Pink forms do not guarantee share allocation

KUALA LUMPUR: It’s final and official. Pink forms are just an invitation and not a direct guarantee of share allocation.



This follows the Federal Court’s decision to uphold the Court of
Appeal’s ruling that Malaysian Bulk Carriers Bhd (MBC) was right to
reject share applications from three individuals even though they had
been alloted the pink forms.


In the judgment delivered on Tuesday, the Federal Court ruled that the pink form was not a direct guarantee for share allotment.


In fact, it will be subjected to the company’s or its directors’
discretion as and when shares will be issued. “There will be no more
appeal to this case.


The judgment is final,” MBC solicitor Tay & Partners partner Leonard Yeoh told Business Times yesterday.






Yeoh said the decision was made in the presence of five judges.


The case was heard nearly 10 years after MBC undertook an initial
public offering (IPO) and listed its shares on December 2 2003.


It was brought up by three plaintiffs, namely Azijan Sipon, Yakob Masir and Norulhadi Md Shariff.


The three were former employees of Global Maritime Ventures Bhd, a company which owned 30 per cent of MBC then.


The case was first mentioned in 2004 at the Shah Alam High Court,
with the first decision delivered in 2011. The case then went to the
Court of Appeal in Putrajaya in 2012 and the Federal Court this year.


It is the first and landmark pink form case in Malaysia, which bears
a significant impact on companies planning to issue shares via IPO.


“As far as the legal status is concerned, the pink form is no
different than a white form and when one submits the forms, both will
still be subjected to the company’s discretion as to

whether one should be allocated with the shares or otherwise,” Yeoh said.


He added that company directors have the absolute right to reject
any application as and when they want and can return the forms along
with the bank draft or cheque.


“Banks will now have to reconsider when giving out financing for
shares based on the pink forms because it is no longer a done deal,”
Yeoh noted.