SGX RegCo reports Tee International for late disclosure of claims

THE Singapore Exchange Regulation (SGX RegCo) on Thursday (Feb 17) said it reported Tee International M1Z : M1Z 0% to relevant authorities for potential offences under the Securities and Futures Act, and is investigating the company for potential listing rule breaches.

This was in relation to the 121 letters of demand and overdue trade-related payables that Tee International and its principal subsidiaries had received from various creditors between July 2020 and June 2021.

The company had announced the claims - amounting to around S$38.8 million - in June 2021. It later said in its response to SGX queries that it did not do so earlier as it was in active negotiations with the creditors, and the amount claimed by each creditor was not material.

SGX RegCo noted that the aggregated claims accounted for more than or equal to 10 per cent of the group's net asset value and cash and cash equivalent balances.

Hence, the claims were material information that would potentially impact the group's ability to operate as a going concern, and should be disclosed promptly according to mainboard listing rules.

SGX RegCo said while disclosure may not be necessary if the claim or action could reasonably be characterised as "bound to fail", "mere optimism of an impending settlement of the claim or legal advice obtained on the likely success of winning the case are not sufficient to meet the high bar of 'bound to fail'".

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It highlighted that Tee International has defaulted on its debt repayment and received a demand letter of material quantum, which suggests that the claim was meritorious and the event of default had occurred.

Under the SGX mainboard's listing rules, issuers must announce any information concerning it and its related companies if it can materially affect the price or value of its securities.

They should also disclose defaults, as well as claims and lawsuits if the amount or action has a material impact - notwithstanding that negotiations are ongoing or the outcome of the lawsuit is not yet known.

"The exchange regards disclosure as fundamentally important to the operation of a fair and efficient market and will not hesitate to take enforcement actions against errant parties," SGX RegCo said.

Shares of Tee International last closed flat at S$0.032 on Jun 15, 2021. The company had requested for a voluntary trading suspension, as it was reviewing its existing business amid a significant loss reported for its fourth quarter ended May 31, 2021.

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