KUALA LUMPUR (April 26): Two substantial shareholders of M3 Technologies (Asia) Bhd (M3 Tech), one of whom is the company's former group managing director Lim Seng Boon, want to remove four directors and to terminate the employees share option scheme (ESOS).

This happens one week after seven shareholders collectively holding 146.1 million shares rejected the proposed private placement at the extraordinary general meeting (EGM) last Monday (April 19).

On top of that, M3 Tech last week also terminated the memorandum of collaboration with AT Systematization Bhd to provide digital signage hardware and software enhancements for large-scale Covid-19 disinfection chambers.

According to a filing with Bursa Malaysia today, Lim, who stepped down two months ago, and another substantial shareholder Voon Sze Lin have requested to convene an EGM to remove four directors and to appoint four others to the board.

The duo have a combined shareholding of 13.5%, of which Lim holds a 7.4% stake, while Voon has 6.15%. The other substantial shareholder is XOX Bhd holding a 9.39% stake — including a 5.23% stake held via XOX (HK) Ltd.

The two want to remove executive chairman Mark Chew Shin Yong, non-independent and non-executive directors Datuk Chai Woon Chen and Ng Kok Heng as well as executive director Nicholas Wong Yew Khid.

Meanwhile, Voon intends to take up the non-independent chairman post, and three others — Yeoh Boon Hock, Shaifubahrim Mohd Saleh and Muhammad Zul Hanafi — as independent directors.

Furthermore, they are also calling for the termination of the ESOS announced on March 4. The ESOS entailed a total of 231.38 million share options at the exercise price of five sen to eligible employees.

The number of shares to be issued is equivalent to close to 30% of the company's existing issued share capital of 773 million shares.

"Now that we have officially served the official notice as prescribed under Section 311 of the Companies Act 2016, we hereby request that NO NEW DIRECTORS are to be appointed before the extraordinary general meeting."

"In accordance to the above, please make [a] corresponding announcement on Bursa accordingly to protect all shareholders' interest and full compliance of Listing Requirement accordingly," said the notice served to M3 Tech. The notice was dated April 25, 2021.

M3 Tech said the company is seeking legal advice in respect of the notice. "Further development on the above matter will be announced to Bursa Malaysia Securities Bhd in due course," said M3 Tech.

Massive dilution

M3 Tech's board made multiple proposals last month including a private placement to issue 232.15 million new shares or 30% of share capital to raise RM9.82 million and to grant ESOS up to 30% of the share capital as well.

Notably, M3 Tech completed a private placement of 128.54 million shares in January, equivalent to 20% of the company's issued share capital then.

In 2019, M3 Tech did a private placement. The company placed out 58.43 million shares — representing up to 10% of its share base then.

M3 Tech's share price soared to 17 sen in August last year. It closed at 5.5 sen, valuing the company at RM42.56 million.