PUTRAJAYA: A landmark decision that pink forms in initial public offerings (IPOs) do not constitute a guarantee of shares remains unchallenged after the Federal Court here denied three individuals leave to appeal against the decision.
The five-member panel ruled in favour of Malaysian Bulk Carriers Bhd (MBC), agreeing with MBC counsel Leonard Yeoh's argument that pink forms, just like white forms, were subject to the terms of the form and prospectus, and hence, were merely an invitation to treat and not an offer.
In 2010, the Shah Alam High Court made the landmark ruling that MBC was right to reject share applications from the three former Bank Industri Malaysia Bhd directors, although they had been allotted pink forms.
The directors had appealed the matter to the Court of Appeal, but had their appeal dismissed with costs in September last year.
The judgement is seen as a landmark case, as it provides certainty regarding pink forms in IPOs.
Previously, the allotment through a pink form was generally accepted as a guarantee of shares.
The pink form is an application form typically reserved for company employees and normally used by companies going for listing in Malaysia and Singapore.
According to industry practitioners, recipients of pink forms used to sell theirs because it was seen as a guaranteed allotment.
In July 2010, the applicants, who were former employees of Global Maritime Ventures Bhd (GMV), a subsidiary of Bank Pembangunan Malaysia Bhd, filed the application, claiming that MBC had been wrong to go back on its offer to allot them collectively 1.6 million shares.
MBC maintained that it was the prerogative of the company directors to reject an application of shares, be it for a pink form or a normal white form.
MBC undertook its IPO and listed its shares on Dec 2, 2003. Prior to MBC's listing, GMV a venture capital company that invests in companies in the maritime sector owned 30% of MBC.
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