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Notes to the
Financial Statements
As at 31 March 2020
Fima CORPORATION Berhad
(197401004110)
(21185-P)
• Annual Report 2020
187
39. Capital Management
The primary objective of the Group’s capital management is to ensure that it maintains an optimal capital structure in order to
support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or
adjust the capital structure, the Group may adjust the dividend payment to shareholders. The Group’s approach in managing capital
based on defined guidelines that are approved by the Board.
There were no changes in the Group’s approach to capital management during the year.
40. Material litigation
Hak Guna Usaha No. 01/Nunukan Utara
(a) On 13 May 2003, the National Land Body of Indonesia (“NLB”) issued a certificate, Hak Guna Usaha (“HGU”) providing PT
Nunukan Jaya Lestari (“PTNJL”) a right to use a land covering a total size of 19,974 hectares (“Total Parcel”) identifiable as No.
1/Nunukan Barat for the purposes of plantation. The HGU is set to expire on 12 May 2038.
Notwithstanding the HGU, the Minister of Agrarian Affairs and Spatial Planning (“Minister”) vide letter dated 25 July 2016
(“Revocation Letter”) informed PTNJL among others, of the following:
- There were administrative irregularities performed by officer(s) of the Regional Land Body of East Kalimantan in respect
of the HGU. Due to these irregularities, it was identified that 17,165 hectares (“Irregular Parcel”) of the Total Parcel is
delineated for forestry.
- A third party situated adjacent to the Total Parcel (“Third Party”) has requested to revise/amend the HGU as there
are overlaps between the Total Parcel with the Third Party’s interests on the land pursuant to their operating permits
(approximately 3,500 hectares) (“Overlapping Parcel”).
Following the above, the Minister vide the Revocation Letter has provided the following decisions:
- the HGU is revoked effectively immediately (“Revocation”);
- PTNJL to apply for a new certificate for the remaining 2,809 hectares of land located at Land Allocated for Other Purposes
(“APL”); and
- The Irregular Parcel is to be surrendered to the Minister of Environmental Affairs and Forestry of Republic of Indonesia.
On 21 October 2016, PTNJL initiated an action against the Revocation (“Lawsuit”) in the Administrative Court (“State
Administrative Court”) of Jakarta, Indonesia. In the Lawsuit, PTNJL applied for an order for stay of enforcement of the
Revocation until the final judgment is issued.