SGX reprimands seven former Nutryfarm directors for breaching disclosure rules

SEVEN former directors of Nutryfarm International : AZT 0% have been reprimanded by the Singapore Exchange Regulation (SGX RegCo) for failing to disclose material information in a timely manner, leading to declines in the company’s share price in 2021.

The seven are: Chang Meng, who was Nutryfarm’s executive director and chief executive; Terence Luk, who was non-executive chairman; Jimmy Ng and Neo Chee Beng, who were both non-executive and non-independent directors; Lee Pih Peng and Eric Low, who were non-executive independent directors; and Levin Lee, who was an executive director.

The public reprimand was in relation to Nutryfarm’s talks with its creditor, Corpbond IV, to potentially restructure HK$126.9 million (S$21.9 million) in third-party loans into convertible bonds. Converting the loans to equity would strengthen the company’s balance sheet.

On Jan 10, 2022, SGX issued a trading query after Nutryfarm’s shares fell 36.4 per cent to S$0.14 amid heavy trading. The company said at the time that it was not aware of any material information not previously announced to explain the unusual trading.

However, significant price movements a week later pushed Nutryfarm to call a trading halt on Jan 18. It later announced that the loans could be restructured into convertible bonds on Jan 20, 2022.

The former directors initially took the position that there was no new information to disclose, as they had already disclosed the possible loan restructuring in an announcement on Aug 3, 2021. However, SGX RegCo, in its assessment, argued that this announcement did not make any reference that there were ongoing negotiations to restructure the loans into convertible bonds.

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If converted to equity, the convertible bonds would have a material dilutive effect on the respective shareholdings of existing shareholders. This meant the development was considered material information that required prompt disclosure in light of the unusual trading activity on Jan 10, 2022.

SGX RegCo also assessed that there was “no indication of any substantive checks” done to confirm if any leakage of information had occurred. The board earlier claimed that it had made arrangements to check with Corpbond IV on whether the unusual share trading was due to said leakage.

Nutryfarm, which distributes durian and health foods, requested for a trading suspension on Apr 11, 2022, pending a review of ongoing concerns, its shares last traded at S$0.085 on Apr 4, 2022.