KUALA LUMPUR (July 5): South Malaysia Industries Bhd (KL:SMI) has sought a court order to compel local stockbrokers Kenanga Investment Bank Bhd to provide details of shareholders who sold their shares that led to Francis Leong Seng Wui becoming its major shareholder with a 30.67% stake.

Leong, the executive director of property developer Hong Seng Consolidated Bhd (KL:HONGSENG), emerged as a substantial shareholder of the company after he acquired 32.58 million shares or a 15.52% stake through his private vehicle Target 1 Sdn Bhd on June 4.

A day later, he upped his stake in the company through Target 1 by acquiring 2.5 million shares through the open market and 29.3 million shares via a direct business deal, bringing his total shareholding in SMI to 64.38 million shares, equivalent to a 30.67% stake.

In a bourse filing on Friday, SMI said that it has filed an application with the court seeking that Kenanga Investment Bank Bhd, who acted as the stockbroker for those transactions, provide the identities of the sellers and relevant documents of the transactions that took place on June 4 and 5.

The transaction price was not disclosed, but the counter which closed at 44 sen on June 4, saw its share price surging 17 sen, or 38%, to close at 61 sen on June 5.

Besides compelling Kenanga to disclose the identities of the sellers of the shares, SMI is also seeking that Kenanga deliver the identities of the sellers to SMI or its solicitors within seven days of the court order.

SMI said the application is based on a possible breach of Section 176 of the Capital Markets and Services Act 2007, which relates to market manipulation of securities.

The company said that this information is important to supplement its ongoing Securities Commission (SC) complaint, which remains unresolved. The identities of the sellers and related documents will serve as fresh evidence in the on-going court proceedings involving the company, it noted.

Previously, SMI had filed a complaint with the Securities Commission Malaysia (SC) alleging that parties associated with Honsin Apparel Sdn Bhd and HiQ Media (M) Sdn Bhd had acquired more than 33% in the company and had not done a mandatory takeover.

The SC stated that the complaint could not be substantiated, resulting in SMI filing a judicial review on the decision.

Currently, SMI’s second largest shareholder is Honsin who has a 16.86% stake in the company.

Shares in SMI's settled one sen or 1.98% down to 49.5 sen on Friday, resulting in a market capitalisation of RM103.92 million