Understanding PN17 and GN3 Companies
Companies that are experiencing financial difficulties
Understanding PN17 and GN3 Companies: A Guide for Investors
PN17 and GN3 are terms used in Bursa Malaysia to classify companies that are facing financial difficulties. Investors should be aware of these classifications and their implications.
What is a PN17 Company?
- Definition: A PN17 company is a listed company that has triggered certain financial criteria indicating financial distress.
- Triggers: These criteria can include low profitability, negative working capital, or overdue debts.
- Obligations: PN17 companies are required to submit a regularisation plan to the Securities Commission within a specified timeframe.
Example: A company that has consistently reported losses and has a negative net worth may be classified as a PN17 company.
What is a GN3 Company?
- Definition: A GN3 company is a listed company that has failed to comply with certain listing requirements, such as submitting financial reports on time or maintaining a public float of at least 25%.
- Consequences: GN3 companies may face delisting if they fail to rectify their non-compliance within a specified period.
Example: A company that fails to submit its annual report on time may be classified as a GN3 company.
Risks Associated with PN17 and GN3 Companies
- Financial risk: PN17 and GN3 companies may face financial difficulties, which could lead to bankruptcy or liquidation.
- Liquidity risk: Shares of PN17 and GN3 companies may be less liquid, making it difficult to buy or sell them.
- Volatility risk: These companies often experience significant price fluctuations due to their financial challenges.
Investing in PN17 and GN3 Companies
- Proceed with caution: Investing in PN17 and GN3 companies involves higher risks. It's essential to conduct thorough research and consider the potential risks before making any investment decisions.
- Seek professional advice: If you're considering investing in PN17 or GN3 companies, it's recommended to consult with a financial advisor who can provide expert guidance.
- Monitor developments: Keep track of the company's progress in addressing its financial issues and complying with listing requirements.
Note
- PN17 and GN3 companies are not inherently bad investments. Some companies may successfully recover from financial difficulties and achieve a turnaround.
- Diversification can help mitigate risks: If you choose to invest in PN17 or GN3 companies, consider diversifying your portfolio to reduce your exposure to any single company or sector.
- Stay informed: Keep up-to-date with the latest news and developments regarding PN17 and GN3 companies.
By understanding the implications of PN17 and GN3 classifications, you can make more informed investment decisions and manage your risks effectively.