KUALA LUMPUR: It is the duty and responsibility of Serba Dinamik Holdings Bhd board of directors to respond accordingly to issues raised by its auditors, Institute of Corporate Directors Malaysia (ICDM) chairman Tan Sri Zarinah Anwar said today.
Zarinah said Serba Dinamik board could not be side-stepping on the matter as KPMG is the oil and gas service provider's external statutory auditors and that their job is to raise red flags.
"We have seen that the board does not respond to the issue, resulting in shareholders voted with their feet.
"And overnight, there is a collapse of share price as well as diminishing of market capitalisation," she told a virtual media conference after the ICDM's fourth annual general meeting (AGM) today.
On May 31, Serba Dinamik hit the limit down immediately after resuming trading, bogged down by the company's audit issues.
The company had requested for trading suspension for two days since May 27.
As of June 18, RM3.69 billion was wiped off from the company's market capitalisation from RM6 billion before the audit issues were made public.
Serba Dinamik's market capitalisation stood at RM2.31 billion as of Friday.
ICDM president and chief executive officer Michele Kythe Lim said while the issue is still under investigation, this shows how crucial it is for independent directors to communicate well.
"It is important that directors, as the steward of their organisations and more so independent directors, in this case, to communicate and to communicate well and ensure that the market value is not eroded and that they build up that trust with their shareholders out there on the issues raised," she said.
Meanwhile, Zarinah said in conjunction with the AGM, ICDM published its second report covering progress and key organisational milestones for the financial year ended December 31, 2020 (FY20) and the period from January to April 2021 to reflect the most current updates.
Among the notable highlights are the growing ICDM membership base with 671 individual and 50 corporate members, 132 sessions of virtual director development programmes, the launch of the Aspiring Directors Immersion Programme (ADIP) and the release of the inaugural Malaysia Board Diversity Study and Index.
"Before the global pandemic, board leadership in Malaysia was already in the midst of a paradigm shift, with regulatory measures put in place to transition boards' traditional conformance-oriented oversight to one that is agile, responsive and future-focused.
"Covid-19 has accelerated that process, with the transformation journey gaining a new level of momentum as companies are driven to survive amidst great uncertainty and unpredictability.
"Disruption will only accelerate. And, to ensure companies stay competitive and relevant, it is imperative for boards to speedily transition from a reactive approach to a proactive, sustainability-driven governance model," she said.
Zarinah said this change is echoed by investors and other stakeholders, with increased scrutiny on businesses' sustainability commitment, particularly on environmental, social and governance (ESG) practices.
"On this front, boards and directors must continue to keep up with the intensity of market upheavals and disruptions, proactively address issues through regular communications across stakeholders, and most importantly, conduct continual board reviews, board refreshment and elevate director competencies for improved performance delivery," she added.