SC meets PN4 companies to facilitate regularisation process

The Securities Commission (SC), together with the Kuala Lumpur Stock Exchange (KLSE), today had a closed-door dialogue with the directors and senior officers of listed companies classified under KLSE Practice Note 4/2001 (PN4). The dialogue was chaired by the SC Chairman, Datuk Ali Abdul Kadir.

“PN4 companies” are affected listed companies that fail to meet the financial conditions for continued trading and listing on KLSE. In this context, the provisions of PN4 aim to ensure that affected listed companies take steps to regularise their financial conditions expeditiously within the stipulated time frame. PN4 also aims to protect the interests of investors by ensuring that sufficient information disclosures are made on the affected listed company’s restructuring plans, and by imposing penalties on affected listed companies that do not meet the requisite deadlines.

The objective of the dialogue was to gather feedback from PN4 companies in order to speed up the restructuring of such companies. In line with this, the dialogue provided an avenue for these companies and their advisers to raise general issues of concern besides those raised in working meetings with the SC. The dialogue also enabled the SC to solicit feedback on the progress of the restructuring efforts of these companies.

During the dialogue, the SC reiterated the guiding principles as well as the priority it accorded in assessing restructuring proposals submitted by PN4 companies. The SC also clarified to the PN4 companies on the flexibilities which have been made available earlier by the SC to facilitate restructuring exercises.

PN4 companies were reminded of the year-end deadline and the consequences if they fail to regularise their financial positions expeditiously – PN4 companies that fail to comply with the regularisation time frame face possible trading restriction or suspension. Ultimately, PN4 companies that fail to improve their financial conditions, despite being given ample opportunity to do so, will be delisted from the KLSE.

Going forward, the SC will consider the feedback received at the dialogue to develop further facilitative and market-driven guidelines governing corporate restructuring among listed companies in Malaysia. This would be balanced against the objective of an orderly development of the capital market.

Corporate advisers comprising merchant banks and universal brokers were also present at the dialogue.

While the SC is facilitating the restructuring efforts of PN4 companies, the SC also advises the investing public to follow the developments of these companies closely and take into consideration the higher risks involved should they invest in such companies.

22 April 2002