KUALA LUMPUR (Oct 14): South Malaysia Industries Bhd (KL:SMI) has filed a fresh bid to challenge the Securities Commission Malaysia's (SC) decision to allow six directors nominated by its offeror Target 1 Sdn Bhd to be appointed to the company’s board before the dispatch of the official takeover offer document.
In a bourse filing on Tuesday, SMI said it had filed the fresh judicial review application with the Johor Bahru High Court on Sept 25, after an earlier application made in January was dismissed on Sept 3 on technical grounds.
The new application seeks the court’s leave to challenge the SC’s decision to dismiss SMI’s earlier appeal over the regulator’s consent for the appointment of six new non-independent directors to the board prior to the issuance of the takeover offer document.
SMI is also seeking two certiorari orders to nullify the SC’s earlier rulings. The first challenges the regulator’s approval for the appointment of six directors before the offer document was issued, while the other seeks to quash the SC’s subsequent decision to reject SMI’s review application.
A certiorari order is a form of judicial remedy that allows a higher court to review and overturn the decisions of a public authority if they are found to be unlawful or made in error.
The company further requested for a stay of both SC decisions pending the outcome of the judicial review.
The legal tussle stems from Target 1’s move to appoint six new directors to SMI’s board before the mandatory takeover offer document was issued.
Under the takeover rules by the SC, nominees of an offeror or its persons acting in concert (PACs) are generally barred from joining the board or exercising voting rights until after the offer document or whitewash circular is circulated to shareholders, unless specific approval is granted by the SC.
SMI contends that the regulator’s decision undermines the independence of its board and compromises minority shareholder protection.
It had earlier argued that the appointments — which included former Perak police chief Datuk Pahlawan Mior Faridalathrash Wahid — effectively gave the offeror influence before shareholders had been properly informed of the offer terms.
Target 1, controlled by Francis Leong Seng Wui, an executive director of Hong Seng Consolidated Bhd (KL:HONGSENG) and Revenue Group Bhd (KL:REVENUE), together with its PACs Honsin Apparel Sdn Bhd and HiQ Media (M) Sdn Bhd, collectively holds 50.05% of SMI.
This triggered an unconditional mandatory takeover offer at 45 sen per share in August last year.
SMI shares closed unchanged at 27 sen on Tuesday, with a market capitalisation of RM56.68 million. Year to date, the counter has lost over 34%.