PETALING JAYA: Bursa Malaysia Securities Bhd has publicly reprimanded and/or fined five directors of Industronics Bhd for breaching the Main Market listing requirements.
Independent chairman Jacob Leung Kwok Kuen and executive director Amy Liu Wing Yee both received a public reprimand and a fine of RM200,000 each.
Independent directors Tsui Kwok Ho and Lu Zhi Qin have been publicly reprimanded and fined RM50,000 each, while audit committee chairman and independent director Fung Ling Yip received a public reprimand.
Leung and Tsui resigned from the company on Jan 23, 2018, while Fung resigned on July 26, 2018.
In a statement, the market regulator said Liu, Leung, Tsui and Lu had failed to ensure that a deposit agreement entered into with Singapore-based Vashion Group Ltd was “fair and reasonable to Industronics and not to the detriment of the company and its shareholders”.
“Fung...fail[ed] to ensure that the continuing advances to Vashion by virtue of the extensions of the deposit agreement until June 20, 2016 via supplemental agreements...were fair and reasonable and not to the detriment of the company and its shareholders,” it said.
According to the statement, despite the materiality of the deposit, there was no evidence of any proper enquiry, assessment, analysis or justification undertaken by the directors before entering into the agreement and payment of the deposit.
“The directors had proceeded to approve the deposit agreement merely via a Directors Circular Resolution (DCR) dated July 2, 2014 after teleconferences on July 2, 4 and 9, 2014 where the directors had only discussed the idea and material terms of the draft deposit agreement.
“The directors had also via the DCRs dated Oct 10, 2014, Dec 31, 2014, March 31, 2015, June 30, 2015, Sept 30, 2015 and/or June 1, 2018 approved the supplemental deposit agreements which essentially allowed the continuing advances to Vashion/deferred the refund of the deposit...without any evidence of discussion with Vashion on the proposed subscription until December 2015,” it said.
To recap, on July 9, 2014, Industronics entered into a deposit agreement with Catalist-listed Vashion for the proposed subscription of shares in Vashion by way of private placement.
Industronics had paid the deposit to Vashion on July 9 and July 16, 2014, which represented 11.7% of the company’s net assets and 26.3% of the cash and bank balances as at June 30, 2014.
The deposit agreement was initially valid until Sept 30, 2014 but was subsequently extended every three months until June 30, 2016 via supplemental deposit agreements.
Vashion subsequently made partial repayments of the deposit on Feb 5, 2016 and Feb 25, 2016.
On Aug 26, 2016, the balance of the refundable deposit of approximately S$1 million (RM3.1 million) was converted into a loan with interest at 3% per month to be paid by Vashion within 3 months from July 1, 2016 which was subsequently extended to Dec 31, 2016.
The loan together with interest was fully repaid by Vashion on Dec 22, 2016.
