SINGAPORE (Mar 29): SGX RegCo has issued a notice of compliance to Camsing Healthcare, ordering the trading of its shares to remain suspended and the appointment of a special auditor to report on the state of affairs in the company.

In its notice issued on Friday night, SGX RegCo has also directed the company to give -- by Apr 5 -- detailed explanations from each of its three former independent directors as to why they considered it proper and appropriate to resign when audit matters have yet to be resolved.

In an unprecedented move, SGX RegCo says it will then make an assessment of each of the former independent directors’ suitability for appointment as director or executive officer, based on their responses.

On March 21, Camsing had announced the resignation of all three directors -- Kenneth Chin Hock Raphael Lau, Maurice Tan Huck Liang and Ong Wei Jin -- with effect from March 20, citing “unresolved differences in opinion on material matters between the IDs and the board, including matters which would have a material impact on the group or its financial reporting”.

Camsing’s auditors had earlier identified and raised their concerns over certain matters arising from their audit work for the financial year ended Jan 31.

The audit matters in question included whether related parties were involved in certain agreements amounting to some $9.7 million in FY17 and FY18 and whether the company had retained the “risks and rewards embodied” in the products sold under the deals.

Similarly, the auditors wanted to know whether parties involved in a purchase agreement, amounting to HK$15.6 million for FY19, were related and whether payments were made and refunds received.

They also highlighted uncertainty over the recoverability of licence fee income amounting to $299,00o in FY18 and the reversal of licence fee income totalling $294,750 in FY19 and questioned whether the group’s cashflow could meet its operating and financing needs for the next 12 months in view of the breach of certain bank covenants for credit facilities arising from two loans with some $3.4 million outstanding.

“We wish to express our disappointment that the former IDs have chosen to resign at the point when the audit matters were raised by the auditors and the audit matters have yet to be resolved,” says SGX RegCo in its notice of compliance.

“The resignation of the former IDs (and by implication, the entire audit committee), places the company in jeopardy as there is no continuity in the independent oversight of the audit matters which took place in the financial period prior to their resignations.”

Camsing conducts investment activities in healthcare related businesses. For the half year ended July 2018, the company reported losses of $1.3 million. Its shares last traded at $1.07 on Mar 21.