Focus View
Punish directors for delays
FocusM team | 19 May 2017 00:30
IT’S never a good thing when listed companies delay releasing their financial results or annual reports. For one, the share price slides. The companies then get suspended or later delisted if the results or annual reports are not filed. But such delistings or suspensions don’t seem to bother directors.

Recently, at least three companies were penalised for failing to furnish their annual reports on time. They were Java Bhd, Wintoni Bhd and Perak Corp Bhd. All had trading in their shares suspended.

While most companies which delay their annual reports offer the usual reason, Java’s excuse was unusual. It blamed a lack of company resources for the delay.

What does the company mean by “lacking resources”? Surely, it could have hired the resources to complete the annual report on time. It did finally release its annual report on May 5. However, its audited accounts were qualified by the external auditors.

Java has to put its house in order. In January, it slipped into PN17 status after ceasing its timber operations. It has yet to come up with a regularisation plan.

In the case of Wintoni, it not only delayed releasing its annual report, but also a boardroom tussle has erupted. Its annual report was delayed due to the pending
audit finalisation. To add to its woes, the company suffered losses in its FY15.

As for Perak Corp, its excuse was that its external auditors required more time to resolve the substantial outstanding audit and accounting issues with the management. The company is controlled by the Perak government and it is inexcusable that this can happen to a government-controlled listed company.

Perak Corp recently appointed Messrs KPMG PLT as the external auditors for FY16, following the resignation of the previous auditors Messrs Ernst & Young. Thus, KPMG would need more time.

Not surprisingly, the shares of all three companies have not been performing well. In the case of Wintoni, it has fallen from six sen in January to four sen. Java’s share price, too, fell from 11 sen in February to four sen and that of Perak Corp from RM2.13 in April to RM1.83.

Clearly, since it’s the minorities who suffer, the regulators should come down hard on the board of directors rather than just suspend or delist such errant companies.