I set out five tips on how I regularly check the Bursa Malaysia (stock exchange) Company Announcements page to gain legal and commercial awareness. This note is based on an email I sent out to my team members.
Tip #1: Litigation Advantage
I monitor companies that my client may be litigating against. You may need to immediately utilise the information for ongoing litigation. I give an example. Once, I was litigating against a public listed company (PLC). One day, I came across its Bursa announcement that the PLC’s auditors issued a disclaimer on its audit opinion and expressed concerns on the PLC continuing as a going concern. The PLC slipped into PN17 status (Practice Note 17, essentially a key sign of financial weakness).
I updated the client immediately on this development. I advised them to apply for security for costs. The demand for security for costs was issued that day itself, and the letter cited the PLC’s own admissions that it was unlikely to continue as a going concern. The client will appreciate the pro-activeness. The speed of the demand and the court application to follow can exert a lot of pressure on the opponent.
In another case, I was litigating against another PLC. Parties were knee-deep in several material litigation proceedings. But as I tracked the PLC’s announcements, quarterly reports and annual reports, I saw no reporting of that material litigation. That also made me think why was the PLC trying to hide the fact that there was such material litigation. Would there be a way to exert pressure or cast aspersions on that PLC?
Tip #2: Material Litigation Tab
Separately, I would also use the Material Litigation tab. You click on ‘General Announcement’ and as the sub-category ‘Material Litigation’. This gives me an idea of the type of litigation that the listed companies are involved in. Are there any shareholder disputes brewing or boardroom tussles? Is there an arbitration launched against an airline company?
I want to maintain a feel of how the litigation scene is shaping up.
Tip #3: Winding Up / Restraining Order Tab
Related to that, I also click on the Winding Up tab. This is under ‘General Announcement’ and the sub-category of ‘Winding up / Receiver & Manager / Restraining order’.
Here, there may be slightly irrelevant information on the voluntary winding up of some of the PLC subsidiaries. But I also get information about any significant court winding up actions against PLC themselves or its subsidiaries. Or if a PLC undertakes a scheme of arrangement, the announcements will also appear in this section. All of this may have an impact to the larger body of creditors of a PLC. This may then impact ongoing litigation or my clients.
Tip #4: Commercial Awareness
I also track the commercial developments of my client or of the industry. It allows me to see what significant investments are being made. Are there any corporate exercises? It gives me a feel of the corporate scene and the corporate environment that my clients are operating in.
Tip #5: Companies Act 2016 Developments
Finally, I regularly track the Bursa announcements to monitor Companies Act 2016 developments. Take a read of the wordings of the Constitution that are being tabled at the various AGMs. Monitor how the PLCs have tried to comply with the new Malaysian Code of Corporate Governance through their CG Report. I also try to follow how the companies are utilising some of the new provisions of the Act to carry out corporate exercises. For example, how a PLC undertook a selective capital reduction using the Solvency Statement route.
It is a bit painstaking to sieve through all the announcements but you can gain so much knowledge.