To be told or not to be told? That is the question.
Do listed companies tell
investors that their business may be at risk? Or do they save themselves
the trouble because the possibility is so far fetched, it is almost
laughable?
All prospectuses by companies going for a listing stress on informing investors of "every risk", whether imaginary or real.
If not, why would every
prospectus talk about not only risks inherent to the industry the
company is in, but also the country and world's economy?
The rule of disclosure after all is based on a very simple premise.
Timely and relevant information help investors make informed investment decisions.
But what qualifies as timely and relevant information is where it gets complicated.
There are guidelines for
immediate disclosure by listed entities. Some are spelt out, while
others are deliberately left vague to encompass a myriad of
possibilities.
This is understandable considering that the stock exchange regulator governs many companies across various industries.
But one would expect this to work in favor of investors, not against it.
A case in point is AirAsia Bhd.
Last Friday, this paper
reported that the low-cost carrier has been accorded only a six months
right-to-fly due to shortcomings found in its flight operations
procedures and practices. A renewal of its air operator's certificate
(AOC) would have given it a two years right-to-fly.
Other news reports
followed, but neither was AirAsia -- as a listed entity and a Kuala
Lumpur Composite Index 30 Index stock -- queried by Bursa Malaysia on
the matter nor was the Department of Civil Aviation (DCA) compelled to
explain the circumstances surrounding AirAsia's shortened AOC.
While no one really
believes that the authorities will close down a corporate giant like
AirAsia, investors and the flying public have a right to know the kind
of risks it is exposed to.
And who better to give them the right information than the regulators?
AirAsia's excuse was that
such matters are confidential, definitely not for public consumption.
It said it was between the DCA and the airline to sort the matter out.
And the DCA? Well, the aviation regulator believes that silence is golden.
Then of course there's Bursa Malaysia, the regulator for listed companies.
While its rules are clear. Its practice is not.
Its rules stipulated
that: "In the event that material information is or is believed to have
been inadvertently disclosed to third parties or where the material
information has become generally available through the media or
otherwise, the listed issuer must immediately announce the information
to the exchange."
But till today, no word
has been forthcoming from AirAsia and not a query from Bursa Malaysia
three market days after reports on the matter started appearing.
The argument that an
airline's right-to-fly is not "material information" does not hold water
because if an airline's right-to-fly is not important to its
operations, what is?
And so, we wait. Possibly
for nothing, because as members of the public and investors we do not
have a right to information. Rather, we just have a right to know what
they see fit to tell us.
http://www.thesundaily.my
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