Focus View
China Stationery’s strange excuse
FocusM team | 08 Dec 2017 00:30
Listed companies routinely offer various excuses to Bursa Malaysia when they are unable to comply with deadlines or the listing requirements.

But China Stationery Ltd (CSL) recently gave a rather strange excuse for failing to meet the deadline to release its financial results for the third quarter ended Sept 30, 2017. It said it was unable to contact two of its directors to approve the results. 

The two directors are Chan Fung @ Kwan Wing Yin and his son Angus Kwan Chun Jut, both Hong Kong citizens. According to the company’s 2016 annual report, Chan who is CEO and chairman is the single largest shareholder while his son is executive director.
 
It was reported that as of March 31 this year, Chan had an 18.84% stake in CSL. On Nov 1, Chun Jut announced his resignation which would be effective Dec 18. 

By any account, it is unusual for a company to say it can’t contact its directors. More so when they are substantial shareholders and hold important positions. 

CSL also said it was unable to obtain confirmation from third parties (such as bankers, debtors, creditors, and courts in China) to perform verification checks in relation to all litigation cases involving CSL subsidiaries. It was also unable to undertake the necessary assessment on the impact on CSL’s financial statements and its operations without the issuance of a legal opinion report by Zhi Jun Law Firm of Fujian.

Minorities have every right to be disappointed with this latest turn of events. This is not the first time CSL has failed to get its financial statements in order. In July 2014, the company could not meet an extended deadline to submit its FY 2013 audited accounts. At that time, it had blamed the delay on a fire at one of its plants in China.
 
CSL is an integrated plastic stationery company that designs and manufactures more than 450 plastic products. Its woes have seen its share price tumble from its initial public offering price of 95 sen in 2012 to just one sen on Dec 5 when the counter was suspended.

Clearly, minorities are the victims here with their shares almost worthless.

The authorities must come down hard on the CSL board for what has happened. And for Chan, who is also its founder, to go missing with his son is irresponsible.