PETALING JAYA (June 12): Shareholders of Tan Chong Motor Holdings Bhd (KL:TCHONG) on Friday have also rebuffed a proposal for a recurrent related-party transaction mandate.
Results released after a four-hour heated annual general meeting (AGM) showed that nearly 83% of the voted shares rejected the proposal for transactions with Warisan TC Holdings Bhd (KL:WARISAN). A similar proposal with APM Automotive Holdings Bhd (KL:APM) was also overwhelmingly rejected.
The outcomes mean that the Tan Chong group of companies have been prevented from entering into large commercial transactions with related parties linked to its largest shareholder Datuk Tan Heng Chew and his family.
The result also mirrored decisions at the respective annual general meeting of APM and Warisan TC earlier this week, where shareholders similarly voted against proposed related-party transaction mandates.
Ahead of the votes, Tan Chong chief executive officer Daniel Ho Wai Ming had defended the proposal as “important commercial arrangements that support the group's operational sustainability”.
The arrangements were commercially necessary to support the turnaround efforts, diversification plans and operational efficiency, Ho said.
He noted that the recurring transactions with APM enabled Tan Chong to source local automotive components more efficiently, helping meet localisation requirements while maintaining competitive vehicle pricing.
Further, the arrangements would support the expansion beyond its traditional Nissan business through collaborations involving new vehicle brands, contract assembly activities, after-sales services and distribution programmes, Ho added.
The proposed transactions with Warisan TC carried a total estimated value of RM312.87 million, covering the sale and purchase of goods and services, rental arrangements and other recurring transactions.
The largest component involved Tan Chong selling motor vehicles, parts, components, customised goods and providing vehicle after-sales, pre-delivery inspection and leasing services to Warisan TC, with an estimated value of RM120 million.
Meanwhile, the proposed transactions with APM carried a total estimated value of RM82 million. The largest portion involved the purchase of goods and services worth RM50 million.
The entire transaction mandates were linked to Tan and his family, who control substantial interests across Tan Chong, Warisan TC and APM. Tan currently serves as the president of all three companies.
Minority shareholders' governance push also defeated
Friday's AGM also saw shareholders reject four governance-related resolutions proposed by a minority shareholder bloc led by Pang Sew Ha. Pang was married to the late Tan Sri Tan Kim Hor, who was the uncle of Datuk Tan Heng Chew, the president.
The resolutions, which were defeated by about 76% of voted shares, called for a reconstitution of the remuneration committee, independent reviews of major asset disposals, enhanced disclosure of capital allocation policies, and stronger conflict-of-interest governance measures.
Speaking through proxy Tan Guan Zhen during the AGM, the minority shareholder group argued that the resolutions were aimed at improving governance standards at a company that has remained loss-making for several years. Guan Zhen argued that the group was concerned that governance practices had not "kept up with the times" at what he described as a family-controlled company.
"We are not trying to propose these resolutions to go against the board or against Tan Chong. That is really not the objective," Guan Zhen said. "Good corporate governance is good corporate governance. It's absolute".
Aside from Pang, the minority shareholder group includes Boon Pun, Hoe Pin, Chee Keong, Beng Keong and Ban Leong, who jointly own 12% of the company.
At the AGM, Guan Zhen also questioned whether senior executives' compensation was sufficiently linked to company performance, arguing that shareholders had endured years of losses while remuneration remained substantial.
"Remuneration has to be in line with the performance of the company," he said. "One or two years of losses is absolutely fine. But this has dragged on for six years now consecutively,"
Aside from that, the minority shareholder group also raised concerns over recent asset disposals, arguing that investors should be given greater visibility into whether assets were sold at fair value and how proceeds would be redeployed.
At Friday's AGM, Tan was re-elected as a director with 76.48% of votes in favour, while Ho secured the same level of support for his re-election. Independent non-executive director Ng Chee Hoong was also retained after receiving 81.11% shareholder support.