Wednesday, August 3, 2011

Bursa Securities raps Rhythm, fines chairman RM350,000

KUALA LUMPUR: Bursa Malaysia Securities Bhd has publicly reprimanded RHYTHM CONSOLIDATED BHD [] and three of its directors for breaching the listing requirements.

Bursa Securities said on Wednesday, Aug 3 that it had imposed a fine of RM350,000 on group executive chairman Ahmad Redza Ahmad Khairuddin. The breaches were committed prior to the de-listing of Rhythm on Aug 27, 2010.

Bursa Securities said the company failed to immediately announce the numerous defaults in payment of credit facilities by the subsidiaries in 2007 and 2008 which were only announced on Feb 20, 2009 and April 10 and 24, 2009.

It cited the winding-up order dated July 9, 2008 against a subsidiary, Rhythm TECHNOLOGY [] Sdn Bhd was only announced on Dec 30, 2008.

Another winding-up petition dated Dec 3, 2008 by Alliance Bank Malaysia Bhd against Rhythm and a subsidiary, Papertech Sdn Bhd was served on Rhythm and Papertech on Jan 15, 2009 and Feb 12, 2009 respectively.'' However, Rhythm only announced the winding-up petition on Feb 20, 2009.

Bursa Securities said the company failed to make an immediate announcement following the appointments of receiver and manager.

To recap, on July 31, 2008 Rhythm Tech was notified that Malaysian Debt Ventures Sdn Bhd had appointed a receiver and manager on July 23 over the subsidiary which failed to repay the outstanding principal and interest amounting to RM5.21 million.

However, Rhythm only announced the appointment of the receiver and manager on Dec 30, 2008.

On April 24, 2009, Rhythm announced that it was an affected listed issuer pursuant to Practice Note 17/2005 (PN17).

Bursa Securities also rapped Rhythm for the deviation of about 218.9% between the unaudited and audited results for the financial year ended June 30, 2008.

The company reported an unaudited loss after taxation and minority interest of RM8.708 million in its fourth quarterly report for FY ended June 30, 2008 as compared to an audited loss after taxation and minority interest of RM27.768 million in its annual audited accounts for FY ended June 30, 2008.

'The difference of RM19.06 million between the unaudited and audited results for FY ended June 30, 2008 represented a deviation of approximately 218.9%,' it said.

As for Ahmad Redza, he was found to be in breach of the Listing Requirements for 'permitting knowingly or where he had reasonable means of obtaining such knowledge', Rhythm to commit the breaches.

Bursa Securities also rapped the former directors Datuk Abd Hamid Abdul @ Dol who was an independent director and audit committee chairman (resigned on Oct 20, 2009) and Ab Hakim Hamat, independent director and audit committee member (resigned on May 15, 2009).

It said Ahmad Redza, as group executive chairman and the only executive director then was responsible for the overall management and financial affairs of the company.

It said he had the primary responsibility to ensure the proper discharge of the company's obligations under the LR.

It is not acceptable for him to merely rely on management to ensure compliance with the LR particularly when he had assured the Board that he would ensure close monitoring of the operations and full compliance of all regulatory requirements including making the necessary announcements to Bursa Securities in a timely manner.

As for the deviation, Ahmad Redza,'' Abd Hamid and Hakim Bin Hamat had failed to undertake reasonable assessment / enquiries and address the following audit issues raised by the external auditors to them prior to the release of the fourth quarter results for 2008.

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