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PETALING JAYA: Bursa Malaysia says its supervision of China companies listed here includes “establishing contact with the relevant provincial governments and regulators for information sharing, as well as regular engagement with audit committee members, the advisors, the statutory auditors and the management of the listed companies”.

Bursa said this in reply to questions from StarBizWeek, amidst growing concerns in markets such as the United States, Hong Kong, Singapore and South Korea over accounting scandals of some foreign listed China-based companies.

“For Chinese listed companies, we also undertake education, direct engagement, to enable the foreign directors and key management to better understand their obligations and expectations for high standards of corporate governance,” a Bursa official said in an e-mailed reply.

There has been a lot of attention on China stocks the world over, stemming largely from Sino-Forest, a Chinese timber company listed in Canada.

Its shares have plummeted amidst reports that it had overstated the value of its assets.

In light of the recent developments, some regulators are trying to ensure the other Chinese stocks listed on their exchanges don’t suffer from accounting shenanigans.

In the US, the trading in the shares of at least 21 small cap Chinese stocks has been halted over the last one year with the Securities and Exchange Commission (SEC) investigating these companies, their auditors and sponsors.

In South Korea, the stock exchange is now considering some rule changes to improve investor protection and to ensure the reliability of the financial statements of foreign companies.

The Bursa official said that the stock exchange operator has put in place a comprehensive and effective regulatory framework which is aimed at maintaining a fair and orderly market.

The official added that Bursa undertakes a risk-based approach in monitoring of the financial position of listed issuers and this includes filtering and evaluating information in financial statements to assess if there are issues of concern that require further action.

Currently, Bursa’s Listing Requirements require foreign listed entities with predominantly foreign-based operations, to comply, amongst others, with the following:

·Must have at least one director whose principal or only place of residence is within Malaysia

·Must appoint an agent or representative in Malaysia to be responsible for communication with Bursa Malaysia on behalf of the applicant

·Auditing standards applied are in accordance with the approved auditing standards applied in Malaysia or International Standards on Auditing

·All information or documents presented, submitted or disclosed pursuant to the Listing Requirements must be in English

·Financial Statements must be prepared in accordance with the approved accounting standards as defined in the Financial Reporting Act, 1997 and

·The annual audited financial statements must be accompanied by a statutory declaration which is signed by the director or person primarily responsible for the financial management of the corporation, as the case may be, who satisfies the requirements prescribed in Paragraph 9.27 of the Listing Requirements.

“It must be emphasised that the boards play an important role in ensuring high standards of corporate governance,” the official said.