Fair share of corporate tussles in 2017

TheEdge Thu, Dec 28, 2017 08:52am - 6 years View Original


KUALA LUMPUR: This year witnessed its fair share of tussles in the corporate world, in the form of shareholder spat, boardroom fight or family feud.

As usual, some of the cases developed into a legal battle as the warring parties dragged their “enemies” to court.

Below are some of the tussles and boardroom changes that have made the headlines this year.

 

Eka Noodles Bhd

Eka Noodles Bhd was embroiled in a board tussle after Tan Sri Tan King [email protected] Khoon Hai emerged as a substantial shareholder of the loss-making rice vermicelli and sago sticks maker.

The tussle began in December 2016 when Tan’s Vibrant Class Sdn Bhd bought a 8.97% stake in Eka Noodles. Vibrant Class and two individual shareholders then sought to oust most of the existing board members.

Vibrant Class raised its shareholding to 19.65% on March 13, making it the single largest shareholder of Eka Noodles.

On May 2, Eka Noodles non-executive chairman Datuk Sohaimi Shahadan and managing director Datuk Seri Chin Seak Huat resigned from the board. Chin, once the group’s largest shareholder, ceased to be a shareholder in March.

Earlier, three directors — Yee Yit Yang, Datuk Ahmad Zaffry Sulaiman and Raja Nazrin Raja Ghazilla — had also resigned.

On May 8, the Practice Note 17 company appointed Tan as its non-executive chairman, bringing an end to the tussle. Tan pledged to return Eka Noodles to profitability.

 

Ire-Tex Corp Bhd

Ire-Tex Corp Bhd was in the spotlight in April due to a tussle between two groups of feuding shareholders — its existing directors and Singapore-based Elite Cosmo Group Ltd.

On April 7, Ire-Tex filed a suit against former director and shareholder Datuk Tey Por Yee, Lim Chye Guan, Future Rank, Mohd Zamzuri Zakaria and Musa Abu Bakar for RM11.5 million, claiming that Tey and Lim had allegedly paid out the amount despite there being no purpose for making the payment.

Elite Cosmo, which emerged as the group’s largest shareholder, had repeatedly called for an extraordinary general meeting (EGM) to seek the removal of seven Ire-Tex directors, namely Felix Chin Wui Choong, Mak Lin Kum, Soo Tee Wei, Lee Yow Fui, Wong Fook Hiong, Datuk Seri Mohd Shariff Omar and Amryn Abd Malek.

Elite Cosmo instead proposed the appointment of Raja Hizad Raja Kamarulzaman as independent non-executive director, Hamdan Mohd Nor as executive director and Datuk Amiruddin Jamaluddin as independent director.

The feud in the group worsened with police reports filed against its directors.

On June 21, the existing directors filed a suit against Elite Cosmo and 19 others, including Ire-Tex director Kong Hon Kay, Tey, chief operating officer Christopher Purcell and another major shareholder, Famous Bluechip Sdn Bhd.

On Dec 15, Ire-Tex announced that it was discontinuing that suit, saying the action was unsustainable “due to the numerous applications to strike out filed by several defendants”.

 

Felda Global Ventures Holdings Bhd

On June 19, Isa resigned as FGV chairman and from all other positions in the group.

The tussle between the management and the board of directors of Felda Global Ventures Holdings Bhd (FGV) concerned irregular business dealings over the long outstanding debt of about US$11.7 million as at April 30 that Dubai-based Safitex Trading LLC owed to Delima Oil Products Sdn Bhd (DOP), a subsidiary of FGV.

On May 31, Tan Sri Isa Samad, the then chairman of FGV, asked group president and chief executive officer (CEO) Datuk Zakaria Arshad to resign for alleged breach of corporate governance code by allowing the practice of sales to Safitex without letters of credit.

On June 6, FGV chief financial officer Ahmad Tifli Mohd Talha and two other senior members of the management team were given leave of absence pending investigations into certain transactions under DOP.

The saga in FGV led to former minister Datuk Seri Idris Jala being appointed as an independent party to recommend the way forward for FGV in regard to the leave of absence of Zakaria, Ahmad Tifli and two senior members of the management team.

The matter also caught the Malaysian Anti-Corruption Commission’s attention. It seized a trolley-full of evidence after an eight-hour search at FGV’s headquarters on June 8.

On June 19, Isa resigned as FGV chairman and from all other positions in the group. Tan Sri Sulaiman Mahbob was subsequently appointed as acting chairman of FGV.

Ahmad Tifli resumed his duties as group chief financial officer effective Oct 4, while Zakaria returned as the group president and chief executive officer effective Oct 16 after a domestic inquiry was concluded.

 

Wintoni Group Bhd

There was no end in sight for the problems within Wintoni Group Bhd, which underwent a series of ugly boardroom tussles that had led to the removal and voluntary resignations of previous directors since 2015.

The resignations in 2015 included that of the entire board including chairman Datuk Khairuddin Mat Yusof, together with two executive directors including Datuk Tey Por Yee, plus four independent directors and CEO Choong Siew Meng.

This year, the group lodged a police report on June 19 against Tey, whom it alleged may have caused RM53 million to be unaccounted for or misappropriated from the group. Tey held a 4.5% stake in Wintoni as at Nov 16, 2016.

Wintoni, which has ceased all of its operations and recorded zero revenue in the latest financial quarter, is controlled by its executive director Cheah Kwong Lee, who was appointed to the board on June 20, not long after he emerged as the substantial shareholder on April 27. Cheah has a 10.7% stake in the group.

On Oct 2, Wintoni announced that the High Court on Aug 17 ordered the group to be wound up upon petition by a creditor.

Ten days later, Cheah applied to set aside the order, claiming that the group was not given any notice of the winding-up process.

 

Multi-Usage Holdings Bhd

The board of Multi-Usage Holdings Bhd, which had been sued by its suspended director Tan Chew Hua, retaliated with a lawsuit against Tan on Feb 16, as its boardroom tussle dragged on.

Besides Tan, the group also sued Khoo Yik Chou and the Companies Commission of Malaysia (CCM). Multi-Usage said it was seeking declarations that a Form 49 filed by Tan and Khoo with the CCM on Dec 21 last year was illegal. It also demanded that the appointment of directors reflected in the form, together with a letter to Multi-Usage’s secretary, be declared null and void.

The suit came after Tan and Khoo filed a suit on Jan 11 to seek a declaration that the group’s chairman Ang Kim [email protected] Teng Kok, and his son, executive director Ang Hwei Chyn, were no longer directors of the group.

Tan was suspended as a director in November last year to facilitate the group’s probe into matters highlighted in a qualified auditors’ report and a special audit report on the group. In January, the board extended his suspension until March 28.

On Aug 30, Multi-Usage extended indefinitely Tan’s suspension after he refused to cooperate in an internal investigation conducted by the group’s solicitor.

On Nov 7, the High Court approved an application by Multi-Usage to bar Tan from the director’s position, a year after he was suspended from the role. The group said that the decision will be effective “until the disposal of the main suit” against Tan.

On Dec 18, the group applied to the court to strike out three notices of intention received from shareholders seeking to appoint new directors.

 

Hock Seng Lee Bhd

Sarawak-based Hock Seng Lee Bhd (HSL) made news after a shareholder sought to remove his relatives from the board over a feud concerning the transfer of shares in HSL’s holding company.

Yii Chee Ming, a shareholder of the construction and engineering group, filed a suit late last year to seek the removal of his brother Datuk Yu Chee Hoe (managing director), his nephew Tony Yu Yuong Wee (executive director) and his brothers-in-law Lau Kiing Kang (executive director) and Lau Kiing Yiing (non-executive director) as directors.

The suit was over issues of disclosure to the relevant authorities by the four regarding the acquisition and disposal of shares in Hock Seng Lee Enterprise.

On June 29, the High Court dismissed the suit. However, Yii succeeded in getting the court to order the four directors to disclose matters pertaining to the acquisition and disposal of shares in HSL and Hock Seng Lee Enterprise.

The matter was then brought to the Court of Appeal by the four board members as they were not satisfied with the decision to grant the disclosure order.

On Sept 20, the Court of Appeal, by consent of both sides, set aside the June 29 order. HSL then announced that “the series of litigation matters involving HSL and the Yu/Yii family is concluded”.

 

Stone Master Corp Bhd

Stone Master Corp Bhd’s boardroom tussle intensified on May 29 after the group’s EGM. The meeting to remove managing director Datuk Koh Mui Tee and executive director Datuk Lee Hwa Cheng seemed to have thrown the loss-making stoneware manufacturer into an impasse.

One faction, made up of Datuk Karen Lee Fong Yin — the group’s single largest shareholder with a 22.29% stake who had called for the EGM — told the media that the EGM was valid and the resolutions to remove Koh and Hwa Cheng were passed in the meeting.

However, Koh, who was in the other faction, claimed that he remained as the managing director and that he still possessed executive power over the operation of Stone Master simply because the EGM was “invalid”.

On June 14, the High Court ruled in favour of Stone Master’s major shareholders, stating that the EGM was valid. With that, Koh and Hwa Cheng were deemed removed from the group’s board of directors, while eight new directors were considered appointed to the board.

 

Genting Bhd

Amid an ongoing legal dispute in the Lim family, Kok Thay and his son surfaced as major shareholders of Genting, with a 42.62% equity interest or 1.63 billion shares.

Amid an ongoing legal dispute in the Lim family, which controls the multibillion-ringgit Genting gaming empire, Tan Sri Lim Kok Thay and his son Lim Keong Hui surfaced as major shareholders of Genting Bhd, with a 42.62% equity interest or 1.63 billion shares.

Kok Thay is president and CEO of Genting, while Keong Hui is an executive director of the group.

Genting announced on Nov 6 that these shares, held by Kien Huat Realty Sdn Bhd, Golden Hope Ltd and Inverway Sdn Bhd, were held in trust for Kok Thay and Keong Hui.

The two are beneficiaries of the trusts and have reasonable grounds for believing that, effective from Nov 3, they have deemed interest in the shares owned by Kien Huat Realty and Inverway, the group said.

Kok Thay and his younger brother Datuk Lim Chee Wah have been at loggerheads with the family of their late brother Datuk Lim Tee Keong. Tee Keong’s children Joey Lim Keong Yew, Benjamin Lim Keong Hoe and Marie Lim Seok Leng are in disputes with Kok Thay and Chee Wah and have filed several suits against the uncles.

One such suit was filed in June, where Keong Hoe sought to rescind or set aside a power of attorney purportedly given to Kok Thay and Chee Wah by his grandmother. The power of attorney purportedly conferred the two sons — Kok Thay and Chee Wah — with wide powers.

In other suits, Keong Yew and sister Seok Leng alleged issues with their father’s will and questioned about being left out of a trust left by their grandfather.

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