In the past few months, Bursa Malaysia has seen some interesting shareholding changes in some penny stock companies.
Companies such as Envair Holdings Bhd, Sanichi Technology Bhd and DVM Technology Bhd have seen quick enter-and-exit shareholders. The three are listed on the ACE Market whose market capitalisations are below RM50 million.
The roller coaster rides of the share prices that coincide with substantial shareholding changes raise the question whether the existing time frame for disclosures on changes in substantial holdings should be tightened further.
According to the Companies Act 1965, substantial shareholders need to notify the listed company within seven days of the shareholding transaction. This also applies to emerging and ceasing substantial shareholders.
Under Bursa Malaysia’s ACE Market Listing Requirements, the listed companies are required to make an immediate announcement to the stock exchange upon receipt of notifications from substantial shareholders.
But, is seven days too long considering the significant impact insider moves could have on share price movement?
This is because while these new substantial shareholders had immediately notified the companies of their emerging substantial stakes, it took some of them awhile to notify the companies when paring down their stakes.
Take Envair Holding Bhd for example.
Carpet Raya Sdn Bhd director Deepak Jaikishan emerged as a substantial shareholder in Enviar on Dec 2 with a stake of 5.06%. He then sold the entire stake less than two weeks later on Dec 14.
The announcement of Deepak becoming a substantial shareholder was made to the stock exchange on the very same day he acquired the shares. However, the announcement of his exit was made seven days later, although that was within the regulated time frame.
Before Deepak’s entry and exit, the Envair also saw the entry and exit of two Chinese nationals.
On Nov 1, Chinese national Jiang Chuan Yi emerged as a substantial shareholder when he bought a 6.75% stake in a direct deal on Nov 1. He then sold the same stake on Nov 23, and announced to the exchange on the same day. Envair rallied 277% to 41.5 sen on Nov 1 from 11 sen a month earlier.
It had pared down since to close at 32 sen yesterday. Prior to that, Envair was trading quietly between eight sen and 14.5 sen.
Last month, Envair announced that it was entering the oil and gas business by supplying two million barrels of light crude oil monthly to a Chinese company for a five-year duration.
Another Chinese national, Zhang LiYing bought 10.8 million Envair shares or a 9.11% stake in a direct deal on Oct 13 but it was only notified on Nov 2.
Zhang then sold off the 10.8 million shares on Dec 14 on the open market, and notified Bursa Malaysia on Dec 16. It is not known if Jiang and Zhang are linked to the Chinese company.
Another company that saw quick entry-and-exit shareholding changes is Sanichi.
On Aug 3, Mohd Wira Abdul Daim, the son of former finance minister Tun Daim Zainuddin, emerged as a substantial shareholder in Sanichi after he bought a 6.12% equity stake.
The transaction was immediately notified to Sanichi and Bursa Malaysia on the same day the shares were bought. Wira only held the stake for two days before he sold all 10 million shares on Aug 5. However, the notification was only filed with Bursa Malaysia six days later on Aug 11.
Sanichi rose to an earlier 15-month high of 10.5 sen on the next day after the announcement that Mohd Wira bought into the company. Prior to that, Sanichi was only trading in the range of 3.5 sen and six sen.
Trading of Sanichi shares were halted on Aug 4 at 4.05 pm due to an announcement that a Germany firm Projektarbelt Technische Beratung Venretung International (Protev) is commencing due-diligence process on the company.
Sanichi and Protev had earlier signed a memorandum of understanding (MoU) to form an alliance to set up a one-stop plastic injection mould fabrication solution centre. After Mohd Wira’s entry-and-exit, Sanichi’s shares slumped back to as low as four sen on Aug 29, down 62% from the peak of 10.5 sen.
Its shares later saw another spike that could be linked to an agreement with an Indonesian company to market and distribute three million metric tonnes of coal annually in China.
Sanichi had triggered two unusual market activity (UMA) queries from Bursa Malaysia — on Nov 8 and Dec 12. Sanichi closed at 13 sen yesterday.
Until today, it is not known why Mohd Wira had emerged as substantial shareholder in Sanichi for barely three days.
Meanwhile, DVM Tech also saw a quick entry-and-exit shareholder.
On Aug 2, Raymond Yip Wai Man bought 12.98 million shares or a 7.4% stake on the open market in DVM Tech. He then bought another 1.43 million and 3.95 million shares in two separate open market transactions on Aug 4 and 12 respectively, bumping his stake to 10.43%.
However, he ceased to be a substantial shareholder when he disposed 9.8 million shares on Aug 15. The disposal was only filed on Aug 18 while the acquisitions were filed on the days they were purchased.
On Aug 2, Danish citizen Christian Kwok-Leun Yan Heilesen bought 12.05 million DVM Tech shares, or a 6.85% stake on the open market. DVM Tech had closed at 25 sen that day. The transaction was notified to the company and Bursa Malaysia on Aug 4.
On Aug 12, he acquired an additional 4.6 million shares, bumping his shareholding to 9.46%. The notice was filed on the same day.
On Aug 15, Heilesen ceased to be a substantial shareholder when he sold 8.35 million shares. DVM Tech closed at 15 sen on Aug 15. The notice was only filed with Bursa Malaysia three days later.
DVM Tech saw its share price surge 233% to 25 sen on Aug 2, from 7.5 sen a month earlier. It had since fallen to close at 8.5 sen yesterday.
What is interesting about these three companies is that they have seen their share price increase prior to the emergence of the shareholders, and then on a declining trend after that.
In some instances, the substantial shareholders had taken some time (although all within the seven days time frame) before notifying their shareholding changes to the companies.
As such, there could be instances where retail investors bought shares in a company due to the entry of new shareholders, only to see the same shareholders exit the company at the same time.
While it is not known why these shareholders had quickly entered and exited these companies, perhaps it is time for regulators to consider shortening the disclosure period from seven days.
This is in line with how fast information is disseminated these days via the Internet and mobile services, and how efficient and sensitive markets are to news.
After all, the present seven-day disclosure rule was shortened from 14 days earlier. With current technology and reduced dependence on snail mail, perhaps a shorter period is now warranted?
A shorter period would be good to prevent any instances of speculation due to the emergence of new shareholders.
This article appeared in The Edge Financial Daily, December 23, 2011.
Companies such as Envair Holdings Bhd, Sanichi Technology Bhd and DVM Technology Bhd have seen quick enter-and-exit shareholders. The three are listed on the ACE Market whose market capitalisations are below RM50 million.
The roller coaster rides of the share prices that coincide with substantial shareholding changes raise the question whether the existing time frame for disclosures on changes in substantial holdings should be tightened further.
According to the Companies Act 1965, substantial shareholders need to notify the listed company within seven days of the shareholding transaction. This also applies to emerging and ceasing substantial shareholders.
Under Bursa Malaysia’s ACE Market Listing Requirements, the listed companies are required to make an immediate announcement to the stock exchange upon receipt of notifications from substantial shareholders.
But, is seven days too long considering the significant impact insider moves could have on share price movement?
This is because while these new substantial shareholders had immediately notified the companies of their emerging substantial stakes, it took some of them awhile to notify the companies when paring down their stakes.
Take Envair Holding Bhd for example.
Carpet Raya Sdn Bhd director Deepak Jaikishan emerged as a substantial shareholder in Enviar on Dec 2 with a stake of 5.06%. He then sold the entire stake less than two weeks later on Dec 14.
The announcement of Deepak becoming a substantial shareholder was made to the stock exchange on the very same day he acquired the shares. However, the announcement of his exit was made seven days later, although that was within the regulated time frame.
Before Deepak’s entry and exit, the Envair also saw the entry and exit of two Chinese nationals.
On Nov 1, Chinese national Jiang Chuan Yi emerged as a substantial shareholder when he bought a 6.75% stake in a direct deal on Nov 1. He then sold the same stake on Nov 23, and announced to the exchange on the same day. Envair rallied 277% to 41.5 sen on Nov 1 from 11 sen a month earlier.
It had pared down since to close at 32 sen yesterday. Prior to that, Envair was trading quietly between eight sen and 14.5 sen.
Last month, Envair announced that it was entering the oil and gas business by supplying two million barrels of light crude oil monthly to a Chinese company for a five-year duration.
Another Chinese national, Zhang LiYing bought 10.8 million Envair shares or a 9.11% stake in a direct deal on Oct 13 but it was only notified on Nov 2.
Zhang then sold off the 10.8 million shares on Dec 14 on the open market, and notified Bursa Malaysia on Dec 16. It is not known if Jiang and Zhang are linked to the Chinese company.
Another company that saw quick entry-and-exit shareholding changes is Sanichi.
On Aug 3, Mohd Wira Abdul Daim, the son of former finance minister Tun Daim Zainuddin, emerged as a substantial shareholder in Sanichi after he bought a 6.12% equity stake.
The transaction was immediately notified to Sanichi and Bursa Malaysia on the same day the shares were bought. Wira only held the stake for two days before he sold all 10 million shares on Aug 5. However, the notification was only filed with Bursa Malaysia six days later on Aug 11.
Sanichi rose to an earlier 15-month high of 10.5 sen on the next day after the announcement that Mohd Wira bought into the company. Prior to that, Sanichi was only trading in the range of 3.5 sen and six sen.
Trading of Sanichi shares were halted on Aug 4 at 4.05 pm due to an announcement that a Germany firm Projektarbelt Technische Beratung Venretung International (Protev) is commencing due-diligence process on the company.
Sanichi and Protev had earlier signed a memorandum of understanding (MoU) to form an alliance to set up a one-stop plastic injection mould fabrication solution centre. After Mohd Wira’s entry-and-exit, Sanichi’s shares slumped back to as low as four sen on Aug 29, down 62% from the peak of 10.5 sen.
Its shares later saw another spike that could be linked to an agreement with an Indonesian company to market and distribute three million metric tonnes of coal annually in China.
Sanichi had triggered two unusual market activity (UMA) queries from Bursa Malaysia — on Nov 8 and Dec 12. Sanichi closed at 13 sen yesterday.
Until today, it is not known why Mohd Wira had emerged as substantial shareholder in Sanichi for barely three days.
Meanwhile, DVM Tech also saw a quick entry-and-exit shareholder.
On Aug 2, Raymond Yip Wai Man bought 12.98 million shares or a 7.4% stake on the open market in DVM Tech. He then bought another 1.43 million and 3.95 million shares in two separate open market transactions on Aug 4 and 12 respectively, bumping his stake to 10.43%.
However, he ceased to be a substantial shareholder when he disposed 9.8 million shares on Aug 15. The disposal was only filed on Aug 18 while the acquisitions were filed on the days they were purchased.
On Aug 2, Danish citizen Christian Kwok-Leun Yan Heilesen bought 12.05 million DVM Tech shares, or a 6.85% stake on the open market. DVM Tech had closed at 25 sen that day. The transaction was notified to the company and Bursa Malaysia on Aug 4.
On Aug 12, he acquired an additional 4.6 million shares, bumping his shareholding to 9.46%. The notice was filed on the same day.
On Aug 15, Heilesen ceased to be a substantial shareholder when he sold 8.35 million shares. DVM Tech closed at 15 sen on Aug 15. The notice was only filed with Bursa Malaysia three days later.
DVM Tech saw its share price surge 233% to 25 sen on Aug 2, from 7.5 sen a month earlier. It had since fallen to close at 8.5 sen yesterday.
What is interesting about these three companies is that they have seen their share price increase prior to the emergence of the shareholders, and then on a declining trend after that.
In some instances, the substantial shareholders had taken some time (although all within the seven days time frame) before notifying their shareholding changes to the companies.
As such, there could be instances where retail investors bought shares in a company due to the entry of new shareholders, only to see the same shareholders exit the company at the same time.
While it is not known why these shareholders had quickly entered and exited these companies, perhaps it is time for regulators to consider shortening the disclosure period from seven days.
This is in line with how fast information is disseminated these days via the Internet and mobile services, and how efficient and sensitive markets are to news.
After all, the present seven-day disclosure rule was shortened from 14 days earlier. With current technology and reduced dependence on snail mail, perhaps a shorter period is now warranted?
A shorter period would be good to prevent any instances of speculation due to the emergence of new shareholders.
This article appeared in The Edge Financial Daily, December 23, 2011.
