KUALA LUMPUR (April 10): The Securities Commission Malaysia (SC) said it is looking into a complaint filed by South Malaysia Industries Bhd (SMI), in which the group accused that some parties acting in concert violated the Capital Markets and Services Act 2007 (CMSA) in accumulating shares without making a mandatory general offer (MGO).

“The SC has received a complaint from SMI, and we are currently looking into the matter,” the regulator told The Edge. 

Last Tuesday (April 4), SMI announced that over 20 parties, comprising companies and individuals, were acting in concert with Prolexus Bhd's units — Honsin Apparel Sdn Bhd and Hi-Q Media (M) Sdn Bhd — by acquiring more than 33% of the group’s stake without making an MGO under the CMSA.

However, Prolexus, which holds a 10.01% stake in SMI through Honsin and Hi-Q, denied the allegations.

SMI said the parties acting in concert also included YB Ventures Bhd, an executive director and a substantial shareholder of both Prolexus and YB Ventures, and "some close relatives".

This prompted SMI to file a complaint with the SC under Section 218 (2) of the CMSA, which would require the parties involved to form an MGO to acquire all shares in the group not held by them.

Under the Act, the SC said, “an acquirer who has obtained control in a company shall make a mandatory offer to acquire the remaining voting shares in accordance with the provisions of the Malaysian Code on Take-Overs and Mergers, as well as guidelines, directions, practice notes and any ruling issued by the regulator”. 

SMI’s substantial shareholders include listed company Asian Pac Holdings Bhd, with a 2.25% direct stake, and a 9.31% indirect stake via its subsidiary BH Builders Sdn Bhd, followed by Mah Sau Cheong with a 7.65% direct equity interest.

Mah is a major shareholder of Asian Pac, owning 31.98% direct interest and 0.35% through his wife, Chin Lai Kuen. 

SMI has been loss-making since the financial year ended Dec 31, 2019 (FY2019).

The group widened its net loss to RM5.03 million in FY2022, from RM1.72 million a year earlier, dragged by its manufacturing and trading divisions. Revenue also decreased to RM48.74 million from RM49.81 million a year earlier. 

At the time of writing on Monday, SMI’s share price was trading down four sen or 4.12% at 93 sen, giving the company a market capitalisation of RM195.24 million. The counter, which hit a record high of RM1.46 in February, had risen 45.31% year-to-date. 

Read also:
Prolexus denies allegations of CMSA breach, rejects demand of mandatory general offer for SMI
South Malaysia Industries lodges complaint with SC on alleged CMSA breach