2. In November 1996, Idris was granted approval for the acquisition of Wisma Idris, a 22-storey building with three basement levels held under two issue documents of title, for a total consideration of RM105 million to be satisfied by the issue of 32,812,000 Idris shares at an issue price of RM3.20 per share. Under the relevant agreements executed, all the parcels in the said building were originally purchased by KFC, Grand Ultimate Sdn Bhd (GUSB) and Impress Eight (M) Sdn Bhd (IESB) from Castle Property Sdn Bhd (CPSB). The three purchasers had in turn contracted to sell their entitlements to Idris by way of subsequent separate sale and purchase agreements and assignments.

3. The SC's approval dated 6 November 1996 was subject to, inter-alia, that the purchase consideration and issuance of shares be made only after the building was completed and the availability of separate titles (i.e. after the titles have been issued by the relevant Land Office). Idris' adviser, Aseambankers Malaysia Berhad (Aseambankers), had submitted to the SC that the new Idris shares to be issued as consideration would be fully underwritten and placed out to Bumiputera parties to ensure that the vendors of Wisma Idris, consisting of KFC, GUSB and IESB, would receive cash for the entire purchase consideration. Aseambankers had sought verbal clarification in respect of the abovementioned condition and had been advised that the legal title of ownership should be issued in Idris' name prior to the issue of Idris shares. This was to safeguard Idris' interest.

4. On 16 December 1996, Idris entered into an underwriting and placement agreement with Taiping Securities Sdn Bhd (TSSB). TSSB was to fully underwrite and place out the new Idris shares to be issued to Bumiputera investors. Subsequently, on 30 January 1997, a supplementary agreement was entered into between Idris, KFC, IESB and GUSB. This was done to incorporate certain terms for completion, after taking into account SC's conditions of approval, i.e. the revised consideration and registration of title under Idris' name before the issue of new Idris shares and payment to KFC.

5. On 6 May 1997, KFC was informed that CPSB was required to register a right of easement to Lion Courts Sdn Bhd (LC) and The Synod of the Diocese of West Malaysia (The Synod) for the usage and access of the perimeter roads on the land pursuant to an agreement dated 10 September 1994 between CPSB, LC and The Synod. On 31 July 1997, the SC approved the extension of time for a further three months for Idris to complete the Wisma Idris acquisition.

6. As an arrangement for payment to the vendors, TSSB had, on 17 September 1997, issued an irrevocable and unconditional broker's undertaking to KFC, IESB and GUSB to effect payment to the vendors within 7 days of receiving the consideration shares. Idris had also agreed to grant the easement right to The Synod subject to Wisma Idris being first registered in Idris' name. The title was then registered in Idris' name on 9 September 1997 and the new Idris shares were issued on 13 October 1997 (but yet to be listed). On 20 January 1998, the endorsement of the easement right to The Synod was made on the title.

7. In January 1998 but prior payment being made to the vendors, Idris created a charge over Wisma Idris to TA First Credit Sdn Bhd (TACB) as a secondary security for an existing short-term facility granted to Idris. Having been made aware of the charge, Idris and KFC had, on 12 June 1998, entered into a deed whereby Idris irrevocably and unconditionally acknowledges, amongst others, that KFC is still beneficially the owner of Wisma Idris and that the payment to KFC had yet to be made.

8. The fact that the title of Wisma Idris was transferred to Idris and Idris had subsequently charged the property to a financial institution was reported in a local financial weekly on 22 June 1998. Following the report, the SC immediately called for a meeting and had on 24 June 1998 met with certain board members of KFC, Idris and Aseambankers Malaysia Berhad. At the meeting, it was explained that the payment was not yet made to KFC because Idris shares could not be placed out by TSSB as a result of the market downturn. It was further explained that the delay in the placement of Idris shares was due to the fact that the property had a right of easement issue that had to be settled before the title could be transferred to Idris.

9. To resolve the problem, both KFC and Idris had indicated at the meeting held on 24 June 1998 that they would rescind the Wisma Idris transaction. Idris and KFC were asked to submit to the SC written explanations on the issue incorporating also a chronology of events and their proposal on how to resolve the matter to the SC.

10. The written explanations from Idris and KFC were received by the SC on 22 July 1998 and 29 June 1998 respectively. The SC was not satisfied with the explanations provided as they did not give a reasonable reply as to why Wisma Idris was charged to a financial institution when payment had not been made to the vendors. As such, the SC had on 28 July 1998, issued a show-cause letter to the Boards of Directors of Idris and KFC respectively seeking explanations on why appropriate action should not be taken against them for not performing their fiduciary duties in a responsible and professional manner, with due care and diligence, in respect of the disposal and acquisition of Wisma Idris. The show-cause replies, which were received on 10 August 1998, were found to be unacceptable.

11. As for KFC, while the Board of Directors had taken a reasonable step in having procured a broker's undertaking to safeguard and protect the company's interest, the SC believes that they should have taken additional safeguards to protect KFC's interest given that the transaction was a related-party transaction and that TSSB, the party providing the undertaking, was controlled by Dato' Hj Ishak Ismail, who is the principal interested party in the transaction.

12. The SC views seriously the action of Idris having charged Wisma Idris to TAFC before first settling the payment to the vendors. This would not have happened had the directors of Idris and KFC treated the transaction at arm's length.

13. The SC expects the performance of high standards of fiduciary duties and corporate governance by directors of public companies in any corporate proposal. The directors are under a fiduciary duty to ensure that the interests of the company and its minority shareholders are well safeguarded in any transaction, more so when it involves related-parties. In the case of Idris and KFC, the SC has decided to issue the public reprimand to the Boards of Directors of both Idris and KFC for their failure to perform their fiduciary duties in a responsible manner expected of them in respect of the transaction involving Wisma Idris. The standard of due care exercised was far from satisfactory.

14. In view of the gravity of the case, the SC has also decided that in the event the transaction is not rescinded and Wisma Idris is not transferred back to KFC by the end of September 1998 as agreed by Idris and KFC, the SC will not consider any corporate proposals from Idris for a period of one year from 1 October 1998 or until the full settlement of the issue (whichever is later). The SC also reserves the right to take further actions against the parties in respect of this affair.

15. Directors and principal officers of public companies are expected to maintain a high standard of corporate conduct and to observe all relevant laws, regulations and rules as well as good practices at all times. Directors of companies must ensure that their fiduciary duties are discharged in a fair and responsible manner with due care and diligence at all times. This is necessary to uphold market integrity and to ensure continued investor confidence in our capital market.