KUALA LUMPUR (Aug 2): HHRG Bhd (KL:HHRG) and its wholly-owned subsidiary HH Land and Development Sdn Bhd (HHLD) have received a writ of summons, statement of claim and an ex-parte order, among others, filed by its largest substantial shareholders, alleging fraudulent inducement in agreements related to the transfer of shares.

The letter containing these legal filings was received by HHRG from Messrs Gan Partnership, the solicitors acting for Ch’ng Chen Mong, Tan Poh Cheng, Ch’ng Boon Sin and Cfamillie Holdings Sdn Bhd.

Cfamillie Holdings Sdn Bhd — the Ch'ng family’s private vehicle and the largest shareholder in HHRG — holds a 17.77% stake in the company, according to the biomass material manufacturer’s latest annual report. Chen Mong also holds a 0.67% direct shareholding in the company.

The subject matter of the claim involves shares in HHRG’s 51%-owned subsidiary, MG Furniture Sdn Bhd (MGF), and MG Furniture Innovation Sdn Bhd (MGFI), a wholly-owned subsidiary of MGF.

In a bourse filing on Friday, HHRG stated that the plaintiffs allege they were fraudulently induced in 2021 by former group executive chairman Datuk H’ng Choon Seng and Goh Boon Leong to sign several agreements, including the share sale agreement (SSA), shareholders agreement (SHA), profit guarantee agreement (PGA), supplemental profit guarantee agreement (SPGA) and escrow agreement (EA).

Notably, H'ng and Goh are also the substantial shareholders of HHRG, holding a 13.85% stake in the company through GH Consortium Sdn Bhd.

According to the SSA, the plaintiffs agreed to transfer their 51% ordinary shares in MGF to HHRG for RM28 million, with HHRG issuing new shares to the plaintiffs as payment.

The plaintiffs are seeking a court declaration that all agreements, and any other related or supplemental agreements or contracts, are void, rescinded, and not binding on the plaintiffs and/or the defendant.

The plaintiffs also seek, among other things, a declaration that three land sale agreements dated April 11, 2023, are void and non-binding; an injunction requiring the return of 1.02 million ordinary shares to the plaintiffs; enforcement of the judgment under Section 585 of the Companies Act 2016; payment of general, aggravated and exemplary damages; coverage of legal costs, interest on all sums at 5% per annum; the liberty to apply for further relief and any other relief deemed just by the court.

HHRG said the company is seeking legal advice and will take all necessary actions to pursue all available legal remedies to defend and protect the company’s position.

Shares in HHRG closed unchanged at 16 sen on Friday, giving the company a market capitalisation of RM152.81 million.