The Securities Commission (SC) hereby reprimands the persons named below, who were directors of Widetech (Malaysia) Berhad [Widetech] at the relevant times, for breach of a condition of approval imposed by the SC for the listing of Widetech on the Second Board of the Kuala Lumpur Stock Exchange.
Widetech had failed to seek the prior approval of the SC before diversifying into other businesses not related to its original core-business. This breach constitutes a non-compliance by Widetech with the provision of the SC’s Policies and Guidelines on Issue/Offer of Securities (Issues Guidelines).
The persons reprimanded, together with the dates of their appointment and resignation (where applicable), from the Board of Directors of Widetech are as follows:
|Name of Director|
|Quah Chin Cheng|
|Dato’ Lim Yak Hua|
|Dato’ Abul Hasan bin Mohamed Rashid|
|Dato’ Kamaruddin @ Abas bin Nordin|
|Charlie Ong Chye Lee|
|Dato’ Tengku Mahmood bin Tengku Zainul Abidin|
|Lim Kia Kee|
|Chia Tong Saik|
|Cheong Wai Seng|
|Mohd Ariff bin Amran Hmdi|
Widetech had, on 31 March 1997 acquired the entire equity interest in Swift Triumph Sdn Bhd (Swift Triumph) and on 30 September 1999 entered into a subscription agreement to acquire 98% of the equity interest in Standard Malaysian Equity Sdn Bhd (SME). Contrary to Widetech’s principal activity at that time, namely manufacturing and trading of correction fluids, Swift Triumph ventured into the business of lamination of plywood whilst SME was involved in property development.
Whilst the SC recognises the operational independence of a listed entity and the commercial reality for a company to take on new businesses, the venture into Swift Triumph and SME by Widetech, however, represents a departure from its core business. This is against paragraph 7.08 of the Issues Guidelines which clearly stipulates that, as a general rule, a company which had been approved for listing should not be used as a vehicle for venturing into other activities not related to its original core business. The company should give priority to the expansion of its existing business, at least within three to five years of listing.
In the case of Widetech, it had only been listed for less than one month before it acquired Swift Triumph whilst the subscription agreement with SME was entered into approximately 2½ years after listing. The express condition laid by the SC in approving the listing of Widetech vide the SC’s letter dated 30 October 1996, amongst others, stipulated that Widetech should fully comply with the requirements of the Issues Guidelines, particularly those in Chapter 7.
Widetech should have sought the SC’s approval to undertake the said diversification or seek a waiver from complying with the requirements under paragraph 7.08 of the Issues Guidelines with appropriate justifications.
The above persons, who were members of the Board of Directors of Widetech, at the relevant times have been given due opportunity to explain their case to the SC. The persons being directors of a public company should have discharged their duties and responsibilities in a more diligent manner.
Notwithstanding this reprimand, the SC reserves the right to take further actions against the above named persons or any other party in respect of this breach of condition of approval or any other matters which may arise therefrom.
The SC also wishes to remind directors of public companies of their duty to maintain a high standard of corporate conduct, to observe all relevant laws, rules and regulations as well as exhibit good practices at all times.
31 January 2002