Personal Finance 101: PN17 companies. Why, What and Who Questions.
What and Why PN17 company classification?
What is PN17 company? PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia; relating to companies that are in financial distress. Companies that fall within the definition of PN17 will need to submit their proposal to the Approving Authority to restructure and revive the company in order to maintain the listing status.
According to klmanagement.com.my, here are the criterias for PN17 listing.
Criteria for a listed company to be classified as a PN17 company are as follows:-
- Shareholders’ fund is equal or less than 25% of the total issued and paid up capital of the listed company; or
- Receivers and/or managers have been appointed to take control of at least 50% of the total assets employed of the listed company on a consolidated basis; or
- Winding up of a subsidiary or associate company which makes up at least 50% of the total assets employed of the listed company on a consolidated basis; or
- The auditors have expressed adverse or disclaimer opinion on the listed company’s latest audited accounts; or
- For any default in payment, the listed company must announce its inability to provide a solvency declaration through Practice Note 1/2001 or PN1; or
- The listed company has suspended or ceased all or a major part of its operations.
There are many reasons and circumstances for a listed company to fall under the classification of PN17. For example, some cases are classified as PN17 due to external factors such as currency fluctuation and economic forecasts.
Can the company escape the PN17 classification?
When a company is announced as a PN17 company (list of PN17 companies in Malaysia), it has to undergo a few exercises to comply with the requirements of Bursa; in which failing to do so will result in suspension in trading list securities (5 market days from the day of notice, the next day) de-listed from the market or both.
- Regularize its condition within 12 months (1 year) from the date it was announced a PN17 company.
- Submit a regularization plan to the Securities Commission of Malaysia to see if the regularization plan will result in a significant change in the business direction or policy, or;
- Submit a regularization plan to Bursa Malaysia to obtain approval (and implement) the regularization plan (that will not result in a significant change in the business direction or policy.)
- Implement the plan according to the time stipulated by Bursa or Securities Commission; whichever is applicable.
Could we still buy shares of PN17 companies?
The answer is Yes. Just to show one example of a PN17 company in the list below; Airasia X Berhad. Below image is dated 4th April 2023. Source: google.com by typing “AirAsia X share price.”
Who are these PN17 companies currently?
Info Source: bursamalaysia.com (As at 8th March 2023)
Syarikat PN17 dan GN3
List updated: 8 March 2023
- AIRASIA X BERHAD
- ALAM MARITIM RESOURCES BERHAD
- ASIA MEDIA GROUP BERHAD
- BARAKAH OFFSHORE PETROLEUM BERHAD
- BERTAM ALLIANCE BERHAD
- CAPITAL A BERHAD (FORMERLY KNOWN AS AIRASIA GROUP BERHAD)
- COMINTEL CORPORATION BERHAD
- DOLOMITE CORPORATION BERHAD (IN LIQUIDATION)
- E.A.TECHNIQUE (M) BERHAD
- FSBM HOLDINGS BERHAD
- IQZAN HOLDING BERHAD
- IREKA CORPORATION BERHAD
- IVORY PROPERTIES GROUP BERHAD
- JERASIA CAPITAL BERHAD
- KHEE SAN BERHAD
- KNM GROUP BERHAD
- KONSORTIUM TRANSNASIONAL BERHAD
- PERAK CORPORATION BERHAD
- PHARMANIAGA BERHAD
- PROPEL GLOBAL BERHAD (FORMERLY KNOWN AS DAYA MATERIALS BERHAD)
- SAPURA ENERGY BERHAD
- SARAWAK CABLE BERHAD
- SCOMI ENERGY SERVICES BERHAD
- SCOMI GROUP BERHAD
- SEACERA GROUP BERHAD
- SERBA DINAMIK HOLDINGS BERHAD (IN LIQUIDATION)
- TOP BUILDERS CAPITAL BERHAD
People say do not judge a book by its cover. Actually, whether it’s a PN17 company or a compay without PN17, please buy the shares only after understanding the business. If we do not understand the business of the company, then it’s probably not an investment for us. We cannot say it is an investment if we have zero idea about what we are actually investing in. When we know nothing about that investment, it turns into a potential gamble. Cheers.
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