PLC's Announcements on Ventures into Internet Business Must be based on Full and Fair Disclosure

Kuala Lumpur, 22 March 2000

The Securities Commission (SC) wishes to remind public listed companies (PLCs) to uphold the principles of full and fair disclosure when making announcements and statements on their intended venture into Internet business. This is particularly important to assist investors in making informed investment decisions in the PLCs concerned. It will also contribute towards maintenance of investor confidence and a fair market amidst the current euphoria on technology stocks and internet-related corporate proposals.

The SC is concerned about the standards of disclosure displayed by some PLCs when announcing or making statements on their Internet ventures. Given that electronic businesses (e-businesses) are different from traditional businesses and that most ventures are either start-ups or at very preliminary stages of development, there is a need for disclosure on such ventures to be complete, accurate and timely and supported by proper due diligence processes.

In this regard, the SC wishes to remind PLCs that it is an offence under Section 86 of the Securities Industry Act 1983 (SIA) for any person to make a statement, or disseminate information, that is false or misleading and which is likely to induce the sale or purchase of securities or is likely to have the effect of raising, lowering, maintaining or stabilising the market price of securities.

In addition, PLCs are also expected to strictly adhere to the principles of corporate disclosure policy under the Listing Requirements of the Kuala Lumpur Stock Exchange (KLSE).

To further guide PLCs on what to disclose to the market on their internet ventures, the KLSE will be issuing relevant practice notes pertaining to disclosure obligations on the matter.

The SC also wishes to remind investors to be cautious when investing in PLCs intending to venture into internet-related businesses. Investors should realise that they are investing on the potential of such ventures, and not on businesses which are already established, which potential may not materialise. Investors should seek advice from professionals, such as their remisiers, brokers, accountants and investment advisers, and should gather adequate information about the PLCs concerned and the intended internet-related ventures, before making the decision to invest.


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