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PN17 GN3

Publish Date: 09-11-2018

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Beside the situation that related to shareholder equity, a company will trigger PN 17 or GN 3 as long as the experience the situation as stated below:

  • 50% of total assets are under receivership
  • Subsidiary that makes up more than 50% of total asset is winding up
  • Adverse or disclaimer opinion by auditor
  • Auditor express an emphasis of matter on going concern and shareholder equity is less than 50% of issued and paid-up capital
  • The company default in its payment

 

Adverse Opinion: Financial records are not in accordance to accounting standards or grossly misstated

Disclaimer Opinion: Auditor do not provide any opinion due to absence of financial records or insufficient cooperation from management

Emphasis of matter on going concern: Uncertainty on whether the company will survive

 

Obligation of PN17/ GN3 companies

When a company hits the criteria of being a PN17/ GN3 company, they have to announce to the exchange immediately. The below is a timeline of what a company should do when it became a PN17/GN3 company.

If the PN 17 firm plans to change its business direction or policy

  1. Announce a regularization plan within the first 3 months
  2. Submit the regularization plan to Securities Commission (SC) for approval within 12 months from the First Announcement
  3. Update the status of regularization plan on a monthly basis
  4. Complete the plan within the time frame prescribe by SC

 

If the PN 17 firm does not plan to change its business direction or policy

  1. Announce a regularization plan within the first 3 months
  2. Submit the regularization plan to the exchange for approval within 12 months from the First Announcement
  3. Complete the regularization plan within 6 months from the time the plan being approved. Cases that involve court proceedings are being given a time frame of up to 12 months.
  4. Update the status of regularization plan on a monthly basis
  5. Record a net profit in 2 consecutive quarterly result after the completion of the plan

Action to do by a GN3 Company

  1. Appoint a sponsor within the first 3 months
  2. Submit the regularization plan to the exchange for approval within 12 months from the First Announcement
  3. Complete the regularization plan within 6 – 12 months
  4. Update the status of regularization plan on a monthly basis

 

A failure to do so will face a suspension or delisting of the counter.

 

Some example of regularization plan

  • Divestment of non-core business
  • Injection of fresh capital via new strategic shareholders
  • Agreement and compromise with creditors
  • Share capital reduction
  • Fund raising via rights issue or private placement

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