AMLR has to be interpreted contextually, not textually, the Federal Court judge said. Therefore, she said a proper interpretation of the AMLR would mean there is no mandatory obligation on Bursa’s part to immediately delist a listed company upon a winding-up order made against it (the listed company).
PUTRAJAYA (Jan 5): The Federal Court on Wednesday ruled that there is no mandatory obligation on Bursa Malaysia Securities Bhd’s part as a stock exchange, to immediately delist a company when a winding-up order is made against the listed entity.
“As long as the wound-up company remains listed, the liquidator, being the controlling person of the company, has to comply with the AMLR (Ace Market Listing Requirements),” said Federal Court Judge Datuk P Nalini.
As the AMLR requires financial statements of the listed company to be prepared, Justice Nalini said the liquidator has to comply with or ensure compliance with the requirement.
Hence, she added, the directors of a wound-up company cannot do anything without the consent or authorisation of the liquidator who is in control of the wound-up company.
In a nutshell, the wound-up companies which will not be delisted immediately are obliged to file financial accounts and annual reports, so that shareholders and the investing public will be able to scrutinise these listed firms’ financials.
Justice Nalini said this after a three-member bench she chaired allowed an appeal by Bursa Malaysia against the Court of Appeal (COA)'s decision in January last year that a wound-up company should be delisted. The other judges on the bench were Federal Court justices Puan Sri Zaleha Yusof and Datuk Rhodzhariah Bujang.
The bench also dismissed liquidator Datuk Mohd Afrizan Husain's judicial review application at the High Court.
In dismissing Afrizan's judicial review application and allowing Bursa's appeal, Justice Nalini said in her broad grounds to the apex court's decision that Bursa has a statutory duty to protect the interests of the investing public, and that in interpreting the AMLR, or Main Market Listing Requirements (MMLR), the court is required to take into account Bursa's statutory duty to interpret them in a proper context.
AMLR has to be interpreted contextually, not textually, the Federal Court judge said.
Therefore, she said a proper interpretation of the AMLR would mean that there is no mandatory obligation on Bursa’s part to immediately delist a listed company upon a winding-up order made against it (the listed company).
The bench ordered Afrizan to pay RM50,000 costs to Bursa.
Bursa was represented by Khoo Guan Huat, Preetha Pillai, Nimalan Devaraja and Tiang Wen En, while Sukhwinder Singh appeared for Afrizan.
Bursa's appeal was dismissed in 2020
On Jan 20 last year,the appellate court dismissed Bursa's appeal over Afrizan's judicial review application on the winding up of Wintoni Group Bhd.
The judicial review relates to a decision by Bursa Malaysia’s Listing Committee to take action against him. The action was certified by the exchange’s Appeals Committee.
Action was taken on Afrizan for allegedly committing breaches of Rules 9.22 (1) and 9.23(1) of the MMLR, for causing and permitting delay in the announcement or issuance of the quarterly or annual report of Wintoni.
Bursa Malaysia had claimed that Afrizan failed to comply with the MMLR. However, his lawyers argued that the Companies Act prohibits him from complying.
Under the Companies Act, only directors can prepare the company’s accounts. But since the company is wound up, the directors have lost their powers, argued Afrizan's lawyers.
The COA three-member bench led by Justice Datuk Lau Bee Lan ruled that the language used in Rule 16 (2) of MMLR makes it clear that the delisting is mandatory, and the exchange does not have the discretion to maintain the company’s listing status.
Following that, the appellate court upheld the decision made by High Court judge Datuk Nordin Hassan (now COA judge) in allowing Afrizan's judicial review of Bursa Malaysia’s Listing Committee and Appeals Committee, as he ruled it was ridden with errors and irrationality.
Justice Nordin, now a Court of Appeal judge, ruled that under Rule 16 (2), the word “shall” is deemed mandatory.
Rule 16 (2) of the MMLR states that the exchange shall delist a listed company, in any one of the following circumstances:
a) pursuant to a directive, requirement or condition imposed by Securities Commission Malaysia (SC), after which the exchange will notify the SC of the decision to delist;
b) upon the maturity or expiry of a class of securities;
c) upon the commencement of a voluntary winding-up of a listed corporation in accordance with the Companies Act; or
d) upon a winding-up order being made against a listed company.