FRSIC Consensus 15 – Classification Of A Term Loan That Contains A Repayment On Demand Clause By The Borrower (30 March 2011)

The Malaysian Institute of Accountants (MIA) has issued a new FRSIC CONSENSUS on 30 March 2011.

The release of FRSIC Consensus 15 – Classification Of A Term Loan That Contains A Repayment On Demand Clause By The Borrower provides guidance, to address the current and non-current classification issues faced by a borrower related to a term loan agreement which contains a repayment on demand clause.

Considering the legal opinions obtained as well as the case laws established in Malaysia, FRSIC concluded that the repayment on demand clause in term loan agreements governed by and construed in accordance with the laws of Malaysia would not affect the borrower’s ability to defer settlement of a liability for at least twelve months after the reporting period. As such, the borrower should determine the classification of the liability associated with such term loan in its statement of financial position in accordance with other terms and conditions as stated in the term loan agreement..

You can download FRISC Consensus 15 here: http://www.mia.org.my/new/1_tech_detail.asp?tid=6&rid=5&id=919

FRSIC Consensus 14 – Impairment of Investment in Equity Instrument Categorised as Available-forSale Financial Asset due to “Significant or Prolonged” Decline in Fair Value (23 March 2011)

The Malaysian Institute of Accountants (MIA) has issued a new FRSIC CONSENSUS on 23 March 2011.

The release of FRSIC Consensus 14 – Impairment of Investment in Equity Instrument Categorised as Available-for-Sale Financial Asset due to “Significant or Prolonged” Decline in Fair Value provides guidance, in the context of investment in equity instrument categorised as available-for-sale financial asset, to the meaning of the term “significant or prolonged” contained in Paragraph 61 of FRS 139 “Financial Instruments: Recognition and Measurement”. FRS 139 do not define nor illustrate in detail the meaning of the term “significant or prolonged”.

The Consensus elaborated on the need for reporting entities in developing internal guidance to aid consistent application of judgement required in determining whether there is any objective evidence that an investment in equity instrument categorised as available-for-sale financial asset and measured at fair value is impaired due to “significant or prolonged” decline in fair value.

You can download FRISC Consensus 14 here: http://www.mia.org.my/new/1_tech_detail.asp?tid=6&rid=5&id=914

Sample Disclosure – Accounting Policy Of Operating Segments Reporting (17 March 2011)

Operating Segments

In the previous financial years, the Group deemed a segment as a distinguishable component of the Group that was engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment) which was subject to risks and rewards that were different from those of other segments.

Following the adoption of FRS 8 Operating Segments, an operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the Chief Operating Officer (CEO), acting as the chief operating decisions maker of the Group. The CEO makes decisions about resources to be allocated to a segment of the Group, and assesses its performances, for which discrete financial information is available for him/her to make the decisions.

However, as the Group have remained dormant, the adoption of FRS 8 Operating Segments does not have any impact to the presentations and disclosures required to be made in the financial statements.

Sample Disclosure – Note On Significant Event During The Year On Lifting Of PN 17 Status (9 March 2011)

Note On Significant Event During The Year – Lifting Of PN 17 Status

The Company had previously announced on 8 April 2008 that it intended to undertake a regularisation scheme to address its status under the Amended Practice Note 17/2005 of the Listing Requirements issued by Bursa Malaysia Securities Berhad (“PN 17”). The regularisation scheme was approved by the shareholders of the Company at the Extraordinary Meeting held on 8 June 2009.

As part of the regularisation scheme, order from the High Court confirming the par value reduction of the ordinary shares of the Company pursuant to the requirements of Section 64 of the Companies Act, 1965 was obtained on 8 July 2009.

The regularisation scheme was completed on 8 September 2009 followed by the lifting of the PN 17 status of the Company by Bursa Malaysia Securities Berhad on 15 September 2009.

The details of the regularisation scheme are as follows:-

  • A total of RMX,XXX,XXX nominal Redeemable Convertible Unsecured Loan Stocks – A (“RCULS-A”) were issued on 1 August 2009 from its renounceable rights issue. The RCULS-A were subsequently  converted on 7 September 2009 into XX,XXX,XXX new ordinary shares of RM0.25 each at the conversion rate of five ordinary shares of RM0.25 each for RM1 nominal value of RCULS-A held.
  • A total of RM175 million ordinary shares of RM0.25 each (the “DEF Consideration Shares”) and 43.75 million nominal value of 3% Redeemable Convertible Unsecured Loan Stocks – B (“RCULS-B”) were issued on 7 September 2009 respectively as consideration for the acquisition of 100% equity interest in DEF Sdn. Bhd.. The DEF Consideration Shares were subsequently listed and quoted on Bursa Malaysia with effect from 8 September 2009.
  • The issued and fully paid-up share capital upon the completion of the regularisation scheme on 8 September 2009 stood at XXX,XXX,XXX ordinary shares of RM0.25 each totalling RMXX,XXX,XXX.

Sample Disclosure – Lifting Of PN 17 Status (8 March 2011)

LIFTING OF PN 17 STATUS

The Company had previously announced on 8 April 2008 that it intended to undertake a regularisation scheme to address its status under the Amended Practice Note 17/2005 of the Listing Requirements issued by Bursa Malaysia Securities Berhad (“PN 17”). The regularisation scheme was approved by the shareholders of the Company at the Extraordinary Meeting held on 8 June 2009.

As part of the regularisation scheme, order from the High Court confirming the par value reduction of the ordinary shares of the Company pursuant to the requirements of Section 64 of the Companies Act, 1965 was obtained on 8 July 2009.

The regularisation scheme was completed on 8 September 2009 followed by the lifting of the PN 17 status of the Company by Bursa Malaysia Securities Berhad on 15 September 2009.

The details of the regularisation scheme are disclosed in Note XX to the financial statements.