Scan Associates to sue Bursa Malaysia for GN3 directive

PETALING JAYA: Scan Associates Bhd shares fell 25% yesterday after it announced that it is suing stock exchange regulator, Bursa Malaysia, for classifying it as a Guidance Note 3 (GN3) rules based on its fourth quarter results for 2014.
Bursa said Scan Associates had triggered rules 2.1(b) and (c) of GN3, which see a company's loss equals to or exceed the amount of shareholders' equity and the shareholders' equity is equal to or less than 50% of the issued and paid-up capital for one full financial year loss.
For aggregated losses in any two consecutive financial years, it will be triggered when the loss in second financial year is 50% or more of the loss incurred in the first year.
Scan Associates has been in the red over the past few years. Its net loss for the fourth quarter ended December 31, 2014 widened to RM1.1 million against RM69,000 in the previous corresponding period.
Full-year net loss also widened to RM7.1 million versus RM2.63 million in FY13, mainly due to higher operating expenses and impairment.
The ICT security solutions provider said in a filing with the stock exchange that it disagreed with a Bursa Malaysia directive issued on May 8, asking it to announce its reclassification as a GN3 company, and had appointed solicitors Messrs Lim, Chong, Phang & Amy to file a legal action against the regulator.
"The suit was filed on May 10 against Bursa Malaysia to, inter alia, nullify the directive and to seek damages from Bursa Malaysia," it said.
Scan Associates also said that in any event, it has no means to make the reclassification announcement as its secretary had resigned on the same day.
Scan Associates was granted an ad interim injunction by the high court on May 11 to restrain Bursa Malaysia from implementing the classification of the company.
"The ad interim injunction will be enforceable and binding until the high court makes a decision at 4pm on May 18," it noted.
Trading in Scan Associates shares was suspended from 9am to 10am yesterday in conjunction with this material announcement. It closed 1.5 sen or 25% lower to 4.5 sen yesterday on some 23.87 million shares done.
Bursa Malaysia's shares dropped 8 sen to close at RM8.41 yesterday.
Scan Associates was also queried by Bursa Malaysia last week following the recent sharp fall in its share price and high volume traded.
Year-to-date, the counter has dropped 55%.