Factors trigger PN17/ GN3 Status Practice Note 17, also known as PN 17, is triggered as long as a company listed in Main Board hits the following criteria: Shareholder equity falls below 25% of issued and paid up capital and shareholder equity is less than RM40 million> Guidance Note 3, also known as GN 3, is triggered as long as a company listed in Ace market meets the following criteria: Shareholder equity is less than 25% of issued and paid up capital The firm has incurred loss for one full financial year the loss amount is equal to or more than shareholder equity and shareholder equity is less than 50% of issued and paid up capital It has incurred loss in two consecutive full financial year and the amount is more than shareholder equity, the second year loss is more than 50% of first year loss and the shareholder equity is below 50% of issued and paid up capital

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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