KUALA LUMPUR (March 31): The Kuala Lumpur High Court has found Nakamichi Corp Bhd's former chief executive officer and executive director Lo Man Heng guilty of breaching his fiduciary duty.
In a filing to Bursa Malaysia today, Nakamichi said the court delivered its verdict yesterday (Tuesday, March 30). It also found that Man Heng's sister Lo Shwu Fen and Man Heng's wife Lai Yun Fung are jointly and severally liable to pay Nakamichi RM19.21 million as shortfall for the profit guarantee for both 2012 and 2011, as provided for under previous agreements signed on Nakamichi's acquisition of Tamabina Sdn Bhd in 2008.
The court also ruled that Nakamichi is at liberty to file an application to the court to ask Man Heng and Lee Jyh Kiong - the former chief financial officer of Nakamichi - to furnish the documents, based on a list provided by the company.
Additionally, it held that Man Heng, Shwu Fen and Lai, are to pay RM150,000 in costs to Nakamichi.
The suit was brought to the court by Nakamichi in August 2013 against Man Heng, who was removed in an extraordinary general meeting on July 29, 2013.
Nakamichi has been embroiled in a legal tussle for more than a year now with its 51%-owned Tamabina and the latter's directors Shwu Fen and Lai after they failed to hand over Tamabina's management accounts to Goh Kheng Peow and his wife See Thoo Chan, who are the largest shareholders of Nakamichi.
Without the management accounts, Nakamichi could not submit its results from the second quarter ended June 30, 2013 (2QFY13) to the fourth quarter ended Dec 31, 2014 (4QFY14) within the time frame set by Bursa Malaysia. Consequently, the group's shares have been suspended since September 2013. This also hampered the company from releasing its annual audited accounts for the financial year ended Dec 31, 2013.
Bursa had previously reprimanded Nakamichi and Man Heng on Oct 8, 2014, for failing to announce its financial statements within the stipulated timeframe. Man Heng was also fined RM1.43 million for the offense.
Man Heng, Lai and Shwu Fen collectively control a 49% stake in Tamabina. Tamabina is the only asset of Nakamichi, with a concession to log timber from a 15,900 ha tract at the Pinangah Forest Reserve in Sabah.
Prior to the decision of removing Man Heng, a boardroom tussle was triggered when Tamabina failed to present the share certificates to Goh and See, after Nakamichi acquired the controlling stake in Tamabina for RM30 million cash from Shwu Fen and Yap Siaw Lin in 2008.
The acquisition had come with a profit guarantee of an audited net profit of at least RM12 million from financial year 2010 till 2012. However, Tamabina had failed to fulfill the agreement in FY2011, when it posted only RM3 million net profit.
Nakamichi's prospects are dependent on Tamabina, considering the latter is a core subsidiary. The company had been loss-making since the year ended Dec 31, 2010 (FY10).