PETALING JAYA – The Securities Commission Malaysia’s case against former Transmile Group Bhd CEO Gan Boon Aun is going back to the sessions court after the apex court ruled on the validity of a rule to try him for abetting Transmile in making misleading statements on the group’s revenue.
In June 2011, Gan made an application to the High Court to refer a constitutional question on the validity of Section 122(1) of the Securities Industry Act 1983 (SIA) arguing that the provision was inconsistent with Article 5(1) of the Federal Constitution. It was later brought to the Federal Court.
The Federal Court yesterday upheld the validity of Section 122(1) of the SIA, saying that it is not in violation of the Federal Constitution.
The ruling has wide-ranging ramifications as there are 32 other provisions in other Acts that are akin to that provision. Section 122(1) of the SIA deems a company director, chief executive officer, officer or representative of the company, to have committed an offence of the company, unless he can prove the lack of consent or connivance on his part and the exercise of diligence to prevent the commission of the offence.
Gan was charged by the SC in 2007 for abetting Transmile in making a misleading statement relating to Transmile revenue in the company’s quarterly report on unaudited consolidated results for the financial year ended Dec 31 2006, which was likely to induce the purchase of Transmile’s shares by other persons.
Gan was also charged in the alternative with having furnished a misleading statement to Bursa Malaysia Securities Bhd in the same financial statement. Gan was called to enter his defence on the alternative charge after the close of the prosecution’s case.