Bursa cautions over 'exaggerated' Covid-19 ventures

Bursa Malaysia has cautioned all listed companies to avoid using “exaggerated”, “flamboyant” or “overstated” words in disclosures on Covid-19 related investments to prevent unwarranted price movements.

PETALING JAYA: Following the surge in Covid-19-related disclosures recently, Bursa Malaysia has cautioned all listed companies to avoid using “exaggerated”, “flamboyant” or “overstated” words in disclosures on Covid-19 related investments to prevent unwarranted price movements.

The companies were reminded to refrain from any form of promotional disclosure activity.

This was one of the disclosure guidance provided in the stock exchange operator’s latest issuers’ communication, which was released on June 10.

The disclosure guidance was issued in response to the increased Covid-19-related disclosures where listed companies are taking advantage of the business opportunities arising from the pandemic.

These were observed by way of various memorandum of understanding, letter of intent and distributorship agreement, among others, to manufacture personal protective equipment, ventilators, hand sanitisers, face masks, distribution of Covid-19 rapid diagnostic test kits or to develop or distribute health supplements.

“Based on the exchange’s observation of the recent disclosures made by listed issuers in connection with the impact of Covid-19, it is noted that there is room for improvement especially in respect of quality and adequacy of information.

“Investors and securities holders need more transparent and entity-specific disclosures, including information about the impact of Covid-19 on the listed issuers’ operations and financial performance, ” stated Bursa Malaysia.

Stressing on the need to provide fair and accurate disclosure, Bursa Malaysia said that any disclosure on Covid-19 related investments should contain several material information to aid investors in making an informed investment decision..

These include total capital and investment outlay, plan to bring the venture onstream, impact on its profitability, relevant regulatory approval required, business risks or exposure and prospects of such investments.

“Further, listed issuers should proactively monitor and provide regular updates on the Covid-19 related investments, in the event of any material development or on a periodic basis as required under the Main Market and Ace Market Listing Requirements, ” it said.

Meanwhile, Bursa Malaysia also said that listed companies should consider assessing and disclosing several Covid-19 related impacts such as the impact on listed companies’ business operations as well as the impact on their cash-flows, liquidity, financial position and financial performance.

In addition, the disclosure could include the impact on business and earning prospects as well as the strategy and steps taken to address the impact of the Covid-19 pandemic.

“Information is considered material if it is reasonably expected to have a material effect on the price, value or market activity of any of the listed issuer’s securities or the decision of a holder of securities of the listed issuer or an investor in determining his choice of action.

“Where information is fluid or insufficient to disclose the impact with certainty, listed issuers are expected to use the best available information in making well-reasoned and supported judgements and estimates, ” it said.

Bursa Malaysia pointed out further that companies should consider providing additional disclosures that are specific and relevant to the sector and industry they operate in.

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