KUALA LUMPUR: Bursa Malaysia Securities Berhad has publicly reprimanded Reach Energy Berhad (REACH) and seven of its directors for breaches of the Main Market Listing Requirements (Main LR). Additionally, six directors were each fined RM50,000.
REACH was found to have breached paragraph 8.04(3)(b) of the Main LR, read together with paragraph 4.1(a) of Practice Note 17 (PN17), for failing to immediately announce its PN17 status upon releasing its fourth-quarter financial results for the period ended Dec 31, 2022.
The company had triggered PN17 criteria as its shareholders’ equity on a consolidated basis stood at RM111.29 million, or 22.8% of its share capital of RM488.98 million, based on the 2022 fourth-quarter results. Furthermore, its external auditors had highlighted a material uncertainty related to going concern (MUGC) in the company’s 2021 audited financial statements.
Despite these red flags, REACH only made its PN17 announcement on April 3, 2023 — more than a month after it should have done so.
Penalties on Directors
Seven directors were found to have breached paragraph 16.13(b) of the Main LR for allowing REACH to commit the breach. The penalties imposed are:
| No. | Name | Designation | Penalty |
|---|---|---|---|
| 1 | Y.M. Tunku Datuk Nooruddin Bin Tunku Dato’ Sri Shahabuddin | Executive Director (resigned 29 Mar 2023) | Public reprimand and RM50,000 fine |
| 2 | Tan Sri Dr. Azmil Khalili Bin Dato’ Khalid | Non-Independent Non-Executive Chairman | Public reprimand and RM50,000 fine |
| 3 | Yusoff Bin Hassan | Independent Non-Executive Director | Public reprimand and RM50,000 fine |
| 4 | Nik Din Bin Nik Sulaiman | Independent Non-Executive Director, Audit Committee Chairman (resigned 29 Mar 2023) | Public reprimand and RM50,000 fine |
| 5 | Dato’ Jasmy Bin Ismail | Independent Non-Executive Director, Audit Committee Member (resigned 29 Mar 2023) | Public reprimand and RM50,000 fine |
| 6 | Datin Noor Lily Zuriati Binti Abdullah | Independent Non-Executive Director (resigned 29 Mar 2023) | Public reprimand and RM50,000 fine |
| 7 | Izlan Bin Izhab | Senior Independent Non-Executive Director (resigned 29 Mar 2023) | Public reprimand only |
No fine was imposed on Izlan Bin Izhab due to personal extenuating circumstances.
Bursa Malaysia Securities emphasised that the delay in announcing REACH’s PN17 status deprived shareholders and investors of crucial information regarding the company’s financial condition, including the risks of suspension and delisting if the company failed to regularise its financial situation.
Background
REACH triggered the PN17 criteria following the release of its fourth-quarter 2022 results on Feb 28, 2023. However, it only made the First Announcement on April 3, 2023, following engagement from Bursa Malaysia Securities on March 31, 2023.
Bursa noted that there was no reasonable explanation for the delay and stressed that the board, particularly its non-executive directors, had failed to exercise sufficient oversight despite financial red flags — including staggering losses of RM227.65 million recorded in the fourth quarter of 2022 and a significant reduction in shareholders’ equity.
The regulator reminded REACH and its board of directors of their responsibilities to uphold corporate governance standards and ensure timely disclosure to safeguard the interests of shareholders and the investing public.
