Federal Court rules regulator has discretion to maintain listing of wound-up company

25 February 2022

Bursa Malaysia Securities Berhad v Mohd Afrizan bin Husain (unreported)

In Bursa Malaysia Securities Berhad v Mohd Afrizan bin Husain, the respondent was the former liquidator of Wintoni Group Berhad (“Wintoni”), a listed corporation on the ACE Market of the appellant (“Bursa Securities”) at the material time. Shortly after his appointment as liquidator, the respondent issued a Letter of Undertaking where the respondent undertook to comply with ACE Market Listing Requirements (“ACE LR”) in consideration of Bursa Securities allowing the continued listing of Wintoni on the Official List of Bursa Securities. The respondent, however, failed to comply with the ACE LR.

Consequently, Bursa Securities publicly reprimanded the respondent for his breaches of the ACE LR. The respondent commenced judicial review proceedings seeking, among others, to quash Bursa Securities’ decision to publicly reprimand him for failing to comply with the ACE LR. In this regard, both the High Court and the Court of Appeal found in favour of the respondent.

The Federal Court considered:

• whether, on a proper construction/interpretation of the ACE LR and Main Market Listing Requirements (“Main LR”) (collectively, “Listing Requirements”), there was a mandatory obligation on Bursa Securities to immediately and summarily de-list a listed corporation upon the listed corporation being served with a winding-up order without any room for the exercise of discretion; and
• whether the liquidator of a wound-up listed corporation has the power and/or duties to comply with and/or ensure compliance by the listed corporation with the Listing Requirements.

In allowing Bursa Securities’ appeal, the Federal Court held that:

• Rule/Paragraph 16.11(2) of the ACE LR/Main LR, which provides that Bursa Securities shall de-list a listed corporation upon a winding-up order being made against a listed corporation, is to be afforded a purposive interpretation such that there is no mandatory obligation on Bursa Securities to immediately de-list a listed corporation in liquidation upon a winding-up order being made at first instance. Instead, Bursa Securities, whose primary duty is to protect the interest of the public investors under the Capital Markets and Services Act 2007, has the discretion to defer the de-listing of a listed corporation in liquidation until all legal challenges/appeals against the winding-up order have been exhausted; and

• where a wound-up corporation continues to be listed, the liquidator who is the person in control of the listed corporation must comply with and/or ensure compliance by the listed corporation with the Listing Requirements.