Serba Dinamik says proposal to change auditor was substantial shareholder Kadier's decision

Serba Dinamik says proposal to change auditor was substantial shareholder Kadier's decision
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KUALA LUMPUR (June 1): Serba Dinamik Holdings Bhd, which has been in the spotlight due to issues pertaining to statutory audit, pointed out that the current proposal to remove KPMG as its external auditor was a decision by its shareholder Datuk Abdul Kadier Sahib, who is also a non-independent non-executive director.

"The company would like to clarify the termination of external auditor was issued by the substantial shareholder of the company — Datuk Haji Abdul Kadier Sahib, whom is also the non-independent non-executive director and it was not an initiation of the company and the board of directors," said Serba Dinamik today.

Meanwhile, the company also highlighted that its board of directors is allowed to discuss the performance of its external auditor KPMG and may propose the latter's resignation.

"Please be informed that the board of directors, in any circumstances, is not limited to discussing the performance of the auditors at any time and may propose for the resignation of the auditors," it said.

"In addition to the above, the established law under Companies Act 2016 only allows the shareholder who owns more than 10%, either individually or collectively, to initiate the motion of removal of existing auditors and nomination of new auditors," it added.

The statement came as the company sought to clarify the two different requests for KPMG to be removed, and as the investing fraternity raised concerns that a removal may hinder the auditor from addressing shareholders' queries.

Serba Dinamik went on to say that it is a prerogative of any share holder who owns more than 10% to issue a special notice to convene an extraordinary general meeting (EGM), inclusive of motion to propose the removal of auditors and nomination of new auditors of the company.

"The board of directors has no legal rights or locus standi to perform such or to act on behalf of the shareholders. As such, the company was acting in accordance to the rule, which is to notify the intention by the said shareholder," it added.

Last Saturday, speaking at a press conference, its executive director Datuk Syed Nazim Syed Faisal said the board asked KPMG to resign because the latter did not revert promptly to the management's responses after it raised the issues pertaining to the statutory audit. However, KPMG refused to resign.

The company also said it raised concerns when KPMG showed no sign of completing the audit process on time, even after the management changed its financial year end to June 2021, from December 2020, to give the auditor more time.

The press conference was held after Abdul Kadier, who owns 15.96% in Serba Dinamik, submitted a notice to the company the day before seeking a shareholder's resolution to terminate KPMG as external auditor, and to appoint BDO instead.

The proposal came three days after Serba Dinamik announced that KPMG had raised several audit issues involving its receivables, payables, and past transactions amounting to over RM3 billion with its customers and suppliers for the financial year ended Dec 31, 2020.

Serba Dinamik, whose share price has nearly halved, is in the midst of conducting an independent review to verify KPMG's claims.

"The board is committed to ensuring that the shareholders will be provided with adequate information to make an informed decision in relation to the proposed termination of the external auditor at the forthcoming EGM to be convened," Serba Dinamik said.

Shares of Serba Dinamik hit limit-down for the second straight day on Tuesday, as investors digested the news about its audit issues after two days of trading suspension.

The counter rebounded slightly to settle at 83.5 sen, still down 29.5 sen or 26.11%, valuing the group at RM3.11 billion. It has lost around RM2.86 billion or near 48% in market capitalisation in just two trading days since the audit issue surfaced.

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Kathy Fong