[SINGAPORE] The Singapore Exchange Regulation (SGX RegCo) has reprimanded three directors and the chief financial officer of BlackGold Natural Resources for breaching listing rules, citing failure to implement adequate internal controls and risk management systems, as well as failure to promptly disclose material information.
The reprimand, issued on Thursday (Mar 20), named executive director and chief executive Andreas Rinaldi, independent director Lim Chee San, independent director Bangun Madong Parulian Samosir, as well as CFO Suherman Budiono.
Catalist-listed BlackGold Natural Resources’ principal business activity includes the production and sale of coal.
SGX RegCo found that the company had failed to put in place adequate and effective systems of internal controls and risk management systems.
Samantaka Batubara, a principal subsidiary of the company, held the mining rights to the group’s only coal mine concession in Indonesia, which was due to expire on Feb 25, 2023. It was the sole contributor to the group’s revenue and had a cooperation agreement with Global Energi Lestari.
On Nov 28, 2022, Samantaka Batubara served a notice of termination to Global Energi Lestari effective Nov 30, on the grounds of non-fulfilment of obligations under the cooperation agreement by the latter.
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This notice was served by a director of Samantaka Batubara, without any formal approval from nor notification to the board.
As a result, Samantaka Batubara was not able to continue with the production and delivery of any coal to its customers.
Noting that Samantaka Batubara had failed to meet its operation target from month to month, and that the director had stopped going to the office since November 2022, BlackGold Natural Resources terminated the director’s service from Dec 31, 2022.
In January 2023, the director informed the CFO of the termination and provided him with a copy of the termination notice.
In or before February 2023, the CEO was aware of the licence expiry on Feb 25, and that it had yet to be renewed. However, he did not inform the rest of the board about this.
On Feb 23, the head of compliance informed the sponsor about the termination. The sponsor informed the board about this on the same day, who decided that an immediate announcement should be released.
However, as the head of compliance was hospitalised for surgery, the announcement was released only on Mar 1.
The licence expired on Feb 25 but the board, apart from the CEO, was unaware.
On Mar 8, the CEO notified the rest of the board about the licence expiry. An announcement was released on SGX the following day.
In relation to the termination and licence expiry, SGX RegCo noted that while the CFO and the CEO were aware of material information that required immediate disclosure, they failed to escalate such information to the board in a timely manner.
Despite the regulator’s requests, the company was also not able to produce any evidence to substantiate the existence of internal controls it purportedly implemented at the material time.
SGX RegCo further noted that the CFO’s inaction in January 2023 resulted in the market trading on an uninformed basis during the relevant period.
It added that the lack of disclosure regarding the licence expiry could mislead shareholders to assume that there was no major change to the group’s business and prospects, which was not the case.
The regulator assessed that the board’s conduct fell short as no systemic internal controls were implemented for the group, particularly at the principal subsidiary level.
“SGX RegCo expects all directors to exhibit a minimum level of care, skill and diligence in the discharge of their fiduciary duties,” it said.
“Directors must devote sufficient time and attention to the affairs of the issuer (regardless of the issuer’s size), including implementing adequate supervisory and monitoring mechanisms over the operations and affairs of its principal subsidiaries.”
Trading in the shares of BlackGold Natural Resources has been suspended since Jun 15, 2023. The company has been placed under judicial management since Jan 26, 2024.
