What is PN17? Do you own shares in these PN17 companies?

Info Source for PN17: klmanagement.com.my

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.

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.

PN17 – Regularizing & Change of Business Direction or Policy

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.

No longer considered PN17 company

For a PN17 company to no longer be considered PN17, it has to first:

Complete the implementation of approved regularization plan.
Submit an application & necessary documents to Bursa to prove that it’s no longer a PN17 company.

Please do refer to this article for more information and reading. Info Source for PN17: klmanagement.com.my

Here are the current companies under PN17 according to Bursa Malaysia Securities Berhad (Bursa Securities). Info source: themalaysianreserve.com

List of companies under PN17:-
1. AIRASIA GROUP BERHAD
2. AIRASIA X BERHAD
3. ASIA MEDIA GROUP BERHAD
4. BARAKAH OFFSHORE PETROLEUM BERHAD
5. BERTAM ALLIANCE BERHAD
6. BRAHIM’S HOLDINGS BERHAD
7. CHINA AUTOMOBILE PARTS HOLDINGS LIMITED
8. COMINTEL CORPORATION BERHAD
9. DAYA MATERIALS BERHAD
10. DOLOMITE CORPORATION BERHAD
11. E.A.TECHNIQUE (M) BERHAD
12. FSBM HOLDINGS BERHAD
13. IQZAN HOLDING BERHAD (FORMERLY KNOWN AS IRE-TEX CORPORATION BERHAD)
14. IREKA CORPORATION BERHAD
15. JERASIA CAPITAL BERHAD
16. KHEE SAN BERHAD
17. KONSORTIUM TRANSNASIONAL BERHAD
18. MALAYSIA PACIFIC CORPORATION BERHAD
19. NATIONWIDE EXPRESS HOLDINGS BERHAD
20. PERAK CORPORATION BERHAD
21. SCOMI ENERGY SERVICES BHD
22. SCOMI GROUP BERHAD
23. SEACERA GROUP BERHAD
24. SERBA DINAMIK HOLDINGS BERHAD
25. SUMATEC RESOURCES BERHAD
26. TH HEAVY ENGINEERING BERHAD
27. TOP BUILDERS CAPITAL BERHAD

Info source: themalaysianreserve.com

Should I hold shares of PN17 companies?

I think the first question is always do I have a choice? It’s possible to sell and move the shares to another counter. It’s possible to sell and move the remaining amount to other investments too. Sometimes however, the stock price may have moved downwards and selling the share may not amount to much. If that’s the case, then the choice will be more limited and perhaps one would have to hope that the company could emerge from their PN17 status.

Sometimes, there may also be a white knight which may emerge to save that PN17 company too. Just be savvy that all these positive potential does not happen often. In 2007 I had shares in a PN17 counter called COMSA. I did not sell the shares because I chose to believe something positive could happen. This was a company in the chicken and eggs business. Surely everyone needs to consume chickens and eggs? It did recover though. So, I lost many thousands of ringgit. Here are more details.

Happy understanding and deciding.

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