News
MSWG Comments on Securities Commission’s RM2.5 Million Restitution Suit Against FTEC Resources Managing Director
1 October 2007
The Securities Commission stands ready to take restitution actions against the managing director of FTEC Resources Berhad (FRB) for his wrongful utilization of cash proceeds raised from the Company’s Initial Public Offering (IPO) is to be applauded.
Based on the issue price of RM0.45 per share of RM0.10 each under its prospectus for a public listing, the Company raised a total of about RM17.946 million from its IPO, which were expected to be used as follows:
The Managing Director’s utilization of RM2.496 million for his personal purpose (not reflected in FRB Group’s unaudited quarterly results ended 31 March 2004, accounted for 13.9% of the total proceeds.
SC’s restitution actions against the Managing Director would strongly remind companies to abide by regulation. A director of a company owes certain fiduciary duties to the company and shareholders. One of the foremost fiduciary duties that a director owes is the duty to act bona fide and in the interest of the company. This duty is referred to as the duty of trust and diligence, which is also referred to a director as a trustee over the company’s funds. In a strict legal sense of certain proven legal cases, directors could be liable as trustees for breach of trust, if they misapplied the funds of the company.
Any misuse or misapplication of funds should have been detected by members of audit committee where qualified, committed, independent and tough-minded independent directors representing the most reliable guardians of the public interest, would have spotted it and queried. Audit committee’s duties should not be limited to a perfunctory function; it should be much more to raise tough questions on management (in this case, the managing director/executive director heading the management team) internal and external auditors, if not how could investors’ interest be served.
The SC whose duty it is to bring dubious directors to book, has done its part well, without fear or favour. The general interest of all shareholders and stakeholders is to request SC and the Government to be tough and weed out bad and unethical directors. As generally many investors feel such directors need to be subject to a thorough, exhaustive investigation to determine whether they are still worthy of directorship.
Abdul Wahab Jaafar Sidek
Chief Executive Officer
Minority Shareholder Watchdog Group (MSWG)
Dated: 1 October 2007
1 October 2007
The Securities Commission stands ready to take restitution actions against the managing director of FTEC Resources Berhad (FRB) for his wrongful utilization of cash proceeds raised from the Company’s Initial Public Offering (IPO) is to be applauded.
Research and development |
RM3,200 |
Working capital |
13,046 |
Estimated listing expenses |
1,700 |
17,946 |
Based on the issue price of RM0.45 per share of RM0.10 each under its prospectus for a public listing, the Company raised a total of about RM17.946 million from its IPO, which were expected to be used as follows:
The Managing Director’s utilization of RM2.496 million for his personal purpose (not reflected in FRB Group’s unaudited quarterly results ended 31 March 2004, accounted for 13.9% of the total proceeds.
SC’s restitution actions against the Managing Director would strongly remind companies to abide by regulation. A director of a company owes certain fiduciary duties to the company and shareholders. One of the foremost fiduciary duties that a director owes is the duty to act bona fide and in the interest of the company. This duty is referred to as the duty of trust and diligence, which is also referred to a director as a trustee over the company’s funds. In a strict legal sense of certain proven legal cases, directors could be liable as trustees for breach of trust, if they misapplied the funds of the company.
Any misuse or misapplication of funds should have been detected by members of audit committee where qualified, committed, independent and tough-minded independent directors representing the most reliable guardians of the public interest, would have spotted it and queried. Audit committee’s duties should not be limited to a perfunctory function; it should be much more to raise tough questions on management (in this case, the managing director/executive director heading the management team) internal and external auditors, if not how could investors’ interest be served.
The SC whose duty it is to bring dubious directors to book, has done its part well, without fear or favour. The general interest of all shareholders and stakeholders is to request SC and the Government to be tough and weed out bad and unethical directors. As generally many investors feel such directors need to be subject to a thorough, exhaustive investigation to determine whether they are still worthy of directorship.
Abdul Wahab Jaafar Sidek
Chief Executive Officer
Minority Shareholder Watchdog Group (MSWG)
Dated: 1 October 2007
