New Straits Times, 1 August 2002
BUDGET 2001 DIALOGUE - SESSION ONE
Fine individuals, not firms, says MIA
" Minority shareholders should not suffer "
The Securities Commission should impose fines for violating listing requirements, company laws and securities laws on the real culprits, that is the individuals, and not on the companies, said the Malaysian Investors' Association (MIA).
"It is the individuals, as brains and hands of the companies that have violated the law," MIA said in a memorandum for Budget 2001 dialogue released today.
It said when a fine was imposed on the companies, it was at the expense of all shareholders, including the minority ones, who had done no wrong.
On forced selling of shares by some stockbrokers, MIA suggested that a mandatory rule in mortgage agreements be imposed in which financiers should not resort to forced selling when the aggregate collateral value are lower than the loan outstanding.
"One of the major factors which depressed the market to 262 level on Sept 1, 1998 was the forced selling of shares," it said.
MIA also recommended fair contract laws for documents and agreements between the stock broking companies and clients. Some of these papers were one sided, it said.
As for initial public offers (IPOs), MIA said the recent financial crisis, where some newly listed companies had come under " Special Administrators" had shown that quality of IPOs were far more important than quantity of IPOs.
"Funds raised in the IPOs were not effectively put into productive investments resulting in higher debts," it said. As Malaysia is advocating e-commerce and knowledge-economy. the association said internet IPOs should be implemented at the earliest date.
Via internet IPOs, subscribers could key in their subscriptions and instruct their bankers to pay directly to the issuing house. Prior to this, potential subscribers could read the prospectus via internet browser.
Noting that the Kuala Lumpur Stock Exchange (KLSE) had unveiled plan for a " World Class Exchange," MIA said it should look into co-operations and inter-cross listings with other exchanges. - Bernama.