CAD seeks KXD Digital documents in probe
China-based KXD Digital Entertainment has been ordered by the Commercial Affairs Department (CAD) to produce company documents in a probe by the white-collar crime buster under the Securities & Futures Act.
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Investigation under Securities & Futures Act
By JAMIE LEE
07 January 2012
China-based KXD Digital Entertainment has been ordered by the Commercial Affairs Department (CAD) to produce company documents in a probe by the white-collar crime buster under the Securities & Futures Act.
In a two-paragraph filing submitted to the Singapore Exchange (SGX) by its interim judicial managers yesterday, KXD said: ‘We have recently been notified by the Commercial Affairs Department of the Singapore Police Force that they have commenced an investigation under the Securities Futures Act, Chapter 289 pursuant to the provisions of the Criminal Procedure Code 2010.’
KXD said that it was asked to hand over all company documents to CAD. No other details were given.
The Securities and Futures Act (Chapter 289) contains laws related to the issuing and trading of listed company securities.
It is not clear who is/are the subject of this CAD probe.
About six months ago, KXD filed a police report against its former chairman and chief executive Liu Fusheng for possible fraud and breach of the Companies Act and listing rules based on findings by special auditors in a report. KXD had also sued Mr Liu for about $295 million for alleged breach of fiduciary duties.
Both the company and Mr Liu were rapped publicly by SGX in June for breaches of listing rules and failures in corporate governance after a special audit flagged several grave lapses.
The report showed that KXD failed to inform shareholders that it had ceased business operations, effectively becoming a cash company. It also failed to promptly disclose lawsuits filed against it by Royal Philips, and the default judgments entered against KXD in 2007-2008.
SGX also noted possible breaches of the law and had reported the matters to the relevant authorities.
Mr Liu had in November called for a shareholders’ meeting to oust the current CEO - a meeting that shareholders voted to adjourn. He claimed that current executive chairman and chief executive Robby Asianto, who now owns about 12 per cent of the firm, has not been ‘concentrating his efforts to take the company forward’.
KXD’s interim judicial managers - Seshadri Rajagopalan and Angela Ee from Ernst & Young - were appointed in September by the court to manage the company’s affairs.
In a separate announcement yesterday, KXD said SGX has granted its request for an extension of time of five months (ending May 31, 2012) to submit a circular for the listing of a new business. It has also granted an extension for the completion of a resumption proposal to be completed by October 2012. The extension of timeline is subject to certain milestones.
Trading of KXD shares is still suspended. The company started out as a maker of DVD players, speakers and MP3 players. It made its trading debut on the Singapore market, with its shares surging to twice its offer price of 23 cents a share on its first day of trading. The stock last traded in May 2010 at one cent.