KUALA LUMPUR: Hong Leong Capital Bhd (HL Cap) will have its shares suspended effective March 3 for not meeting the public shareholding spread requirement of 25%, unless it files an appeal on or before Feb 23.
In a filing yesterday, Bursa Malaysia said it had commenced enforcement proceedings against HL Cap (fundamental: 2.7; valuation: 0) for breach of paragraph 8.02(1) of the Main Market listing requirements and that due process was accorded to the company.
“After due consideration of all the facts and circumstances, the Listing Committee of Bursa Securities found HL Cap to have breached paragraph 8.02(1) of the Main LR (listing requirement) and decided to impose a suspension in the trading of HL Cap’s securities,” it said.
“In the event HL Cap submits an appeal to Bursa Securities within the Appeal Timeframe, it is required to make an announcement of the appeal and the suspension of the securities on March 3 shall be deferred pending the decision on the company’s appeal,” it added.
According to a filing dated Jan 13, HL Cap said it had filed an appeal with Bursa for approval of a lower public spread of 18.67% and, alternatively, for a further extension of time of six months to comply with the 25% public shareholding spread requirement.
However, its appeal had been rejected by the regulator.
“HL Cap has not been able to identify and demonstrate that there is a concrete/definitive plan put in place or to be put in place to rectify the shortfall in the public shareholding spread despite having been granted a total of 21 months extension of time from Feb 28, 2013 until Nov 30, 2014 to address the shortfall.
“The objective of the public shareholding spread requirement is to ensure there is sufficient market liquidity to facilitate the buying and selling of the shares in an orderly manner. The lack of trading liquidity in HL Cap shares during the period of non-compliance renders the prices of HL Cap shares susceptible to significant price movement arising from trading by a small group of investors,” said Bursa.
At the same time, HL Cap was required to show cause by making a written representation within five market days as to why the regulator should not find the company in breach of the listing requirements and impose one or more penalties including suspension in the trading of its shares.
HL Cap shares ended eight sen or 0.65% lower at RM12.20, with a market capitalisation of RM3.01 billion.
This article first appeared in The Edge Financial Daily, on February 13, 2015.