KUALA LUMPUR (June 28): The Kuala Lumpur Sessions Court today convicted two former Bestino Group Bhd directors for distributing application forms for the company's redeemable preference shares (RPS) without a copy of a prospectus registered with the Securities Commission Malaysia (SC).

In a statement today, the commission said Chong Yuk Ming, 57, who is also the founder of the gold trading firm, was fined RM600,000 in default six months imprisonment, while Balachandran a/l Shanmugan, 64, was fined RM400,000 in default four months imprisonment. They were also ordered to serve a one-day jail term.

The duo had committed the offence between Nov 3 2008 and June 16 2009.

Under Section 232(1) of the Capital Markets and Services Act 2007, a person shall not issue securities unless a prospectus in relation to the securities has been registered with the SC.

The SC had previously said the company was believed to have solicited about RM400 million from the issuance of the RPS to over 6,000 people.

"The conviction came after a full trial where 11 witnesses testified for the prosecution while both Chong and Balachandran testified for the defence. They were charged in 2011," said the commission.

The offence, under section 232(2) of the Capital Markets and Services Act 2007, carries a punishment of fine up to RM10 million or an imprisonment term up to 10 years or both if convicted.