This article first appeared in The Edge Financial Daily on May 31, 2017 - June 6, 2017

KUALA LUMPUR: Stone Master Corp Bhd’s extraordinary general meeting (EGM) to remove its managing director (MD) Datuk Koh Mui Tee and executive director Datuk Lee Hwa Cheng yesterday seems to have thrown the loss-making stoneware manufacturer into an impasse.

One faction, which is made up of Datuk Karen Lee Fong Yin — the company’s single largest shareholder holding a 22.29% stake who had called for the EGM — told the media that the company’s EGM was valid and the resolutions to remove Koh and Hwa Cheng were passed in the meeting.

However, Koh, who is on the other faction, claimed that he remains as the MD and that he still possesses executive power over the operation of Stone Master simply because the EGM was “invalid”.

Apparently, there was fiery anger at the EGM; loud arguments were heard from outside of the meeting room. There were at least four police officers on standby, while bodyguards were outside the meeting room.

“This morning’s (yesterday) meeting has been convened in a most uncivil [manner] and non-compliance with the law. Whatever happened there was chaotic and disorganised. Our properly appointed scrutineer has not been allowed to enter the meeting,” said Koh, who walked out from the ongoing EGM.

“We have informed Bursa Malaysia that the meeting is invalid, so both Hwa Cheng and I will continue to go to our office tomorrow (today),” he told the media on the sidelines of the EGM.

In a filing with Bursa, Stone Master said that Low Eng Tack, a proposed independent director suggested by Fong Yin, had acted as chairman of the meeting. “The company objects to such conduct,” said the filing.

“The company secretary was asked by Low whether he could confirm if there was a quorum. The company secretary’s response was that he could not confirm the presence of a quorum as no details of CDS accounts and IC numbers were made available to him.

“Notwithstanding that, the chairman proceeded to continue the meeting,” said Stone Master.

The scrutineer appointed by the company was not allowed to perform their duties, Stone Master noted in the filing.

Fong Yin, who is also the executive director (ED) and vice-president of Stone Master, and Datuk Yii Ching Siew are on the other faction. The duo surfaced as substantial shareholders in August 2014.

Yii, who relinquished his position as ED and president in March, is the second-largest shareholder with a 9.45% stake.

Yii and Fong Yin, who initially declined to meet the press, changed their minds later to hold a press conference at a different venue about an hour after the EGM had ended.

Fong Yin declared that the shareholders have also passed the resolutions to appoint seven directors to the board, namely Datuk Edward Ng Boon Siong, Low, Ma Jee Choong, Datuk Abdul Aziz Mohamed, Tan Wee Hock, Ananda Kumar Ramayah and Foo Chooi Wai.

Ng and Low, the two new directors appointed by Fong Yin, stressed that the EGM was called by a shareholder, and not by the company. 

In other words, Koh, as MD, who does not hold any share, had no authority to stop the meeting, according to them.

“If they (Koh) say the meeting was invalid, they must get a court order to injunct us from convening the meeting. But now, we have successfully convened the EGM without any interference from the court. If the shareholders cannot call [it] a valid EGM, then who can?” Low asked.

Ng and Low explained that the EGM was lawful because they followed all the procedures and “everything was in order”.

“Somebody tried to stop the meeting, but we still managed to get all the resolutions carried. Koh walked away when I chaired the meeting. Actually, he had the right to, either by written or orally, [say] why we should not remove him. But he just gave up [the chance],” said Low.

“It is important to note that 91.48% of shareholders who attended the meeting voted for all the resolutions; only 8.52% voted against [the resolutions]. Based on total issued share capital, 58% voted for the resolutions. So the outcome of the meeting is very clear. Shareholders’ vote is [what matters the most],” he reiterated.

As a new management team, said Ng, the newly appointed directors will not recognise the Bursa announcements that were made by Koh.

“The result is there. He may challenge that there was tampering with proxy, but today (yesterday), shareholders attended the meeting themselves. There was no tampering. There was no complaint from the scrutineer. There is no argument about this (validity of the meeting),” said Ng.

“We are on the right track, so there is nothing to say that the meeting today (yesterday) was not valid, until and unless he can prove that the EGM was invalid,” they concluded.