KUALA LUMPUR: South Malaysia Industries Bhd (SMI), in arguably the first case of its kind in the country, has gone to court to compel a "participating organisation" (PO) to disclose further details of certain selling shareholders it represents.
SMI is looking to compel the PO, Kenanga Investment Bank Bhd (Kenanga IB), to provide further details of the sellers pertaining to a change in its substantial shareholder, as the former believes that there is a possible breach of Section 176 of Capital Markets and Services Act 2007.
"Section 176 relates to stock market manipulation. This case is probably the first of its kind - a novelty of sorts," Minority Shareholders Watch Group's former chief executive officer Devanesan Evanson told Business Times today.
Devanesan said companies or individuals who trade through POs enjoy confidentiality, but the regulators have the power to direct POs to reveal the identities of the trading parties and related information.
"However, if there is a court directive instructing a PO to reveal details of such trade, the PO will be obliged to comply. A public listed company is not in charge of detecting market manipulation (Section 176), the regulators are. It is the responsibility of the SC to enforce Section 176," he explained.
Business Times has reached out to Kenanga IB for comment.
In its filing to Bursa Malaysia on Friday, SMI said it had filed an application on July 3, seeking identification of the sellers from Kenanga IB, which is the stockbroker for Target 1 Sdn Bhd and Velocity Capital Sdn Bhd.
"The grounds for the above application by the company is that the company believes that there is a possible breach of Section 176 of Capital Markets and Services Act 2007," it said.
The transactions involve the acquisition of 32.58 million shares by Velocity Capital and/or Target 1 as well as the acquisition of 2.5 million share by Velocity Capital through open market for Target 1 on June 5 this year.
It also sought details on the acquisition of 29.3 million shares by Velocity Capital via direct business transaction forTarget 1 on the same date.
SMI also requested Kenanga IB to provide the complete information within seven days of the court order in the form of affidavits filed in court and served to the company's solicitors.
SMI also sought liberty to apply for additional documents that Kenanga IB may hold or have custody of.
The case management has been fixed on July 17.