KUALA LUMPUR (June 17): South Malaysia Industries Bhd (KL:SMI) on Tuesday said it has rejected a proposal to nominate Teh Chee Hoe and three others as directors at its upcoming annual general meeting, citing violations of corporate and securities regulations.

SMI received the proposal on June 12 from Teh, who nominated Ng Fun Kim, Ling Chi Hoong, Amy Tan Li Peng and himself for election to the board, according to the company's filing with Bursa Malaysia. The AGM is scheduled for June 25.

The company sought legal advice on the proposal at an emergency board meeting where it was advised that Teh did not meet the requirements of Section 323 of the Companies Act 2016, which allows members of a public company to request circulation of a statement or proposed resolution for general meeting discussion.

In addition, SMI said Teh is linked to Target 1 Sdn Bhd, which issued an unconditional mandatory takeover offer for SMI on Aug 20, 2024. Target 1, controlled by Francis Leong Seng Wui, holds a 30.67% stake in SMI.

Notably, Teh and Leong are both executive directors of Revenue Group Bhd (KL:REVENUE), where they hold a 5.47% stake each.

SMI noted that under Rule 15 of the Rules on Take-Overs, Mergers and Compulsory Acquisitions, nominees of an offeror may not be appointed to the board or exercise voting rights in the target company unless consent is obtained from the Securities Commission Malaysia, and until the offer document has been issued.

“As such, the board of directors has given instruction to its litigation counsel to file a court application under Section 325 of the Companies Act 2016 to declare that the notice of intention as invalid,” SMI said.

Shares of SMI were last traded at 33 sen, valuing the company at RM69.3 million.