comply with Regulation 4 of the Securities Industry (Compliance with Approved Accounting Standards) Regulation 1999 (Regulations) in respect of Aktif Lifestyle’s 2004 financial statements.
Regulation 4 principally requires every listed corporation, its directors and chief executive to ensure that the consolidated financial statements of the listed corporation are to be made out in accordance with approved accounting standards.

In re-issuing its 2004 financial statements, Aktif Lifestyle is also required to make the necessary announcement to Bursa Malaysia Berhad in respect of the rectification together with the reasons and effects (financial or otherwise) thereof.

The Breach
Aktif Lifestyle had breached Financial Reporting Standard (FRS) 122, Business Combinations (previously MASB 21) by using 1 March 2003 as the completion date for the disposal of its subsidiaries (Conditional Sale and Purchase Agreement was executed on 31 October 2003) instead of 18 June 2004 as recognised by the acquirer with which the auditors, Ernst & Young have concurred.

Under FRS 122, the date of completion of a sale and purchase of subsidiaries applied by both the vendor and acquirer must be common and cannot be backdated or otherwise altered.
Aktif Lifestyle’s 2004 financial statements was qualified by its auditors, also Ernst & Young as not being true & fair (adverse audit report) in relation to the application of 1 March 2003 as the completion date for the disposal.
Chan Teik Huat and Faris Abdullah @ Patrick Chen were the two directors who signed the “Statement by Directors”, which stated that Aktif Lifestyle’s 2004 financial statements have complied with approved accounting standards.

The SC views any non-compliance with the Regulations as a serious matter. High standards of financial reporting are fundamental in promoting market integrity and enhancing investor protection. The SC will not hesitate to take action against listed corporations and their officers for failure to comply with any provision of the securities laws.

The SC also reminds all other listed corporations and their directors on the importance of adhering to all relevant financial reporting standards and disclosure requirements in the interest of providing accurate financial information to the investing public.