SMI slams EGM advert as ‘misleading’, seeks SC clarification over director appointments

Wednesday 04 Dec 2024

KUALA LUMPUR (Nov 29): South Malaysia Industries Bhd (KL:SMI) announced on Friday that no extraordinary general meeting will be held on Jan 9, 2025, and slammed an advertisement placed in an English daily by the representative of its major shareholder as "misleading the public and shareholders".

It said this in a bourse filing on Friday following the placement of the advertisement in the New Straits Times on Nov 26 by Velocity Capital Sdn Bhd on behalf of SMI's largest shareholder, Target 1 Sdn Bhd, to appoint six directors to the company's board — including former Perak police chief Datuk Pahlawan Mior Faridalathrash Wahid.

Target 1 is controlled by Leong Seng Wui, who emerged as the SMI's largest shareholder with a 30.67% stake after acquiring shares on the open market (15.52%) and via off-market trades (15.15%) in the months of May and June this year. Leong is an executive director of both Hong Seng Consolidated Bhd (KL:HONGSENG) and Revenue Group Bhd (KL:REVENUE).

SMI said Velocity Capital had not circulated the notice of the EGM to all shareholders, particularly the minority shareholders. "As such, at this juncture, the board wishes to inform that there will be no EGM to be held on Jan 9, 2025 until and unless the notice of EGM has been dispatched to all the shareholders," SMI said, citing requirements under the Companies Act 2016 and the company's constitution.

Waiting for SC's clarification

SMI's board of directors has also sent a formal request to the Securities Commission Malaysia (SC) for a "review of its decision to grant consent" for the appointment of six new non-independent directors, prior to the posting of the document on Target 1's takeover of SMI.

Under listing rules, except with the consent of the SC, no nominee of an offeror or persons acting in concert with it can be appointed to the board of the offeree — nor can they exercise voting shares or voting rights — until the offer document or the whitewash circular has been dispatched to shareholders.

SMI had announced on Aug 20 that Leong's Target 1, together with two subsidiaries of Techbase Industries Bhd (KL:TECHBASE) — Honsin Apparel Sdn Bhd and HIQ Media Sdn Bhd — had inked a collaboration agreement to work together to take control of SMI. The three, who collectively hold 50.05% of SMI, also launched a mandatory general offer for the rest of SMI shares they do not own on the same day.

"Upon receipt of clarification from SC, the board will fix another board meeting and consult its litigation counsels next week on the next course of action," SMI said in its Friday filing.

The delay on the posting of the final offer document is most likely due to an interim injunction filed by another substantial shareholder Mah Sau Cheong on Aug 27 to restrain the offerors from taking further steps under the takeover offer until the disposal of Mah's suit against the company over alleged share manipulation at SMI.

Following the interim injunction, SMI on Sept 2 said its board of directors had been advised to "cease and desist" from taking any action with regards to the unconditional mandatory takeover as it may "disrespect or circumvent" any order to be made by the court.

"Therefore it is best to await clarification or any decision to be delivered by the court..." said SMI then.

Both the interim injunction application and the suit by Mah are still pending at the Johor Bahru High Court.

Shares of SMI closed unchanged at 41 sen on Friday, giving it a market capitalisation of RM86.1 million.

Edited ByTan Choe Choe

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