Corporate Malaysia continues to produce baffling episodes and painful lessons
AREN’T we glad Dec 31 is approaching fast? It’s always a relief to see the back of a trying year. Not that we’re assured of brighter days in 2016, but we’ll deal with it as it comes.
For now, we want to briskly walk away from the prolonged flow of demoralising stories that revolve around politically-charged allegations relating to 1Malaysia Development Bhd, weak commodity prices, the decline of the ringgit, a slowdown in China, Malaysia’s fiscal challenges, and Greece flirting with debt disaster.
But while we hurry towards whatever next year will bring, it’s also a good time to review some of the interesting happenings — they can be instructional or perplexing or both — in corporate Malaysia in 2015 that relate to corporate governance and regulatory matters. Hopefully, we can learn a thing or two.
>They’re out, they’re in, and they’re out again
Seven resolutions were tabled at Wintoni Group Bhd’s AGM on June 26, but only those on the directors’ fees and the auditors’ reappointment were passed. The majority of shareholders at the meeting rejected the resolutions to re-elect four directors.
Among the quartet were the non-executive chairman and an executive director. The other two were independent directors and members of the audit and nomination committees
The provider of automation systems dutifully announced the directors’ retirement. Astonishingly, they were appointed to the board the same day and they assumed their previous roles.
On Sept 10, Wintoni had a boardroom overhaul, with eight directors stepping down.
The four voted out in the AGM were among those who resigned.
They cited various reasons: early retirement, health issue, the need to focus on overseas business, and pursuing personal interests.
> Back by popular demand
Ire-Tex Corp Bhd surprised many people when it announced that co-founder and group MD Datuk Donald Yap Tatt Keat (pic) had retired by rotation at its AGM on June 29 and had not sought re-election.
Yap even spoke to reporters after the meeting but didn’t let on that he was leaving the manufacturer of packaging materials after two decades.
But hours later, the company said he had returned as MD.
Three days on, the company explained that Yap had wanted to opt for early retirement right after the AGM, and that was why he didn’t seek re-election.
“However, due to concerns raised by key stakeholders, namely bankers, customers and suppliers, to Yap’s unexpected early retirement, the board of directors had persuaded him to defer his retirement plans,” said Ire-Tex in an announcement to Bursa Malaysia.
“Consequently, in the best interest of the company, Yap had accepted his re-appointment as MD in the board meeting held immediately after the AGM. As such, he will remain in the board until a succession plan is put in place.”
Yap is still the MD although he ceased to be a substantial shareholder on July 14.
>Resistance is futile
According to Bursa Malaysia’s listing requirement, Scan Associates Bhd’s fourth-quarter results for 2014 had triggered criteria that would make it a GN3 company, a classification that indicates financial distress. On May 8, the stock exchange directed the ACE Market company to announce its GN3 status.
However, Scan Associates didn’t do so, saying its two company secretaries had resigned that day, and more significantly, it disagreed with the directive.
Two days later, the company filed a suit in the Kuala Lumpur High Court to nullify the directive and to seek damages from the exchange. The High Court granted a temporary injunction to prevent Bursa Malaysia from classifying Scan Associates as a GN3 company.
Subsequently, the High Court dismissed the company’s application for an interlocutory injunction. That freed Bursa Malaysia to slap the GN3 label on Scan Associates, which appealed against the dismissal.
On Aug 27, Scan Associates said it had dropped the legal action against the exchange, saying the withdrawal is in the best interest of the company.
> Is there a doctor in the house?
On July 30, Bursa Malaysia exposed an audacious lie when it said it had publicly reprimanded and imposed a fine of RM30,000 on Lim Yin Chow, a former director of Stemlife Bhd, Signature International Bhd and Rev Asia Bhd.
Lim’s wrongdoing was to claim that he had obtained a Bachelor of Medicine and Bachelor of Surgery (MBBS) from the University of Hong Kong in 1992.
This information was repeated in some of the three listed companies’ announcements and annual reports.
Following a complaint, the stock exchange checked and was told by the University of Hong Kong that Lim was not its graduate and that it had not issued a graduation certificate to him for the MBBS degree.
Lim resigned from the Stemlife board in September 2009, and from the boards of the other two companies in January last year.
> What a difference a decimal point makes
In what appeared to be a routine evening announcement, A & M Realty Bhd proposed on April 29 a final single-tier dividend of 15 sen per share for 2014. However, the property developer amended the announcement the next morning. It should be 1.5 sen instead of 15 sen.
That mistake earned it a public reprimand from Bursa Malaysia. The exchange said it did not condone any subsequent alteration to the dividend entitlement, which was prohibited under the listing rules. It viewed such contravention seriously as it affected market integrity.
“Investors and shareholders would have relied upon the company’s declaration of dividend towards their investment decision,” it added.
Executive editor Errol Oh has several reasons for forgetting 2015. Fading memory is one.