CITY Developments Limited : C09 0% (CDL)’s subsidiaries, CDL Investments New Zealand (CDI), and Millennium and Copthorne Hotels New Zealand (MCK), have each been fined NZ$50,000 (S$40,508) by the NZ Markets Disciplinary Tribunal.

The penalties are related to both companies’ listing rule breaches between 2018 and 2020, said CDL on Thursday (Nov 16).

In addition to the fine, both CDI and MCK will need to cover the costs incurred by New Zealand’s Exchange Regulation (NZ RegCo) and the Tribunal in connection with the matter. 

CDL’s board noted that the breaches related to both companies’ audit committee in 2018 not having the required number of members, but this was self-corrected by MCK in 2020.

The New Zealand market watchdog, however, acknowledged their good intention when including only independent directors on its audit committee, therefore reducing the member number to two instead of three as required by listing rules.

Given the historical nature of the breach, MCK and CDI said they are “disappointed” by the penalty amount.

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CDL highlighted that both had failed to meet disclosure requirements of the “comply or explain” regime in their annual reports for FY2017 to FY2022. They also did not include their board performance evaluation on diversity policy in the annual reports for FY2018 to FY2022 as required.

Both MCK and CDI are New Zealand-incorporated companies, listed on the mainboard of New Zealand’s Exchange.

In the breach determination, the CDL units noted that, as the Tribunal found, NZ RegCo had not presented evidence that the breaches have caused actual loss.

CDL’s board also noted that one of its current directors, Tan Kian Seng, who served as a non-executive director on the boards of MCK and CDI for the period of Feb 28, 2017 to Dec 31, 2019, was not involved in their respective daily operations.

The breaches by MCK and CDI on this matter are thus “not directly attributable” to Tan, said the board, noting that the penalties will not affect Tan’s suitability to continue to serve as a director.

“The board does not expect the breaches or the regulatory actions taken by the Tribunal against MCK and CDI to have any impact on the company’s business or operations.”

Units of CDL were trading down 0.6 per cent or S$0.04 to S$6.35 as at 9.13 am on Thursday.

In a separate announcement by Hong Leong Finance, the finance company noted that its non-executive non-independent director Kevin Hangchi, who also serves as a non-executive director of MCK, was not directly involved in MCK’s daily management.

“There is no evidence that any of the breaches were directly attributable to Mr Hangchi,” said Hong Leong Finance, noting that the above breaches do not affect Hangchi’s suitability as its director.