KUALA LUMPUR (Dec 11): South Malaysia Industries Bhd (SMI) has applied to strike out a lawsuit filed by Velocity Capital Sdn Bhd, the company that has called for an extraordinary general meeting (EGM). SMI has also initiated legal action of its own to halt the EGM, which has been scheduled for Jan 9.
SMI, in its application, said Velocity's suit dated Nov 22 must be struck off as it is “scandalous, frivolous, vexatious, and an abuse of court process", according to SMI's filing on Tuesday.
In the suit, Velocity is seeking three injunctive reliefs, including restraining SMI and its directors from taking any steps to disrupt the EGM convened by the firm; preventing SMI from initiating or continuing legal actions, including injunction applications, to obstruct the EGM; and prohibiting SMI’s directors from appointing new board members until the conclusion of the EGM.
SMI argued that the reliefs sought, including restraining the company and its directors from appointing new board members or challenging the EGM, were overly broad, imprecise, and an abuse of court process.
SMI further contended that the Velocity's claims of imminent harm were speculative and unsupported by evidence, deeming the application for an anti-suit injunction premature.
Separately, SMI has initiated legal proceedings against Velocity and three other parties — Target 1, TA Securities Holdings Bhd and Agmo Digital Solutions Sdn Bhd — to block any steps towards convening the EGM, pending a review by the Securities Commission Malaysia (SC).
In this suit, SMI is seeking court orders to restrain the defendants from convening the EGM until the SC reviews its consent under Rule 15.01 of the takeover rules, granted via a letter to TA Securities dated Nov 13.
SMI is also seeking to prevent the defendants from accessing the company’s record of depositors or general record of depositors related to the EGM.
SMI asserts that the SC's consent undermines the protection of minority shareholders and the independence of its board in evaluating takeover offers. The company said it had to initiate the legal proceeding against the defendants to preserve the status quo as the SC has yet to respond to its request.
SMI is also seeking interim reliefs to restrain the defendants from taking further steps relating to the EGM if the SC refuses to revoke its consent, pending a judicial review.
Case management for both suits is scheduled for Wednesday.
Shares of SMI closed unchanged at 41.5 sen on Tuesday, giving it a market capitalisation of RM86.09 million.