Thank you for visiting ETCoLaw’s Client Updates. Please be informed that apart from Client Updates on this page, you may find other updates under individual Practice Areas.
Commencement of Minimum Wages of RM1,700 (Link to read: https://etcolaw.com/employment-law-updates/)
22 July 2025
Zetrix AI Reprimanded and 7 Directors Fined over Misleading Announcements
Bursa Malaysia Securities Bhd has publicly reprimanded Zetrix AI, formerly known as MyEG, Services Bhd, and fined seven of its directors RM150,000 each over misleading announcements and non-compliance with a regulatory directive. The company was found to have violated the Main Market Listing Requirements for misleading and inaccurate statements in its announcements on July 7, Sep 13 and Sep 14 in 2023. The company also violated Bursa’s directive to clarify its July 7 statement by the stipulated Aug 16 deadline. The saga stemmed from the company’s July 7 announcement which claimed that the Ministry of Finance had approved its appointment as a collection agent for government revenue and its continued role as an online service provider for the Immigration Department. However, according to Bursa, the letter dated 4 July 2023 from the Ministry of Home Affairs does not support that statement. In fact, the concession granted to the company had expired on 23 May 2023. Zetrix AI failed to issue a timely clarification, and instead maintained the inaccurate claims in subsequent announcements in Sep. The renewal of the company’s concession came in Oct and would only be effective Feb 2024. Hence, between 23 May 2023 and 31 Jan 2024, Zetrix AI apparently did not have a concession legally in place but nevertheless continued to operate on the same basis and illegally collected payments from the public. Nevertheless, Zetrix AI has released a statement that it would contest the reprimand and fines in court. The gist of this incident is that it is imperative for listed companies to ensure that their announcements are factually accurate and not misleading, and they have to take immediate actions to clarify or correct any incorrect statements made, failing which the companies may be reprimanded or even fined, and the directors may also be personally liable. If in doubt, listed companies should consult a lawyer for the announcements that they intend to make public.
For issues regarding public announcements or compliance with Listing Requirements, please do not hesitate to CONTACT ETCoLaw.
16 July 2025
Ex-Sime Darby CEO and 4 Other Senior Executives Ordered by the Court to Pay RM350 million as Restitution
It was reported in the local media that a former Sime Darby CEO and four other senior executives were ordered by the High Court to jointly and severally pay over RM350 million as restitution for wrongful payments made to consultants in Sime Darby’s Qatar Petroleum Project. In addition, they were ordered to jointly and severally pay over RM115 million for consultant payments and related losses across Maersk Oil Qatar Project almost 20 years ago. The case was brought by Sime Darby Bhd and its subsidiaries. The news report does not mention the legal basis for the case against the five former executives. Several questions seem to arise from the case. Bearing in mind that some of the losses had been incurred over 20 years ago, the case was filed only in 2010. Another more perplexing fact is that the five defendants admitted ton their liabilities and recorded a consent judgment 11 years ago. It took the companies 11 years to proceed with the assessment of damages. It also remains unclear if the compensation carries with it interest, and if so, at what rate and from what date. Another question is what if the defendants disputed the claim (instead of admitting to their liabilities)? That would have dragged the case longer. Some of the losses had been incurred over 20 years ago. What if some of the defendants have passed away? Nevertheless, the key point to take away is that company directors and senior executives owe a duty of care to the company, and they must discharge their employment duties with care and faithfully, failing which they may have to compensate the company for breach of their employment duties.
If a company has issues regarding their senior executives, or if senior executives of a company have issues regarding performing their employment duties, you are most welcome to CONTACT ETCoLaw.
16 July 2025
Suspension of External Auditors by the Securities Commission & Potential Losses Arising from Damage to Business Reputation and Goodwill of Listed Companies
Addendum 1: ETCoLaw has since received queries as to whether this article and the Pointers apply to private limited companies as much as listed companies. In general, they do because all companies, whether listed or unlisted, have their accounts audited annually and issue their annual financial statements.
In a media statement on 11 June 2025, the Securities Commission’s (SC) Audit Oversight Board (AOB) announced the suspension of Chengco PLT (AF 0886), a firm of auditors, for 2 years due to serious audit quality. The AOB also sanctioned 5 of the firm’s audit partners, by prohibiting them from inter alia accepting as clients and auditing any public interest entities (PIEs) or schedule funds for a period of 1 and 2 years respectively. The sanctions came after the AOB apparently uncovered multiple breaches in relation to the firm’s failure to adhere to the relevant requirements of the International Standards of Accounting (ISA) as adopted by the Malaysian Institute of Accountants (MIA) when auditing three PIEs. The AOB’s findings were in fundamental and key audit areas, including failure to obtain sufficient audit evidence in such areas as bank borrowings, opening balances and prior year adjustments, use of going concern assumption, revenue, costs of sales, redeemable convertible preference shares and goodwill. Other deficiencies include property development costs and fixed deposits. In addition, the reviewers failed to sufficiently review key audit documentation, particularly those relating to significant judgments and risk areas, with potential adverse effect on the overall audit quality.
The AOB’s findings were prevalent across the audit engagements inspected, and some of the findings reoccurred from the AOB’s past inspections in spite of previous sanctions by the AOB in 2019 in which two of the audit partners had been sanctioned.
Further to the suspension, it has been reported in the media that apparently several listed penny stock companies announced the resignation or release of Chengco PLT as their external auditors.
There are a few pointers to take from this episode. First Pointer: As far as those companies for whom the suspended firm had audited, their business reputation and goodwill might have been tarnished as a result of the irregular and below-par audit. With such audit problems relating to the companies’ bank borrowings, costs of sales, preference shares, goodwill and risks, among others, there could be severe impacts on the companies’ overall credit ratings. As such, those companies may wish to take the relevant legal actions.
Second Pointer: As for the minority shareholders, their investments or interests are likely to be or have been affected as a result of negative impacts to the companies’ sales and revenues. For that, they may seek the relevant remedies, whether against the companies or any third parties concerned. In turn, the companies concerned will have to guard themselves against such claims, and seek corresponding reliefs.
Third Pointer: As far as banks who lend moneys to those companies are concerned, they will have to review the borrowing companies’ overall credit ratings, and, if necessary, obtain, for example, more fixed deposits from the borrowers or raise the borrowing rates. If the banks take such actions, the costs of doing business of the companies concerned will likely rise. As such, the companies concerned might wish to obtain corresponding reliefs for the damage done to their business and goodwill. A rise in borrowing interest might, in turn, result in higher costs of doing business and lower profit margin and, hence, less dividend, resulting in losses to the shareholders–majority shareholders (as mentioned in First Pointer) and minority shareholders (as mentioned in Second Pointer) alike.
Fourth Pointer: Other companies doing business with those companies audited by the auditors concerned may similarly wish to review their business dealings with the latter, in particular, the credit ratings of the latter, and, if necessary, make a call on the outstanding debts or raise the credit requirements. Such actions are likely to have a negative impact on those companies (and the shareholders), as explained under the three Pointers above.
If you are one of the parties mentioned above, who are potentially affected, you are most welcome to Contact ETCoLaw to ensure that your company’s interests, or your investments in those companies, or your lending to those companies, is safeguarded.
18 June 2025
Putra Height Gas Pipeline Explosion – Damage to Factories & Loss of Business
Further to ETCoLaw’s update titled “Gas Pipeline Explosion at Putra Heights” below, investigations show that, in additional to residential houses, some commercial properties such as factories and shops were also damaged in the incident. In addition, some factories are unable to operate at full capacity due to reduction of gas supply caused by the explosion. News have reported that the authorities are investigating whether the explosion might have been caused by human errors or negligence. In addition to residential property owners who have lost or suffered damage to their homes, factories and shops whose premises are damaged or whose business has been affected by the gas shortage, may seek compensation from such negligent third parties. For such legal help, please do not hesitate to CONTACT ETCoLaw.
Gas Pipeline Explosion at Putra Heights in Puchong, Selangor
The gas pipeline explosion that occurred at Putra Heights in the morning yesterday has apparently caused injuries to over people and damaged over houses and vehicles with hundreds of people temporarily displaced as the authorities had to cordon off the areas surrounding the explosion. The flame was reported to have flared up to as high as 100m with the heat reaching about 1000 degree Celsius. The incident occurred on the second day of Raya Aidilfitri. The fire could be seen from many corners in the Klang Valley. For the owners whose properties were damaged in the incident, or the people who were injured, they can take legal actions to sue the relevant parties for the injuries and damages suffered. For such legal help, please do not hesitate to CONTACT ETCoLaw.
