Why was FGP Ventures fined RM25,000 by the Sessions Court?

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FGP Ventures Fined RM25,000 for Wrongful Offering of Islamic Redeemable Preference Shares

FGP Ventures Sdn Bhd was fined RM25,000 by the Sessions Court for the unlawful allotment of Islamic Redeemable Preference Shares (iRPS). This conviction stemmed from the company's failure to adhere to Section 90(4) of the Companies Act 2016, which mandates the presence of a company constitution for the allotment of preference shares in private companies limited by shares. The company and its director had previously faced charges related to the public offer of these shares, resulting in a combined fine of RM325,000.
Allotment of Preference Shares Without Company Constitution

The core of the conviction against FGP Ventures lies in the company's action of allotting preference shares without having a constitution in place. Section 90(4) of the Companies Act 2016 explicitly states that such an allotment is an offence for a private company limited by shares. Upon conviction, the Act, under subsection (5), allows for a fine not exceeding RM500,000.
Previous Charges and Total Fines

This recent fine of RM25,000 is part of a larger legal action. Previously, on November 28, 2023, FGP Ventures Sdn Bhd and its director, Khemlani Satesh, were charged with four separate offences. These charges were brought under Section 43(1) and Section 90(4) of the Companies Act 2016, specifically concerning the offer of iRPS shares to the public. For these combined offences, the company and its director were ultimately fined a total of RM325,000.
Nature of the Offence

The offences involved FGP Ventures and Khemlani Satesh depositing money with the company for a specified period with guaranteed interest, as per agreed terms, which constituted an offer of shares to the public. Furthermore, the company proceeded with the allotment of preference shares without the requisite provisions in its constitution at the time of the transactions. Following these charges and fines, both defendants were granted a discharge not amounting to an acquittal.
Warning to the Public

The Companies Commission of Malaysia (SSM) has issued a cautionary statement to the public. Private companies are strictly prohibited from offering their shares to the general public or making share allotments unless such activities are clearly provided for within the company's constitution. This warning underscores the regulatory framework designed to protect investors and ensure corporate governance.

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Why was FGP Ventures fined RM25,000 by the Sessions Court?

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