While there are over a thousand companies listed on Bursa Malaysia, not all of them are in a strong financial position. Although at the time of listing, these listed companies must comply with Bursa Malaysia’s listing requirements, over time, the financial position and business direction of the company may change for better or worse.

There are many reasons for these changes, such as change in management, risk profile, management team experience, foresight, financial appetite, excessive leverage, etc.

In this article, I will talk about listed companies that are classified as PN17. PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia; related to companies that are in financial difficulties. The companies that are within the definition of PN17 they must submit their proposal to the Approving Authority to restructure and reactivate the company in order to maintain the listed status.

Prior to 2005, listed companies that are in this PN17 condition are classified as PN4.

The criteria for a listed company to be classified as a PN17 company are as follows:-

1. The shareholders’ fund is equal to or less than 25% of the total issued and paid capital of the listed company; Prayed
2. Trustees and/or administrators have been appointed to take control of at least 50% of the total assets employed by the company on a consolidated basis; Prayed
3. Liquidation of a subsidiary or associated company that represents at least 50% of the total assets employed by the company on a consolidated basis; Prayed
4. The auditors have expressed an adverse opinion or a disclaimer on the last audited accounts of the listed company; Prayed
5. In the event of non-payment, the listed company must announce its inability to present a solvency declaration through Practical Note 1/2001 or PN1; Prayed
6. The listed company has suspended or ceased all or most of its operations.

There are many reasons and circumstances for a listed company to enter the PN17 classification. For example, some cases are classified as PN17 due to external factors such as currency fluctuation and economic forecasts.

Since the middle of 2008, we began to experience a series of economic problems, but many never expected that the situation and the impact would be so serious. Examples of some foreign giants that are severely affected by the “sudden” adverse change in world economic conditions are general motors Y Citi Group.

For other companies like AIG, their problems likely stem from high risk appetite as well as economic miscalculations.