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06-01-2012, 07:41 AM
The Straits Times
Jan 6, 2012
3 China Sky directors resign
Company's non-compliance with SGX directive reason behind notice
By Melissa Tan
SUSPENDED counter China Sky Chemical Fibre appears to have taken its unprecedented act of defiance of Singapore's financial regulators to a new level.
By press time last night, the firm had missed a final deadline of yesterday set by the Singapore Exchange (SGX) to appoint a special auditor to look into some questionable transactions.
It seemed unlikely that it will comply, considering that its three independent directors - Mr Er Kwong Wah, Mr Lai Seng Kwoon and Mr Yeap Wai Kong - quit the company yesterday in a dramatic late night notice to the SGX. Each cited the firm's non-compliance with the SGX directive as the reason for his resignation. A company secretary, Tao Li, also resigned.
Mr Er had just been appointed chair of the audit committee on Jan 1, and Mr Lai had been appointed chair of the nominating committee. Both could not be reached for comment.
Mr Lai's independence came into question after it was disclosed that his firm, SK Lai & Co, had provided accounting-related services to China Sky from 2008 to 2010. This was one of the red flags that triggered the SGX directive.
The SGX was also concerned over events surrounding a planned land acquisition in Fujian province that was later cancelled. All eyes are now on the SGX, which had not stated what action it would take if China Sky failed to meet the deadline. After an increasingly bitter war of words between the bourse operator and the firm, SGX issued the final deadline last Friday.
The SGX had the full backing of the Monetary Authority of Singapore, which issued a statement saying China Sky should comply with SGX's directive.
China Sky, which makes high-end nylon fibres, could not be reached for comment yesterday.
'It's not fruitful to second-guess what's going to happen,' said Mr Robson Lee, corporate lawyer and deputy secretary of the Securities Investors Association (Singapore).
'The exchange has to come out and explain what its next course of action will be, so the market is aware of the roadmap ahead. It's also time the audit committee came out to explain to the market how they feel about the compliance directive. All this is information the market ought to know.'
Some lawyers say that not complying with the request to appoint a special auditor could be seen as a failure to disclose required information to the exchange, a requirement under Section 203 of the Securities and Futures Act.
The SGX website states that the disciplinary action taken against breaches of SGX rules may include expulsion.
Trading in the counter was suspended on Nov 17, the day after the SGX directed China Sky to appoint the special auditor. The shares closed at 10.2 cents.
Based on that price, its 814.6 million shares outstanding give China Sky a market value of about $83.1 million.
There were 3,056 registered shareholders as of March 10 last year. About 48.86per cent are held by the public.
China Sky's substantial shareholders include Asia Fountain Investment, with 10.29 per cent, and Rock Mart Equities, which holds a 37.75 per cent stake.
Rock Mart Equities is linked to its chairman, Mr Cheung Wing Lin, and chief executive, Mr Huang Zhong Xuan.
The status of China Sky's financial statements for 2011 remain under a cloud.
SGX had said last week that it was 'prepared to grant an extension of time to the company to comply with its financial reporting obligations under the listing manual in order to facilitate the special audit'.
China Sky's external auditor, Deloitte & Touche, yesterday said it could not comment due to client confidentiality.
melissat@sph.com.sg
Jan 6, 2012
3 China Sky directors resign
Company's non-compliance with SGX directive reason behind notice
By Melissa Tan
SUSPENDED counter China Sky Chemical Fibre appears to have taken its unprecedented act of defiance of Singapore's financial regulators to a new level.
By press time last night, the firm had missed a final deadline of yesterday set by the Singapore Exchange (SGX) to appoint a special auditor to look into some questionable transactions.
It seemed unlikely that it will comply, considering that its three independent directors - Mr Er Kwong Wah, Mr Lai Seng Kwoon and Mr Yeap Wai Kong - quit the company yesterday in a dramatic late night notice to the SGX. Each cited the firm's non-compliance with the SGX directive as the reason for his resignation. A company secretary, Tao Li, also resigned.
Mr Er had just been appointed chair of the audit committee on Jan 1, and Mr Lai had been appointed chair of the nominating committee. Both could not be reached for comment.
Mr Lai's independence came into question after it was disclosed that his firm, SK Lai & Co, had provided accounting-related services to China Sky from 2008 to 2010. This was one of the red flags that triggered the SGX directive.
The SGX was also concerned over events surrounding a planned land acquisition in Fujian province that was later cancelled. All eyes are now on the SGX, which had not stated what action it would take if China Sky failed to meet the deadline. After an increasingly bitter war of words between the bourse operator and the firm, SGX issued the final deadline last Friday.
The SGX had the full backing of the Monetary Authority of Singapore, which issued a statement saying China Sky should comply with SGX's directive.
China Sky, which makes high-end nylon fibres, could not be reached for comment yesterday.
'It's not fruitful to second-guess what's going to happen,' said Mr Robson Lee, corporate lawyer and deputy secretary of the Securities Investors Association (Singapore).
'The exchange has to come out and explain what its next course of action will be, so the market is aware of the roadmap ahead. It's also time the audit committee came out to explain to the market how they feel about the compliance directive. All this is information the market ought to know.'
Some lawyers say that not complying with the request to appoint a special auditor could be seen as a failure to disclose required information to the exchange, a requirement under Section 203 of the Securities and Futures Act.
The SGX website states that the disciplinary action taken against breaches of SGX rules may include expulsion.
Trading in the counter was suspended on Nov 17, the day after the SGX directed China Sky to appoint the special auditor. The shares closed at 10.2 cents.
Based on that price, its 814.6 million shares outstanding give China Sky a market value of about $83.1 million.
There were 3,056 registered shareholders as of March 10 last year. About 48.86per cent are held by the public.
China Sky's substantial shareholders include Asia Fountain Investment, with 10.29 per cent, and Rock Mart Equities, which holds a 37.75 per cent stake.
Rock Mart Equities is linked to its chairman, Mr Cheung Wing Lin, and chief executive, Mr Huang Zhong Xuan.
The status of China Sky's financial statements for 2011 remain under a cloud.
SGX had said last week that it was 'prepared to grant an extension of time to the company to comply with its financial reporting obligations under the listing manual in order to facilitate the special audit'.
China Sky's external auditor, Deloitte & Touche, yesterday said it could not comment due to client confidentiality.
melissat@sph.com.sg
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