"Furthermore, the court should not second-guess the functions of a regulator in imposing such conditions [for the company to make the announcement]. If so, there would be chaos if the court were to choose and accept to undertake Serba Dinamik’s own interpretation rather than that of Bursa Malaysia, which is the regulator.”
KUALA LUMPUR (Feb 10): The High Court had on Thursday (Feb 10) dismissed Serba Dinamik Holdings Bhd's application for an injunction on Bursa Malaysia Securities Bhd to prohibit the regulatory authority from forcing the company to release the fact-finding update (FFU) by Ernst & Young Consulting Sdn Bhd (EY Consulting).
In his decision delivered via proceedings held on Zoom, Justice Datuk Ahmad Fairuz Zainol Abidin ruled that Serba Dinamik's application to seek an injunction is not defensible and factually not supported, given the undertaking the company has with regards to contractual obligations with Bursa Malaysia.
“Furthermore, the court should not second-guess the functions of a regulator in imposing such conditions [for the company to make the announcement]. If so, there would be chaos if the court were to choose and accept to undertake Serba Dinamik's own interpretation rather than that of Bursa Malaysia, which is the regulator,” he said.
Justice Ahmad Fairuz cited the Federal Court's recent decision on Datuk Mohd Afrizan Husain versus Bursa Malaysia last month in arriving at the decision on Thursday.
“With this, the court dismissed the application in Enclosure 1 [for the injunction],” the court added.
Justice Ahmad Fairuz also ordered Serba Dinamik to pay RM30,000 costs to Bursa Malaysia, as the case was brought requiring immediate attention.
Counsel Mak Lin Kum appeared for Serba Dinamik while senior counsel Datuk Loh Siew Cheang appeared for Bursa Malaysia. Lawyer Christopher Leong held a watching brief for the Securities Commission.
Serba Dinamik had filed the legal action against Bursa Malaysia last November seeking to impose an injunction on the regulator from forcing it to reveal the findings. It has also filed a similar application against EY Consulting which is fixed for hearing on Feb 16, also before Justice Ahmad Fairuz.
Besides the injunction, Serba Dinamik also sought to nullify the appointment of EY Consulting under Bursa Malaysia’s directive to conduct the special independent review (SIR).
Serba Dinamik has been under regulatory and public scrutiny amid several issues raised by its then external auditor KPMG involving its accounts for the 12-month period ended Dec 31, 2020.
On Monday (Feb 7) at another High Court here, Judicial Commissioner Wan Muhammad Amin Wan Yahya had ordered Serba Dinamik to reveal the FFU within two market days.
However, it is understood that Serba Dinamik has formally written in to apply for a stay of Wan Muhammad Amin's decision, and that application will be heard on Monday (Feb 14).
In the Afrizan case, the apex court had last month ruled that there was no mandatory requirement on Bursa Malaysia's part as a stock exchange to immediately delist a company when a winding-up order is made against the listed entity, when it dismissed the interpretation of the liquidator.
The High Court on Thursday also said Bursa Malaysia was not acting in excess of its power when it suspended trading of shares in the oil and gas engineering company.
Justice Ahmad Fairuz said Bursa Malaysia was carrying out its duties under Section 11 of the Capital Markets and Services Act 2007 (CMSA) as a regulator due to unusual activity on the last trading day before the regulator ordered Serba Dinamik's shares to be suspended.
“It would be a failure on the part of Bursa Malaysia if it did not go through with the suspension,” he said.
The court further said that there was no procedural unfairness as claimed by Serba Dinamik that led to its suspension, when the company claimed that only the listing committee can issue such a suspension.
“This court should not second-guess the regulator and the claim that only the listing committee can decide its suspension is devoid of merits,” the judge said.
Justice Ahmad Fairuz added that it was Serba Dinamik's own decision to choose EY Consulting to do the SIR and prepare the FFU as such conditions of the special auditor's appointment were generally made and not imposed by Bursa Malaysia.
“The claim made by the plaintiff [Serba Dinamik] that it was directed to appoint EY Consulting is not supported by the facts. Bursa Malaysia did not direct Serba Dinamik to appoint but it was on the company's own choosing. It is for the plaintiff to appoint and choose an auditor to do the SIR.
“Hence, the claim of non-compliance of Regulation 2.24 of the Main Market Listing Requirement (MMLR) does not arise as Bursa Malaysia did not direct as to the E&Y Consulting's appointment,” the court said, adding Bursa Malaysia has made a commercial judgment and merely was carrying out its duties under Section 11 of CMSA for the SIR to be conducted.
The counter, which was suspended on Oct 22 last year, last traded at 35 sen, giving it a market capitalisation of RM1.3 billion.