The stock exchange is entitled to exercise its power, says Bursa in response to Serba Dinamik lawsuit

The stock exchange is entitled to exercise its power, says Bursa in response to Serba Dinamik lawsuit
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KUALA LUMPUR (Nov 8): Being the frontline regulator of the capital market, Bursa Malaysia Securities is entitled to exercise its power pursuant to the listing requirements in the interest of maintaining an orderly and fair market, said the stock exchange in response to the legal action taken by Serba Dinamik Holdings Bhd.

Bursa stated that it will be defending its position vigorously and will not abdicate its statutory roles and functions in the marketplace.

"Timely disclosure of material information is a key pillar of ensuring the market is well informed of the information and all investors are treated equally and able to trade on equal footing in terms of parity of disclosures.

"This is paramount to enable Bursa Securities to discharge its statutory duty," Busa said.

The statement was issued after it had been served with legal cause papers which included a sealed originating summons (OS), Notice of Application for an Interim Injunction and an affidavit affirmed by Serba Dinamik's chairman and independent non-executive director Datuk Mohamed Ilyas Pakeer Mohammed on Nov 3, 2021 in support of the lawsuit.

According to the statement, Bursa has engaged a legal counsel to advise on the matter and its next course of action while the application for interim injunctive relief is fixed for hearing this Thursday (Nov 11) while the case management for the OS has been fixed for next Wednesday (Nov 17).

Serba Dinamik and Bursa have been embroiled in a bitter dispute when the regulator demanded the oil & gas company to disclose details from the factual findings update as at Sept 30 on the special independent review (SIR) communicated to three out of four independent non-executive directors roughly two weeks ago on Oct 21.

Bursa subsequently suspended the trading of Serba Dinamik's securities on Oct 22 in accordance with paragraph 16.02(1)(c) of the Main Market Listing Requirements, to maintain an orderly and fair market.

The regulator subsequently issued an ultimatum to Serba Dinamik to reveal the findings from the SIR on Oct 26 but was met with a denial. Serba Dinamik insisted in its bourse filing dated Oct 25 that its directors had not been given a "factual findings update" by independent auditor Ernst & Young (EY).

In response, Bursa issued a statement noting that it had been made aware that soft copies of the factual findings update were provided to the company's independent non-executive directors on Oct 22 while physical copies of the same were delivered to them at their request on Oct 23.

To recap, the audit saga started in mid-May when KPMG highlighted discrepancies involving transactions to the tune of RM4.54 billion to the company's independent directors. The audit issues raised were based on the financial accounts for the financial year ended Dec 31, 2020.

Since the audit disputes between Serba Dinamik and its former auditor KPMC were exposed, the company's largest shareholder, Datuk Dr Mohd Abdul Karim Abdullah, who is also the group managing director and chief executive officer, has repeatedly told the investing public that there were no wrongdoings involved in the company.

Nonetheless, Mohd Abdul Karim, holding a 21.23% stake, disposed of his entire holding of 55.9 million warrants before the trading suspension.

The block of derivatives, equivalent to 6.34% of the total warrants, was sold when the price of the warrants hovered near record low levels.

Serba Dinamik's shares were last traded at 35 sen, falling from RM1.61 before the audit issues were made known to the public. Some RM4.6 billion in market capitalisation has since evaporated following the heavy selldown of the stock. 

Read also:
Serba Dinamik sues Bursa for acting 'in excess of power'

Kathy Fong