November 9, 2021

Serba Dinamik Wants Bursa Malaysia Suit!

 The country's oil and gas company, Serba Dinamik Holding Bhd took legal action against Bursa Malaysia over the issue of the stock exchange which issued a directive to conduct a special independent review and disclose the results of the review.

On Wednesday, November 3, Serba Dinamik filed an originating suit (OS) against the stock exchange in the Kuala Lumpur High Court.

The stock exchange in its response said they would not back down and defend their statutory actions, roles and functions in the market. He added that as the front -line regulator of the capital market, they have the right to exercise their powers in accordance with the listing requirements in the interest of maintaining an orderly and fair market.

The issue between Serba Dinamik and Bursa arose when the company stated that Bursa did not have the authority to direct the company to make announcements on material that was unlikely to comply with paragraphs 9.03 and 9.35A of the MMLR and any “fact finding updates” that may or may not be used by its auditors to form an audit opinion at the end of the audit of the company’s financial statements.

As a result, Serba Dinamik found its share price plunged 78% and demanded damages against Bursa. Apart from the potential damages to be assessed and the costs that may be awarded to the Exchange, the company said the lawsuit is not expected to have any other material financial impact on it for the current financial year ended June 30, 2022.

Scanning this issue, in mid -May, KPMG issued a company's audit report on transactions amounting to RM4.54 billion to the company's independent directors.

The resulting audit issues are based on the financial accounts for the financial year ended 31 December 2020.

Following that, Serba Dinamik decided to sue KPMG alleging that the auditor was negligent and in breach of its contractual and statutory obligations.

The company's shares last traded at 35 sen before the trading suspension had fallen to RM1.61 before the audit issue. About RM4.6 billion of market capitalization was lost due to large share sales.

Serba Dinamik's largest shareholder, Datuk Mohd Abdul Karim Abdullah, who is the group's managing director and chief executive officer, disposed of his entire holding of 55.9 million warrants prior to the suspension of trading.

The derivative block, which equates to 6.34% of the total warrants was sold when the price of the warrants hovered near the low level.

The company changed its financial year to end on June 30th. For the cumulative period of 18 months ended June 30, Serba Dinamik recorded a net profit of RM759.98 million or 20.49 sen per share, on revenue of RM8.606 billion.