Serba Dinamik CEO fined for delayed share disposal disclosure during closed period

Bursa Malaysia Securities Bhd publicly reprimanded and fined RM15,000 to Datuk Mohd Abdul Karim Abdullah (picture), the Group MD/CEO of Serba Dinamik Holdings Bhd, for his failure to promptly inform the company secretary regarding his share disposal during a closed period. 

The delay resulted in the required disclosure to the stock exchange being postponed, leading to a breach of securities regulations.

The action was taken by the stock exchange regulator following the violation of paragraph 14.08(d) of the Bursa Malaysia Securities Main Market Listing Requirements (Main LR).

The breach in question pertained to Karim’s failure to notify the company secretary within one full market day after disposing of his interest in 107.96 million Serba Dinamik shares on May 9, 2022.

This notification lapse prevented Serba Dinamik from promptly disclosing this information, as required by paragraph 14.08(d)(i)-(iii) of the Main LR. 

The public announcement of the disposal only occurred on August 12, 2022.

Paragraph 14.08(d) mandates that directors dealing in their company’s listed securities during a closed period must provide written notice to the company secretary within one full market day after the transaction, which should then be immediately announced to the exchange. 

The notice and announcement should include key details like the date of the dealing, the consideration involved, and the number of securities affected.

A “closed period” as defined in paragraph 14.02(b)(i) of the Main LR covers the period starting 30 calendar days before the targeted date of announcement up to the date of the quarterly reports’ announcement to the exchange.

The decision to publicly reprimand and fine Karim was based on paragraph 16.19(1)(b) of the Main LR, following due process and consideration of all relevant factors, including the breach’s materiality and the objectives of Chapter 14 of the Main LR. Chapter 14 aims to enhance transparency and market clarity, ensuring that shareholders and investors are promptly informed about insider dealings during and outside closed periods.

Bursa Malaysia Securities noted the seriousness of this contravention and reminded Karim of his duty to uphold corporate responsibility and accountability to shareholders and the investing public.

To recap, Karim had announced his intention to deal in Serba Dinamik securities during a closed period from May 1 to May 30, 2022. 

However, a force-selling of his interest in Serba Dinamik shares occurred on May 9, 2022, representing 2.91% of the total share capital, without prior notice. 

The announcement of this disposal was significantly delayed, raising concerns about compliance and oversight.

Karim’s explanation that the disposal happened without his knowledge was deemed unacceptable, given his awareness of the circumstances and terms of the pledge allowing force-selling. 

His failure to monitor, establish adequate processes for compliance, and respond to enquiries demonstrated a disregard for the Main LR and a lack of diligence in fulfilling his duties.

This regulatory action underscores the importance of adherence to securities regulations and maintaining the highest standards of corporate governance in the Malaysian financial market. –TMR