This article first appeared in The Edge Malaysia Weekly on November 13, 2023 - November 19, 2023

There are a number of questions that need answering at Practice Note 17 company KNM Group Bhd.

Last week, KNM caught the market by surprise when it announced that the planned sale of its wholly-owned Italian outfit FBM Hudson Italiana SpA, which designs and manufactures heat exchangers and high-pressure equipment, had been thwarted by the Italian government.

In its announcement, KNM said the buyer, United Arab Emirates’ Petro MAT FZCO, which had agreed to fork out €22 million (RM111.76 million), had been rejected by the Italian government because one of the conditions precedent — to obtain the Golden Power Clearance — had not been met.

In earlier announcements, there was no indication that the Italian government was opposed to the sale, nor was it made clear that government approval was a necessity, and not a mere formality, for the deal to go through as KNM had made it seem.

And now that the deal has been scuttled, KNM has not explained why the Italian government is opposed to the sale. The rejection would have cast doubt over whether KNM would ever be able to sell the Italian asset.

Then, again, the shareholders of KNM must be a frustrated lot already. Earlier this month, the company announced the appointment of Ho Soo Woon as an independent non-executive director. Ho had left the company as an independent non-executive director less than a month ago, in mid-October, after a resolution on his removal was duly passed by way of poll at an extraordinary general meeting.

On what grounds can a director who is removed by shareholders be reappointed to the board two weeks later? Don’t the board members respect the outcome of the EGM? Aren’t there listing rules that govern such situations?

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