Bursa Malaysia Securities has fined KAF Investment Bank RM300,000 and issued a public reprimand over due diligence and disclosure lapses tied to an ACE Market listing submission.
The action relates to KAF Investment Bank Berhad’s role as sponsor for an applicant seeking admission to the ACE Market.
The exchange said the bank breached multiple ACE Market Listing Requirements by failing to make all reasonable due diligence enquiries and consider relevant matters involving non-compliances tied to the certificate of completion and compliance of the applicant’s two core manufacturing plants.
It also found that the pre-admission consultation pack and draft prospectus submitted for the proposed listing were inaccurate and contained material omissions.
The documents did not disclose the non-compliances tied to the two plants or the fact that the applicant was seeking new or revised certificates for them.
Bursa Malaysia Securities said KAF Investment Bank had known for months before the submission that the applications were still pending.
Listing documents omitted key compliance issues
Instead of seeking independent verification from the local authority, the bank relied on the due diligence working group’s and architects’ assessment of the old certificates, which the exchange described as subjective, uncertain and inconclusive.
It said that was insufficient given that the two plants were the applicant’s core assets and that their compliance status was material to the listing assessment.
The issue surfaced after Bursa Malaysia Securities raised queries on the draft prospectus, which showed that one of the manufacturing plants had a newly issued certificate.
The non-compliances were later disclosed, and due diligence solicitors confirmed with local authorities that a revised certificate was required because of alterations to the previous building plan.
KAF Investment Bank later withdrew the initial listing application and resubmitted it only after a new certificate had been obtained for the other manufacturing plant.
Bursa Malaysia Securities said the omissions undermined the integrity of the due diligence process and affected its ability to assess the applicant’s suitability for listing based on complete and accurate information.
In addition to the reprimand and fine, KAF Investment Bank has been directed to table the decision to its board and conduct a comprehensive review of the adequacy and effectiveness of its internal policies, processes and procedures relating to its role as an adviser and sponsor.
The exchange said it viewed the breaches seriously given the central role sponsors and advisers play in assessing ACE Market applicants.
It added that the ACE Market is a sponsor-driven market and that listing documents must contain proper, accurate and sufficient disclosures.
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