The Edge: Companies must be delisted once winding-up order served

PUTRAJAYA (Jan 20): The Court of Appeal has ruled that a listed company that has been served with a winding-up order must be delisted, based on Bursa Malaysia’s listing rules.

In a landmark ruling today, the appellate court said the language used in Rule 16 (2) of Main Market Listing Requirements (MMLR) makes it clear that the delisting is mandatory, and the exchange does not have the discretion to maintain the company’s listing status.   

The court ruled this in its unanimous decision to dismiss an appeal brought by Bursa Malaysia against liquidator Datuk Mohd Afrizan Husain with regards to the winding up of Wintoni Group Bhd.

Afrizan’s counsel Mohd Faizal Khalid told The Edge that currently, companies that have a winding-up order made against them are given time to regularise their operations or to pay off creditors, if requested by the companies with the intention of maintaining their listing status.

The decision today, Faizal said, does not give Bursa Malaysia the option of allowing this, once a winding-up order has been made.

“This applies to all listed companies,” Faizal said.

This means companies will not be given time to look for any white knight to regularise their financials.  

To recap, on Oct 3, 2017, Wintoni said in a bourse filing that the company had then been wound up by order of the High Court upon the filing of a petition by a creditor. Mohd Afrizan was then appointed as the liquidator to wind up the company.

However, on Sept 24, 2019, Wintoni said the winding-up order against Wintoni will be terminated, subject to the liquidator making payments to the company’s creditors within 14 days. Wintoni said the High Court had granted the termination order upon an application by the company’s contributory Cheah Kwong Lee.

Wintoni, whose shares have been suspended from trading since May 8, 2017, was categorised as Guidance Note 3 company in February 2016. The ACE-Market listed firm has yet to regularise until now.   

Back to today’s decision, Rule 16 (2) of MMLR states that the exchange shall delist a listed company, in any one of the following circumstances:

(a) pursuant to a directive, requirement or condition imposed by Securities Commission Malaysia (SC), after which the exchange will notify the SC of the decision to delist,

(b) upon the maturity or expiry of a class of securities,

(c) upon the commencement of a voluntary winding-up of a listed corporation in accordance with the Companies Act, or

(d) upon a winding-up order being made against a listed company.

In dismissing Bursa Malaysia’s appeal, the Court of Appeal bench led by Justice Lau Bee Lan, upheld the decision of the High Court to allow Afrizan’s judicial review application against the exchange.

The judicial review relates to Bursa Malaysia’s Listing Committee’s decision to take action against him, which was certified by the exchange’s Appeals Committee.

Action was taken on Afrizan for allegedly committing breaches of Rules 9.22 (1) and 9.23(1) of the MMLR, for causing and permitting the delay in the announcement or issuance of the quarterly or annual report of Wintoni.

Bursa Malaysia had claimed that Afrizan failed to comply with the MMLR. However, his lawyers argued that the Companies Act prohibits him from complying.

Under the Companies Act, only directors can prepare the company’s accounts. But since the company is wound up, the directors have lost their powers, argued Afrizan’s lawyers.

They also asserted that their client cannot delegate powers to the company’s directors to prepare the accounts as Bursa Malaysia had wanted, because it was illegal to do so.

The other judges who sat with Justice Lau were Justice Datuk M Gunalan and Justice Datuk Abu Bakar Jais.

The bench allowed an application by Bursa Malaysia’s lawyer Pretta Pillai of Messrs Skrine for a stay of today’s decision, pending an appeal to the Federal Court.

The appellate court ordered Bursa Malaysia to pay costs of RM15,000 to Afrizan.

High Court judge Datuk Nordin Hassan had ruled that the decision by Bursa Malaysia’s Listing Committee and Appeals Committee was ridden with errors and irrationality.

Justice Nordin, now a Court of Appeal judge, ruled that under Rule 16 (2), the word “shall” is deemed mandatory. 

Source: The Edge

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