Editor’s Note: On Monday (Jan 10), of Serba Dinamik Holdings Bhd said its stocks would remain suspended until further notice despite the company having issued its outstanding annual report that included the annual audited financial statements (AFS) together with the auditors’ and directors’ reports for the 18 months ended June 30, 2021 on Jan 6.
“In view that the company has not complied with Bursa Malaysia Securities Bhd’s directive to make an announcement on the findings from the factual findings update on the special independent review (SIR), the suspension of trading in the company’s securities will continue until further notice,” the global integrated oil & gas (O&G) service provider pointed out in a stock exchange filing.
The following is Serba Dinamik’s side of the coin pertaining to ‘complications’ surrounding the release of the so-called SIR’s factual findings update.
THE High Court at Kuala Lumpur heard the submissions of Serba Dinamik’s counsel this afternoon (Jan 11) on the application of Bursa Malaysia Securities Bhd to seek to compel the company to announce the factual findings update and also on its application to expunge the factual findings update.
As a preliminary issue, Bursa Securities’ counsel asked the Court to remove Serba Dinamik’s latest affidavit which sought to adduce the fact that the company had announced its audited financial statements for the financial year ended June 30, 2021.
Bursa Securities’ argument was that it should not be considered by the Court because it was filed after submissions and that the Court should not allow further material to be considered.
Serba Dinamik’s counsel argued that it was just to show that the company had complied with the listing requirements to announce the audited financial statements. The Judge excluded the audited financial statements from the hearing.
The Defence counsel pointed out to the Court that Bursa Securities’ application is not that Serba Dinamik had breached any Main Market Listing Requirements (MMLR) but rather the company has failed to comply with a directive issued by the Bursa Securities.
It was submitted that the issues centre around whether a declaration may be granted by the Court, whether Bursa Securities is seeking specific performance of the MMLR and why Bursa Securities appears to want to go around its own listing requirements.
It was further submitted that Bursa Securities knew of the terms of engagement between Serba Dinamik and Ernst & Young Consulting Sdn Bhd (EY Consulting) who was not an auditor registered or recognised under the Audit Oversight Board.
Bursa Securities argued that the auditor to be appointed under Listing Requirement 2.24 need not be an auditor of the type that was approved by the Minister of Finance.
Serba Dinamik’s counsel also submitted that Bursa Securities in a letter dated Oct 26, 2021 acknowledged that the terms of engagement made by EY Consulting prohibited the company from making any announcements and that the factual findings update was only for internal use.
Further, the condition that EY Consulting had extended the factual findings update to Bursa Securities and the Securities Commission (SC) was that it was for internal discussion.
Any publication of the factual findings update would require the prior approval of EY Consulting which approval was not sought by Bursa Securities and was also not produced as evidence in Court.
Lawyer Mak Lin Kum who appeared for Serba Dinamik argued that Bursa Dinamik did not come with clean hands as it knew all the while that EY Consulting did not permit any use of the factual findings update besides being for internal use.
It was explained that EY Consulting had refused to make a statutory declaration attesting to the truth of the factual findings update, had refused to identify an author of the factual findings update and had refused to comply with paragraph 9.03 and 9.35A of the Listing Requirements.
On the other hand, Bursa Securities is insisting that the factual findings update be announced in compliance with 9.03 and 9.35A of the MMLR.
Mak stressed that the status of EY Consulting as to whether they were an auditor is being challenged in another Court and it was not a question for decision before this Court.
The whole mischief started around June 28, 2021 when Bursa Securities purported to exercise a power to direct the appointment of EY Consulting under MMLR 2.24 when Bursa Securities did not ever explain why it was of the opinion that a listing requirement was breached and which listing requirement was breached.
Bursa Securities’ answer was that Serba Dinamik had already signed the letter of engagement of EY Consulting and should not now complain.
It was disclosed that all this while, Bursa Securities knew that EY Consulting did not give consent to the publication of factual findings update.
Serba Dinamik’s counsel Mohamed Izzul Faris has submitted that the work product was also subject to copyright and only the maker of the factual findings update had the right to publish that literary work in accordance with Section 38 of the Copyright Act 1987.
Bursa Securities’ counsel Datuk Loh Siew Cheang said he did not understand why there was a copyright argument.
Bursa Securities did not give any convincing reply to the argument by Serba Dinamik that there are settled disciplinary procedures for the market regulator to use, ie the management should issue a show cause and copy it to the Listing Committee.
There is no good reason that Bursa Securities is not going through that procedure and what was Bursa Securities trying to hide from its own Listing Committee.
In closing submissions, Serba Dinamik’s counsel said that what Bursa Securities was trying to do is to force an announcement unto Serba Dinamik where contents of that announcement was a third party work product which Bursa Securities already determined was material despite nobody from EY Consulting being willing to sign it off.
There will be questions if the factual findings update is announced and those questions should be answered by EY Consulting, a contention that lawyer Mak had repeated numerous times.
The Court has fixed Jan 27 for decision (on Bursa Securities’ bid to compel Serba Dinamik to disclose the review findings). – Jan 12, 2022