Can a shareholder of Naim Holdings sue the company for his shares losses ?

22Jan10

The Star Jan 22 10 reported that “Naim Holdings Bhd has been recently publicly reprimanded by Bursa Malaysia for breaching listing requirements ” i.e. under declaring its profits in 2008.

Naim Holdings Bhd is a successful Sarawak’s based listed Company. It is active in Housing and Engineering Projects.

The paper added
“Naim was reprimanded for its failure to take into account adjustments made to its quarterly financial results in August and October 2008 and February 2009 on its “deemed disposal gain’’ of RM13.935mil from its investment in associate company Dayang Enterprise Holdings Bhd.

“It is a very necessary reprimand as companies should disclose promptly for shareholders to make informed decisions.
“Bursa is taking action in a positive and prompt manner to come out with a public reprimand and training requirement for directors and relevant personnel in relation to compliance with the listing requirements especially pertaining to financial statements,’’ said Minority Shareholder Watchdog Group CEO Rita Benoy Bushon.

The adjustment was only made in Naim’s audited quarterly financial statement announced on April 30, 2009. The company has explained that the difference in profit was due mainly to the dilution of (or deemed disposal of) its equity interest in Dayang. The dilution came about after Dayang issued more than 85 million new shares in conjunction with its listing on Bursa, thereby resulting in the dilution of Naim’s stake in Dayang from 45% to 34%.

In the words of Naim Holdings spokeman the under declaring of its profit was “due to a “very technical and complex’’ accounting practice.” .This is fine.

I am just wondering isn’t it by under declaring its profits, would this not depressed its share prices ? I suppose had the market been informed of this extra profit , the share prices of Naim Holdings would have gone up . Can a shareholder who at that time sold his shares , sue Naim Holdings for his losses due to this misrepresentation ? Just a thought.



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