KUALA LUMPUR (March 19): South Malaysia Industries Bhd (SMI) has decided against tabling Datuk Au Yee Boon-related company Honsin Apparel Sdn Bhd’s resolutions to appoint two new directors at the group’s annual general meeting next week.
SMI said this is pursuant to Rule 15.01 of the Rules on Take-Overs, Mergers and Compulsory Acquisitions (Take-over Rules), stipulating that no nominee of an offeror or persons acting in concert shall be appointed to the board, nor may an offeror and persons acting in concert exercise voting shares or voting rights in the offeree, until the offer document has been dispatched.
SMI said it has a pending complaint to the Securities Commission Malaysia (SC) that Honsin is acting with other parties acting in concert, breaching Section 218(2) of the Capital Markets and Services Act 2007 and the Take-over Rules.
“These complaints are still pending before the Court of Appeal and the judicial review application announced on March 14, 2024.
“In protecting the minority shareholders’ interests and their right to receive a general offer and in accordance to Rule 15 of the Take-over Rules as stated above, the company will not be circulating to its members the proposed resolutions of Honsin,” said SMI in a stock exchange filing on Tuesday.
Last week, Honsin filed a notice to SMI, expressing intention to appoint Hong Zheng Hong and Tan Eng Gooi as directors at the upcoming AGM on March 27.
Apart from Honsin, another smaller shareholder Chong Fu Shen also expressed intention to appoint himself, Lum U-Jun, Chong Fu Chih and Loo Choo Hong as directors.
SMI on Tuesday said upon due deliberation of the board after consulting with its lawyers, the board has instructed its company secretary to circulate the notice of the proposed resolutions by Fu Shen to SMI shareholders.
Honsin’s notice of intention came amid a series of ongoing legal battles with SMI, arising from its attempt, together with HIQ Media (M) Sdn Bhd, to wrest control of the listed company’s boardroom since February last year.
Honsin, which owns a 7.5% stake in SMI, is wholly-owned by Techbase Industries Bhd, which is in turn 17.72%-controlled by YB Ventures Bhd through Yi-Lai Industry Bhd and Yi-Lai Marketing Sdn Bhd.
Techbase also owns a 51.91% stake in HIQ Media. Au holds executive directorships in both Techbase and YB Ventures.
SMI’s largest shareholder is Asian PAC Holdings Bhd, which owns a 2.25% direct stake and 9.3% indirect shareholding. Mah Sau Cheong, who is Asian PAC’s single-largest shareholder with a 32% stake, also owns a 7.65% direct interest in SMI.
SMI had filed a complaint to the SC in March last year, alleging that Au and persons acting in concert (PACs) had amassed over 33% stake in it without making a mandatory general offer (MGO).
SC said it has acted on the complaint and held multiple engagements with SMI, which insists that the regulator has yet to make an official decision.
Hence, SMI said it has filed a judicial review at the High Court, compelling SC to hold a proper hearing on its complaint and make an official decision on whether Au and PACs should launch an MGO.
The court has fixed April 29 to hear SMI’s leave application to file the judicial review.
Shares of SMI closed unchanged at 63 sen on Tuesday, giving it a market capitalisation of RM132.26 million.