Harvest Court sheds some legal complications after making board changes

KUALA LUMPUR: The word “Court” in Harvest Court Industries Bhd seems appropriate, as the door manufacturer has been caught in legal battles over the last one year with its biggest shareholder's trying to introduce boardroom changes.

Amid the various complications, the loss-making company last year aborted plans to work with 1Green Enviro Sdn Bhd and Sagajuta (Sabah) Sdn Bhd chaired by Mohd Nazifuddin Najib (who was also briefly Harvest Court director in 2011).

Now it seems that Harvest Court may soon be able to shed its legal problems and focus on turning around its fortunes without side distractions.

The company, which makes timber doors and related products, told Bursa Malaysia on Wednesday that Datuk Chai Woon Chet and his private investment vehicle Zenith City Investment Ltd - the company’s largest shareholder since June last year - were withdrawing two suits against the company and six others.

In the first suit, Chai had sought, among others, damages from Harvest Court for not agreeing to his request to circulate and include resolutions to appoint three additional directors - himself, Datuk Seri Abdul Azim Mohd Zabidi. and Wong Kwai Wah - at its AGM in June last year.

Chai claimed the company’s directors had breached Section 151 of the Companies Act, 1965 (regarding circulation of members’ resolutions, etc) and that its rights were affected.

In the second suit, Chai alleged that Harvest Court and its directors - including managing director/CEO Datuk Raymond Chan Boon Siew - had defamed him through various Bursa announcements and a news article. He sought, among others, damages and a published statement of apology. 

After failing to include the resolutions at the AGM, Zenith City along with Syawaras Sdn Bhd proposed an EGM on Aug 8, 2014, to consider appointing the same three directors. The difference this time was they also sought to remove some existing directors.

Harvest Court took legal action to declare the notice of EGM invalid and/or defective.

Flash forward to today: Even without the EGM, a good part of the resolutions Chai/Zenith City sought has become a reality, based on boardroom changes announced by Harvest Court to Bursa Malaysia last month. 

Chai was appointed to the board and as the company’s managing director on May 22, replacing Chan who resigned on the same day. Chan is also no longer on the board, because the majority of shareholders voted not to re-elect him at last year’s AGM.

Azim - another person whom Chai, via Zenith City, had nominated to the Harvest Court board - was also appointed director on May 22.

As for the four directors whom Chai had wanted to remove, two of them - Zainuri Zainal and Woo Mun Chee - resigned last month. The third, chairman Datuk Mohamed Amir Abas Zainal Azim, stepped down as Harvest Court’s audit committee member though he remains a director.

It remains to be seen what will happen regarding the sale and purchase agreement (SPA) signed between the company and Datuk Lim Thiam Huat on June 19, 2014, to acquire a piece of leasehold property with warehouses in Negri Sembilan for RM7.5mil. Syawaras’ solicitors presented an originating summons to Harvest Court to restrain it from completing the deal.

On March 9 this year, the High Court gave an order to restrain Harvest Court from taking any further steps to complete the SPA until the Companies Commission of Malaysia completed its investigation on any breach of the Companies Act, 1965 by the company, Lim and the company’s directors; and until the Deputy Public Prosecutor gave confirmation as to whether to bring action against the company’s directors and Lim. The order is valid until Sept 9.

In July last year, two projects to diversify into construction were aborted as the majority of Harvest Court shareholders had at last year’s AGM voted against renewing their mandate for the company to carry on recurrent related party transactions of a revenue or trading nature.

The cancelled agreements - inked in November 2011 - were for a RM70mil project to design and build a pulp and paper plant in Negri Sembilan to process oil palm empty fruit bunches for 1Green Enviro, and a RM129mil contract to participate in Sagajuta (Sabah)’s mixed development project in Kota Kinabalu, Sabah. The letters of intent/undertaking were received during the brief period when 1Green Enviro and Sagajuta chairman Nazifuddin was Harvest Court director (Oct 28 to Nov 21, 2011).

Nazifuddin, Raymond Chan, and Lim were founders, directors and shareholders of 1Green Enviro. The trio were also the management team behind the Sagajuta group. 

Harvest Court made a net loss of RM9.219mil for the 15 months ended March 31, 2015 (last December, the company decided to change its financial year end to March 31). For the financial year ended Dec 31, 2013, the company was also in the red with a net loss of RM3.719mil. 

Harvest Court closed up 0.5 sen to 20.5 sen on Thursday.