Business News

Saturday, 27 May 2017

Another one bites the dust

The Securities Commission of Malaysia building in Kuala Lumpur is a 2001 Asean Energy Award winner where it saves RM2.5mil per annum alone on electricity bills.

The Securities Commission of Malaysia building in Kuala Lumpur is a 2001 Asean Energy Award winner where it saves RM2.5mil per annum alone on electricity bills.

TIS the season for removing directors from the boards of companies.

Industrial chemicals distributor Samchem Holdings Bhd earlier in the week received a special notice from seven of its shareholders, who collectively hold 19.8 % in the company, asking for the removal of Ng Soh Kian as an executive director of the company.

Soh Kian was appointed as an executive director in February 2009, just four months before the company was listed. Interestingly, Samchem’s CEO Datuk Ng Lian Poh, the brother of the company’s founder and executive chairman, Thin Poh, resigned earlier this month. He resigned due to personal reasons.

Thin Poh, who has stepped in as acting CEO, holds a 44.14% stake in the company. Soh Kian has been steadily whittling down his stake in the company and now has only 0.26%.

No reasons were given for wanting to remove Soh Kian from the board by the seven, Samchem has not made the news much and when it does, it has not been negative. Besides Malaysia, it has a presence in Vietnam and Indonesia. Petronas Chemicals Group Bhd has awarded the company distribution rights representing it in Singapore, Pakistan, Bangladesh, southern India, Sri Lanka and New Zealand.

Among the seven shareholders were Samchem’s recently appointed chief operating officer Eugene Chong Wee Yip and executive director Chooi Chok Khooi, who respectively hold 1.55% and 3.43% stakes. Chooi is also a long-time executive director, serving alongside Soh Kian. The company’s second-largest shareholder, Tan Teck Beng, who hold a 5.08% stake, is another that has requested for Soh Kian’s removal.

Samchem has called for an EGM to be held on June 23 to vote on the removal of Soh Kian from the board.

Better late than sorry 

OFTEN the Securities Commission (SC) is blamed for the delay in approving submissions.

The SC usually comes under pressure from politicians to influential businessmen to expedite their applications.

In most cases, if the submissions do not have problems, it would sail through. If the investment bank had gone through the proposal and able to answer all queries from SC, there should not be any delays.

However when there are issues with the submission, it would take months and sometimes years. The SC often probes into the application intensively and questions the advisors until they are satisfied.

In some cases, the company withdraws its submission at the behest of the advisor. In most instances, it is finally proven that the SC was right in drilling down to details.

Recently there were two cases involving corporate exercise of listed companies. The investment bank withdrew their submission when they could not fulfil the answers required.

Remember Edra Global Energy Bhd, the utility arm of 1Malaysia Development Bhd (1MDB) that was seeking a multi-billion listing. It was a high-profile listing of a company linked to the government.

The SC, however, was not satisfied with the submission and subsequently 1MDB withdrew the application. It had alluded that it would seek a re-listing at a later date. Until today, Edra has yet to seek a listing.

Edra is no longer part of 1MDB, which on its own had gone through a restructuring to resolve its financial problems.

Of late, there are some quarters wanting to see the SC speed up on its processing of corporate submissions. This is not a healthy practice.

Many forget that the SC is the guardian of investors and their money in listed companies. It should be left alone to do its job. It’s better to be late in giving approvals than sorry because one bad approval would cause a lot of pain for thousands.

No stone unturned

THIS coming Tuesday, Stone Master Corp Bhd, a financially troubled marble-and-granite producer, will hold an EGM to decide the fate of the company’s managing director (MD) and one of the executive directors.

An executive director/vice-president of the company, Lee Fong Yin @ Lee Vun Ya, called the EGM to ask shareholders to vote for the appointment of eight directors and the removal of two others – MD Datuk Koh Mui Tee and executive director Datuk Lee Hwa Cheng.

Fong Yin is the largest shareholder in the company with a 22.29% stake while Koh and Hwa Cheng do not appear to have any shares in the company. The other major shareholders who also sit on the board include Datuk Eii Ching Siew @ Yii Ching Siew, an executive director/president of the company with a 9.45% stake and Datin Chan Chui Mei, who holds an indirect 5.4% stake through Starfield Capital Sdn Bhd, a private equity firm. She is the deputy MD.

Besides these shareholders, two other substantial shareholders, HR Land Sdn Bhd, which holds a 5.63% stake and Ng Siau Men, who has a 5.55% stake, have appeared on the latest list of substantial shareholders. Both these shareholders were not on the list of substantial shareholders in the annual report for the financial year ended Sept 30, 2016 (FY16).

Stone Master caught the market’s attention back in late 2015 when the company signed a series of agreements with major property developers in the country offering them building-finishing material products and services from China on an interest-free basis. The total amount of financing it agreed to provide stood at well over RM3bil. Developers only need to repay after completing their projects.

What is interesting is that the company had to sign agreements entailing the payment of one-time agency fees to various Chinese parties for the exclusive rights of distributing their products here. In lieu of cash, shares would be issued for the payment.

Not much have been heard about the financing scheme since then although there have been some inkling in the FY16 annual report that the substantial shareholders opposed the agreements entered into with the Chinese parties, which could have stalled the implementation of the scheme.

To be noted, Chan faces a suit from the Securities Commission filed last October for allegedly causing wrongful loss to the company.

Apparently, in consideration of the exclusive right to distribute the products of the Chinese companies, certain local representatives were paid a sum amounting to RM11.59mil in the form of a non-refundable deposit, of which RM11.54mil was subsequently paid by these local representatives to Chan, who is still a member of the board.

With such a controversy behind the company, it is strange why key officials are subject to being removed from the board.

Tags / Keywords: Stone Master , EGM , Koh Mui Tee

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