Scan Associates sues Bursa, shares plunge

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KUALA LUMPUR: Shares in Scan Associates Bhd plunged as much as 33.3% yesterday as investors reacted to news that it had filed a legal suit against Bursa Securities for issuing a Guidance Note 3 (GN3) on the information and communications technology security solutions provider.

The penny stock fell to an intraday low of 4 sen, before easing back to close down 25% or 1.5 sen at 4.5 sen, with 23.87 million shares changing hands. Its share price has tumbled 67.9% from its peak of 14 sen late last month.

Scan Associates suspended the trading of its shares for an hour from 9am to 10am yesterday due to the announcement.

In its filing with Bursa Malaysia on Monday, the company had appointed Messrs Lim, Chong, Phang & Amy to file a legal action against Bursa because it disagrees with the directive that was issued by the regulator.

Last Friday, Bursa issued a directive to Scan Associates to announce that the company had triggered rules 2.1(b) and (c) of GN3 based on the company’s fourth-quarter results ended Dec 31, 2014 (4QFY14).

A company placed under the GN3 category could be due to its poor or adverse financial status and level of operations.

“In any event, the company has no means to make such [an] announcement as the company’s secretary had resigned on the same day,” said Scan Associates.

The suit was filed on Sunday against Bursa to nullify the directive and to seek damages from the latter.

Scan Associates said the High Court had on Monday heard the company’s application and granted an ad interim injunction to restrain Bursa to implement the reclassification of the company.

“The ad interim injunction will be enforceable and binding until the High Court makes a decision at 4pm on May 18,” it added.

For 4QFY14, Scan Associates’ (fundamental: 0; valuation 0.3) net loss widened to RM1.1 million from RM69,000 in 4QFY13. Revenue stood at RM4.9 million, which was lower than RM7.49 million recorded a year earlier.

For the whole of 2014, its net loss widened to RM7.1 million from RM2.63 million the previous year. Revenue was lower at RM11.86 million from RM25.15 million.

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This article first appeared in The Edge Financial Daily, on May 13, 2015.