This article first appeared in The Edge Malaysia Weekly on February 19, 2024 - February 25, 2024

ONE of the smaller brokerage firms in the highly competitive stockbroking industry, Apex Equity Holdings Bhd has seen several boardroom and shareholding changes over the last five years, which has grossly overshadowed its legacy, in which it had displayed great tenacity to remain in business even in the worst of times.

Established in 1990, Apex Equity, which owns Apex Securities Bhd (previously known as JF Apex Securities Bhd), came out stronger from the 1998 stock market meltdown that saw many brokerage firms go bust. This was despite the shareholding split into two factions — one headed by the late Chan Guan Seng and the other by the late Lim Siew Kim.

There was a time in June 2012, when a motion to re-elect Guan Seng, who was then executive chairman, did not go through as it was voted down by shareholders holding 44% of Apex’s equity. His ouster lasted less than a week before he was reappointed by the board.

Guan Seng remained as executive chairman until his resignation in September 2017, when he disposed of his shares to the ACE Group, leaving a leadership vacuum at Apex Equity. The seasoned stockbroker, who had led the niche brokerage firm for 37 years, died in February 2018.

Apex Equity’s problems started in September 2017, when ACE Credit (M) Sdn Bhd, a subsidiary of the ACE Group, emerged as a major shareholder of the company with a 23.73% stake.

The ACE Group’s entry into Apex Equity, which controlled Apex Securities Sdn Bhd, did not sit well with the Securities Commission Malaysia (SC). According to the regulator, company directors or shareholders with more than 15% equity interest had to meet its “fit and proper” requirement.

ACE Group and its representatives did not meet the criteria as it had allegedly provided misleading and false information in two memoranda issued to investors in 2015. As a result, the entry of the group only drew attention to the niche brokerage firm.

ACE Group also had to contend with two factions of Apex Equity shareholders. ACE Group had acquired the shares disposed of by the late Guan Seng and held close to 25% on paper.

The second largest shareholder was Fun Sheung Development Ltd with a 15.77% stake. The company was controlled by Siew Kim, one of the daughters of the late casino king Tan Sri Lim Goh Tong. She was married to Guan Seng’s brother, the late Dick Chan Teik Huat, and died in July 2022.

Although they were related, Siew Kim and Guan Seng were said to have had their differences, despite the latter being left to manage Apex Equity. But that was not necessarily the case when ACE Group came into the picture.

“ACE Group went into Apex Equity by purchasing the block from Guan Seng, well aware of the shareholding issues and the presence of Lim [Siew Kim] as a substantial shareholder. But they underestimated the clout the SC had over the brokerage industry,” says an executive familiar with the corporate developments at Apex Equity.

“The SC was closely monitoring the activities at Apex Equity and Apex Securities. ACE Group finally gave up and exited in December 2022.”

The SC imposed restrictive conditions on Apex Securities, a wholly-owned subsidiary of Apex Equity that was profitable and sitting on more than RM190 million cash at the time. The regulator wanted ACE Credit to reduce its stake to less than 15% and relinquish positions held by any representative on the board and management of Apex Equity and its brokerage arm, Apex Securities.

After ACE Credit exited Apex Equity in December last year, a new management team was put in place. Datuk Farhash Wafa Salvador, a former political secretary of Prime Minister Datuk Seri Anwar Ibrahim, was appointed group executive chairman at Apex Equity in December 2022. The other appointments were Datuk Zakaria Arshad, who previously headed FGV Holdings Bhd, and banker Norzilah Mohammed.

Who the appointees represent is not clear. Following the exit of ACE Group, several shareholders with smaller blocks have emerged in Apex Equity.

Datuk Seri Pang Chow Huat, a shareholder of several listed companies, has 9.69% equity interest while the others have stakes of less than 5%. Nevertheless, the new board of directors and management team have met the fit and proper requirement of the SC.

Zakaria was appointed group executive director in October last year while Norzilah was appointed executive director two months earlier. Together with Farhash, there are now three executive directors at Apex Equity, which is a change from 2019 to 2022. During that period, when ACE Group was in control of Apex Equity, the entire board comprised independent directors because none met the conditions imposed by the SC.

The chapter on the acrimonious relationship between Apex Equity, Apex Securities and the SC is over, according to Zakaria. “All suits and counter suits have been withdrawn. The group does not have any outstanding problems with the SC. All directors at the group and stockbroking level have passed the ‘fit and proper’ test of the SC.”

Zakaria, who is known in corporate circles as a planter, says his mandate at Apex Equity and the group of companies is to enhance its governance and expand the business.

“When I was managing FGV, it was more than managing the plantations. I was looking at the entire business spectrum. I also headed the investment committee at Koperasi Permodalan Felda. So, this is not entirely a new area for me,” he says.

On how his appointment came about, Zakaria says it was “by way of word of mouth” and that his first appointment to the group was in March 2023, when he was appointed to the board of Apex Securities.

“I heard of vacant board positions at Apex Securities through friends and approached the board directly. Later, when there was a leadership void at the Apex Equity level following the resignation of Lim Kok Eng, I went through another process before being appointed at the holding company level,” he says.

The faction aligned with the late Siew Kim is not represented on the current board and management. In fact, the Lim family had never sought representation on the board of Apex Equity until the most recent shareholders’ meeting in June last year.

At the shareholders’ meeting, companies related to the Lim family proposed three candidates to the board of Apex Equity. But they were not successful.

Based on the outcome of the shareholders’ meeting, the candidates aligned with the Lim faction controlled about 37% of Apex Equity, while the other group held 45.5% of the voting shares. This suggests that Pang and the shareholders aligned with him have the upper hand when it comes to the control of Apex Equity.

Meanwhile, there is still a lawsuit pending between Apex Equity and a company linked to the Lim faction. The suit was filed by Concrete Parade Sdn Bhd, the private vehicle of investment adviser Lim Beng Guan, in February 2019.

The suit sought to nullify a proposed merger between Apex Securities and Mercury Securities Sdn Bhd that had been mooted in late 2018 and approved by the majority of Apex Equity shareholders at two extraordinary general meetings in June and November 2019. Based on the polling results, it was believed that Siew Kim and her associates voted against the merger.

The proposed merger fell through when Mercury decided not to seek an 11th extension to the merger agreement in April 2021. It subsequently listed on the ACE Market as Mercury Securities Group Bhd in September 2023.

The suit also sought to nullify all share buybacks done by the company between 2005 and 2017.

While the proposed Apex Securities-Mercury merger is no longer an issue, the matter of the share buybacks is still pending a Federal Court decision. If the court decides against Apex Equity, the company will have to dispose of the shares it bought on the market within six months of the decision.

According to its 2022 annual report, as at Dec 31 that year, Apex Equity had 10.9 million treasury shares, or about 5% of the company.

Zakaria does not foresee this being an issue as the new board and management plans to dispose of the treasury shares to increase its cash holding.

“We want to make the assets work. One of them is the sale of the building in Kajang [to Era College]. The disposal of the treasury shares could potentially add another RM10 million to the coffers of the company which can be used to grow the business,” he says.

In reply to a question, Zakaria says he is open to working with all shareholders. “We are here to improve governance and expand the business. We are open to working with all shareholders,” he elaborates.

The founding shareholders of Apex Equity have died. The company is now controlled by a diverse group of shareholders with smaller stakes. The Lim faction that controls a substantial equity interest is not part of the new management. Whether they continue to be passive shareholders remains to be seen. 

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