KUALA LUMPUR (May 26): DGB Asia Bhd has proposed to reduce the par value of its shares by cancelling six sen out of the par value of each 10 sen share to eliminate its accumulated losses.

The stock saw volatile trading over the past year with its price falling below its par value.

It closed unchanged at six sen today (40% below the par value of 10 sen), valuing the company at RM29.34 million.

In a filing to Bursa Malaysia today, DGB Asia noted that this had deterred the company from raising funds from the equity market.

Lowering its shares' par value, the company said, will provide greater flexibility to raise funds and implement corporate proposals, which entails the issuance of new shares closer to its market price in the future.

As at May 20, its issued and paid-up share capital was RM48.9 million. Following the completion of the proposed exercise, it will increase to RM845.88 million

According to the software and engineering services provider, the proposed par value reduction will give rise to a credit of between RM29.34 million and RM50.75 million, part of which will be used to set off against the accumulated losses.

"The remaining credit after the off-setting of the accumulated losses shall be retained in the capital reserves account of the company," it added.

It plans to eliminate its audited accumulated losses as at Sept 30, 2015 of RM24.19 million and unaudited accumulated losses as at March 31, 2016 of RM23.74 million.

To facilitate the reduction in the par value of its shares, it has also proposed an amendment to its Memorandum and Articles of Association. The proposals are subject to its shareholders' approval at an extraordinary general meeting to be convened.

"Barring any unforeseen circumstances and subject to all approvals being obtained, the proposals are expected to be completed by the third quarter of the calendar year 2016," it added.