The auditors of XYZ Bhd express an emphasis of matter on XYZ Bhd's ability to continue as a going concern in its latest audited financial statements for the financial year ended 30 June 2009 ("Financial Statement"). XYZ Bhd's shareholders' equity on a consolidated basis based on the Financial Statement was 60% of its issued and paid up capital (excluding treasury shares).
However, XYZ Bhd's subsequent quarterly results for the period ended 30 September 2009 ("quarterly results") shows that its shareholders' equity has reduced to 35% of its issued and paid up capital (excluding treasury shares).
Will XYZ Bhd trigger the Prescribed Criteria upon the release of its quarterly results?
Yes, since XYZ Bhd's auditors have expressed an emphasis of matter on its ability to continue as a going concern in its latest Financial Statement and based on XYZ Bhd's latest available results which is the quarterly results, its shareholders' equity is less than 50% of its issued and paid up capital (excluding treasury shares), XYZ Bhd will trigger the Prescribed Criteria pursuant to paragraph 2.1(e) of Practice Note 17. In this event, XYZ Bhd must immediately make the First Announcement under paragraph 4.1(a) of Practice Note 17 upon the release of its quarterly results.