South Malaysia Industries Berhad has taken legal action against its 10% shareholder who has requested an EGM with only selected members allowed to attend.
Honsin Apparel Sdn Bhd and HIQ Media (Malaysia) Sdn Bhd had collectively acquired 10.011% of SMIB and later issued a Notice of Intention to hold an Extraordinary General Meeting with “only members whose names appear in the Record of Depositors be entitled to participate, speak and vote at this EGM.
The group said the restriction is contrary to its Constitution which protects the rights of shareholders and provides that any shareholder whose name appears on the ROD up to three market days before the general meeting should be entitled to attend, speak and vote at the proposed EGM. By using a ROD dated 20 February 2023, Honsin and HIQ are denying shareholders who purchased SMIB shares in the one-month period between 20 February 2023 and 21 March 2023 the right to attend, speak and vote at the proposed EGM on 24 March 2023.
Conversely, any shareholder who sells their shares in SMIB during this said one-month period will still be able to attend, speak and vote at the proposed EGM as their name is listed on the ROD that Honsin and HIQ intend to use.
Recall on 21 February 2023, SMIB announced to Bursa Malaysia Securities Berhad that its Board was only able to meet on 24 February 2023 to discuss Honsin and HIQ’s request for the ROD and Notice of Intention to hold an EGM. However, one day before the Board could meet, Honsin and HIQ filed a suit at the Kuala Lumpur High Court as an attempt to compel SMIB to provide the ROD. Honsin and HIQ served the originating summons dated 23 February 2023 to SMIB on the very same day the Board met to deliberate their request.
SMIB said, “We were inclined to provide the ROD to Honsin and HIQ. However, Honsin and HIQ gave SMIB less than two days to provide the ROD and cited the wrong regulations in their request, rendering us unable to comply out of good governance. In our response, we informed them accordingly and advised them on the correct regulations to request for the ROD i.e. Sections 34(5) and 34(6) of the Securities Industry (Central Depositories) Act 1991. Regrettably, Honsin and HIQ had decided to prematurely initiate their suit, leaving us with no choice but to seek legal recourse to protect our shareholders from malice.”
Honsin and HIQ mooted the EGM to remove the entire SMIB Board of five persons including all the independent directors and appoint in their place, just two persons. No reason or grounds were given for their proposed removal of all members of the SMIB Board.
In accordance with Section 207(2) of the Companies Act 2016 which provides for the right of each and every director to answer to any complaint or charge levied against them, the SMIB Board wrote to Honsin and HIQ to request the reason for their proposed removal. Honsin and HIQ replied in identical letters, signed by the same person, that they do not need to provide any justification or reasons.
The two directors proposed by Honsin and HIQ for SMIB are Lee Boon Siong, 42, and Tan Eik Huang, 37. The profiles of both Lee and Tan from available records show them to have no experience in property development and management, which are the principal activities of SMIB.
