KUALA LUMPUR: Bursa Malaysia Securities Berhad has publicly reprimanded Oasis Harvest Corporation Berhad (OASIS) and its principal adviser, Mercury Securities Sdn. Bhd., for breaching key regulations under the Main Market Listing Requirements (Main LR).
OASIS and Mercury Securities were found guilty of the following violations:
- Altering the Books Closing Date (BCD) & Terminating the Rights Issue – They breached Paragraphs 6.02(5) and/or 8.25(2) of the Main LR when they revised, canceled, and ultimately terminated the Rights Issue, initially announced on May 26, 2023.
- Failure to Notify Bursa Malaysia of Material Developments – They violated Paragraph 9.35A(5) of the Main LR by failing to promptly inform Bursa Malaysia Securities that the announcement and shareholder circular for the Rights Issue (dated May 26, 2023, and July 31, 2023) might not have met the disclosure requirements, particularly concerning the impairment of goodwill related to the acquisition of High Reserve F&B Sdn. Bhd.
- Negligence in Financial Due Diligence – Mercury Securities was also found in breach of Paragraph 6.02(6) of the Main LR, read alongside Paragraph 5.05(a) of the Securities Commission’s (SC) Guidelines on Submission of Corporate and Capital Market Product Proposals. The firm failed to conduct due diligence to ensure the proposed use of Rights Issue proceeds for the acquisition and deferred cash consideration would not be detrimental to investors, especially given the impairment concerns.
Bursa Malaysia Securities Stands Firm
The reprimand was issued under Paragraph 16.19(1) of the Main LR following due process, with all relevant facts and circumstances considered. Bursa Malaysia Securities emphasized that adherence to Paragraph 8.25(2) of the Main LR, which strictly prohibits altering or revoking entitlement terms once declared, is crucial for market integrity and investor protection.
Background on the Rights Issue & Violations
OASIS announced its renounceable Rights Issue on May 26, 2023, involving up to 202,804,406 new ordinary shares and 152,103,304 free detachable warrants. The proposal was approved by Bursa Malaysia Securities on July 12, 2023, and by OASIS shareholders on August 23, 2023. Of the projected RM11.3 million in proceeds, RM5.35 million (47.3%) was earmarked for paying the deferred cash consideration for the High Reserve F&B acquisition.
However, on August 30, 2023, OASIS reported a RM12 million goodwill impairment for the acquisition in its fourth-quarter financial report. Despite this, the company proceeded with setting the BCD for October 5, 2023, and submitted its abridged prospectus draft to the SC on September 21, 2023.
Later, OASIS revised the BCD to October 19, 2023, before ultimately canceling the Rights Issue altogether. The inability of OASIS and Mercury Securities to justify the viability of the Rights Issue in light of the impairment led to its termination. This sequence of events violated Paragraph 8.25(2) of the Main LR.
Additionally, OASIS and Mercury Securities failed to notify Bursa Malaysia Securities of the impairment’s impact on the Rights Issue, contravening Paragraph 9.35A(5) of the Main LR. This omission deprived investors of essential information needed for informed decision-making.
