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SGX reprimands Sunvic for breaking rules on 1.6b yuan of IPTs over 3 years
THE Singapore Exchange (SGX) has reprimanded Sunvic Chemical Holdings for breaching listing rules related to 1.6 billion yuan (S$353 million) of interested-person transactions (IPTs) over the three latest financial years.
SGX said that Sunvic, a maker of intermediate chemical products, failed to make immediate announcements of and seek shareholders approval for IPTs that had been undertaken with associates of Sunvic executive director and chief executive Sun Xiao in the 2013, 2014 and 2015 financial years.
The company also failed to ensure that the IPTS were properly disclosed in the company's annual reports for the 2013 and 2014 fiscal years.
Sunvic's auditor, Foo Kon Tan grant Thornton, in April 2014 had highlighted a breach of SGX listing rules related to IPTs between Sunvic and Taixing Jinyan Chemical Technology Co, a company controlled by Mr Sun and his associates. A number of other previously undisclosed IPTs were subsequently revealed by the company.
Although the company announced over the course of five quarterly financial reports that it planned to seek shareholders' approval for the IPTs, a shareholders' vote on those IPTs has yet to be called. In the meantime, the company has continued to enter into new IPTs.
SGX said Sunvic's directors have said that the IPTs were necessary for the business operations of the company, and stopping them abruptly would have a "material adverse impact" on the company. Sunvic's board has also expressed a view that the IPTs "did not result in any prejudice to the interests of the company and its minority shareholders", according to SGX.
Listing rules require companies to immediately announce IPTs when they account for at least 3 per cent of the company's latest audited net tangible assets. Issuers must also obtain shareholder approval for any IPTs with the interest person if the IPTs in total account for at least 5 per cent of net tangible assets.
The IPTs accounted for almost 30 per cent of Sunvic's net tangible assets in year-to-date fiscal 2015.
Sunvic shares closed unchanged at 22 Singapore cents on Monday before the reprimand was announced.