Press conference Statement by Parliamentary Opposition Leader, DAP Secretary-General and MP for Petaling, Lim Kit Siang, in Seremban on Friday, July 3, 1981 at 11 a.m.
Registrar of Companies, Incik Zulkifli Mahmood, shocked at $2 or $3 , holdings companies colleting tens of millions of dollars of public money as shares in open violation of Companies Act 1965 without prospectus.
I met the Registrar of Companies, Incik Zulkifli Mahmood , for 1.1/2 hours yesterday to brief him of the gross violations of the Companies Act 1965 where several MCA-sponsored state holdings companies with $2 or $3 paid capital are collecting tens of millions of dollars of public money as subscription to it shares, in open violation of the law in without having a prospectus registered with the Registry of Companies.
The Registrar of Companies, Incik Zulkifli Mohmood, said he was shocked that $2 or $3 worth of holding companies were violating the Companies Act in collecting tens of millions of dollars from the public as subscription to it shares, without having a prospectus as required by the Companies Act.
He said he would take immediate action to investigate the various companies concerned to protect the public.
Section37 (1) of the Companies Act provides that a person 1 shall not propagate any application form for shares unless accompanied by a prospectus which has been registered by the Registrar of Companies. The purpose is to ensure that every application from will provide sufficient information to the prospective investor to enable him to make a good decision.
Before the Registrar would register a prospectus, it must comply with the content as set down in the Fifth Schedule of the Companies Art 1965, which run into 34 clauses covering 10 pages of the Art from pp.356-365. The penalty for committing an offence under Section 37(1) is two years jail or 5000 fine.
I have turned over to the Registrar of Societies copies of the shares subscription forms for Peak Hua Holdings Bhd. , the Perak MCA state holding company, and the Panwa Elevelopment Bhd., the Pahang MCA state holding company, to enable the Registrar to initiate investigative action as both do not have prospectus registered with Registrar.
I also drew the Registrar’s attention to the law against the hawking of shares under Clause 363(1) of the Companies Act, which make it offence for anyone of the hawk shares, whether by radio, television, press or by person. The penalty is six months jail or $1,000 fine or both, and in the case of a second or subsequent offence 12 moths jail or $2,500 fine or both.
I also discussed with the Registrar clause 40 of the Companies Act which provides that unlawful advertisements of shares, without prospectus, is an offence involving one year’s jail or $2,500 fine; and Clause 366 of the Companies Act 1965 which provides that it will be an offence punishable with 7 years’ jail or $15,000 fine or both anyone to induce any person to buy shares by misleading, false, deceptive statements, promises of forecast.
I provided the Registrar with documentary evidence to show how in Johore, Johore MCA Division induced members and the public to subscribe to Matang Holdings Bhd., the Johore MCA state Holding company, but when the time came turn over the money, they were required to sign pre-printed forms stating that they were giving the MCA Division an interest-free loan for that amount.
Incik Zulkifli said he did not know about the complaints in connection with Peak Hua Holdings Bhd., Panwa Development Bhd. and Matang Holdongs Bhd. (which had appeared in the Chinese press), but he takes a stern view of any attempt to flout the provisions of the Companies Act to protect the public. He assured me that his officers would get onto the various complaints I made without delay.
At the meeting , I also reported to him of another holding company which had issued forms to public to buy shares without a prospectus, namely, the Cerdik Holdings Bhd. I gave the Registrar a copy of shares application form to Cerdik Holdings Bhd, issued by this company.
According to the Registry of Companies Records, Cerdik Sdn. Bhd., which was later change to Cerdik Holdings Sdn.Bhd. on 22nd May 1981 and again altered to Cerdik Holdings Bhd. the same day on 22nd May 1981.
It has an authorized capital of $50million, but the paid up capital is only $3, with a $1 share each by its three original subscriber- director namely:
Chan Kit Chee, MCA National Deputy Youth leader and Perak MCA
First Vice Chairman, (I/C 3836714) of 1 Regat Wah Keong, Ipoh;
Tan Tiew Bock, MCA National Vanguard Director, I/C 7922271 of
No.20, Tingkat Pasir Puteh Empat, Taman Yik Seng, Ipoh;
Shu Kok Shien@ Shu Soo Neng I/C 1863422 of 6, Jalan 71 Kepong Baru, Kepong.
The Registered office is Room 8, 2nd Floor, 67 Jalan Ampang, Kuala Lumpur.
I understand that in Negeri Sembilan, many people had been misled by the Chinese name of Cerdik Holdings Bhd. into believing that it is KOJADI itself and a MCA Holding, and invested their monies in Cerdik Holdings Bhd. The matter of Cerdik Holdings Bhd, is also now in the hands of the Registrar of Companies.
The MCA have been trying to distort the efforts by the DAP to protect the public from companies which want to flout the law. The public can have no protection if companies can be formed with $2 or $3 worth which could then collect some $30 or $40 million of public money. If these who form these $2 or $3 companies disappear with the $30 or 40 million of public money, or abused their management by using the money for their own enrichment, the net losers will be the public.
This is what the law on prospectus in the Companies Act 1965 is specifically designed to prevent to protect the public. This is why the Companies Act provide that every prospectus must contain particulars like:
1. full details must be given of the actual offer, including the number of shares offered, the rights attaching to them, any minimum subscription before allotment;
2. details must be given of all material contracts in respect of property or other rightd which the company is to acquire and which have been entered into within two years of the issue;
3. reports of the company’s accountants must be included on the results of the company or any business to be acquired over the five previous years, and in particular as to the profits and and dividends over than that period.
Thus, it is shocking that such protections provided by law could be flouted by the MCA leaders, who as members of the ruling administration, should set a good example of being law-abiding. The DAP is not opposed to holdings business; what we are opposed are those who want to capitalise on the “holding craze” to carry out improper, irregular and even illegal activities which leave the public with no legal safeguards.
In fact, in order to protect the public from being cheated or swindled from unscrupulous corporate groups, Bank Negara has a policy whereby before companies invite the public to subscribe to its equity stakes, approval must be granted by the Capital Issued Committee.
Unless the CIC has given approval for the issue of public shares the Registrar of Companies would not register a prospectus.
I am surprised that be Deputy Finance Minister, Datuk Mak Hon Kam, who should know the law better than anyone else, should be pushing the shares of Peak Hua Holdings Bhd., which had not even a prospectus; Datuk Mak said last week that Peak Hua had raised $26 million, ans hope to raise $30 million by July 7.
This is the best example of a Government Minister who is the most guilty of breaching its own law. I hope Datuk Mak Hon Kam cann explain why he is advertising for the Peak Hua holdings Bhd. which is issuing share application forms without a prospectus registered with the Companies Register- which is abetting an unlawful act, and an offence, If he cannot, then he should resign from his Ministerial position, and face prosecution for violating the Companies Act.