KUALA LUMPUR (Dec 1): Apex Equity Holdings Bhd's second largest shareholder, ACE Group, is back on the radar of the Securities Commission Malaysia (SC) with the regulator going to the court to prevent the group from taking control of the stockbroking firm.

The SC has previously requested ACE to exit Apex Equity amid a proposed merger between Apex Equity and Mercury Securities Bhd. The merger was called off in April 2021, and ACE has remained a shareholder since.

In a filing on Thursday (Dec 1), Apex Equity said the SC is seeking a court declaration that its subsidiary Apex Securities Sdn Bhd has contravened securities laws, and that ACE Holdings Bhd, which is part of the ACE Group, has been knowingly involved in the contravention.

The SC claimed that Apex Securities contravened the securities laws "as ACE has become a controller of Apex Securities, when ACE is not a fit and proper person" to do so.

The regulator is seeking a court order to refrain ACE from being a controller, not just of Apex Securities, but of any holder of a capital markets services license (CMSL). It also wants ACE to remove relevant directors and senior management personnel from Apex Equity and Apex Securities.

ACE Group holds a 14.98% stake in Apex Equity through ACE Credit (M) Sdn Bhd. ACE Group is controlled by Datuk Calvin Choong Chee Meng, who was appointed as managing director of Apex Equity this year.

According to the Capital Markets and Services Act, a controller of a CMSL holder controls 15% of the company, or has the power to appoint a majority of the directors of the company, or has the power to effect decisions in the business.

The Edge reported in August that at least three of seven Apex Equity directors at the time were linked to ACE Group, including Choong, Datuk Celine Leong Wai Leng, and Lim Kok Eng.

Of the other four Apex Equity directors not linked to ACE, only three have remained. The fourth — Apex Equity's non-executive chairman Datuk Ahmad Redza Abdullah — resigned on Sept 22, company filings showed.

It was reported that reservations by the SC over ACE stemmed from previous breaches of securities regulations by ACE Holdings, which had led the regulator censuring the latter and banning it from fundraising activities.

The SC's writ of summons and statement of claim dated Nov 29 were issued to Apex Equity, Apex Securities and 11 others through law firm Messrs Lim Chee Wee Partnership.

The matter has been fixed for case management on Dec 12. Apex Equity said it is seeking legal advice "and will strenuously defend" the case.

Shares of Apex Equity slipped two sen or 2.04% to 96 sen on Thursday, giving the company a market capitalisation of RM205.02 million. Year-to-date, the counter is down 12.73%.