KUALA LUMPUR (Aug 16): QL Resources Bhd’s Indonesian subsidiaries are being sued by a minority shareholder, which is seeking some RM221.87 million as compensation for alleged management negligence, QL said in a bourse filing today.

The lawsuit is a civil action initiated by PT Pipit Citra Perkasa (PCP), a minority shareholder of PT Pipit Mutiara Indah (PMI), against QL subsidiaries PMI, QL Mutiara (S) Pte Ltd (QLM), as well as QL director Chia Seong Fatt in his capacity as a director of PMI.

PMI is an operating plantation company where 95% is held by QLM and 5% by PCP. QLM is the joint venture company between QL Oil Sdn Bhd, a wholly owned company of QL, and Hang Ting Pte Ltd. PCP and Hang Ting are affiliated companies owned by the family of Kristianto Kandi Saputro.

PCP is suing for the alleged negligence in the management of PMI under Article 1368 of the Indonesian Civil Code. It claimed that the negligence had caused PMI to suffer eight years of continuous losses since the commencement of its operations between 2012 and 2020. In turn, PCP claimed it suffered losses as a result of not receiving any distributable dividends from PMI.

PCP is also challenging the accuracy of the losses reported in the annual financial statements of PMI presented by Chia, as the basis of the non-distribution of dividends by PMI.

The minority shareholder also alleged that QL’s two subsidiaries and Chia have not performed in accordance with good corporate governance required under Indonesian law and under the contractual arrangement between PCP and the accused parties regarding PMI’s annual financial statements, as it alleged that the accused parties had failed to disclose the data and information requested by PCP.

A request for an audit investigation over the annual financial statements of PMI was also rejected by the defendants, it claimed.

Besides that, PCP alleged it had suffered investment losses since it never received any economic benefit from the business of PMI, despite its contribution via capital injection, shareholder’s advance and the management of location permit for PMI since 2004.

As such, PCP is seeking a declaration that the parties have committed an unlawful act and is seeking material compensations of IDR41.52 billion (RM12.24 million) and US$20.58 million (RM87.21 million).

It is also seeking immaterial damage compensation of IDR415.18 billion (RM122.42 million), and late payment penalty of IDR10 million (RM2,948.62) per day for any late payment of compensations from the defendants.

PCP also wants the court to confiscate two plots of land registered in the name of PMI and 2.98 million shares belonging to QLM in PMI.

QL said it had sought preliminary legal advice from its Indonesian counsels, and that it is of the view that the lawsuit is “frivolous, vexatious, inarticulate, obscure and without any legal merits, as well as an abuse of legal and contractual process”.

“The company is denying and refuting any basis of the lawsuit and all the plaintiff’s allegations of liability and claims for damages, and will vigorously challenge and resist the lawsuit,” it added.

QL does not expect to see any material losses to arise from the commencement of the lawsuit, other than legal costs in defending the claims.

The application for hearing will take place on Aug 19, 2021 in Tarakan District Court, North Kalimantan, Indonesia.