KUALA LUMPUR (Nov 17): Malaysian Genomics Resource Centre Bhd (MGRC) said its directors and management have taken the necessary steps to review the group's external transactions that have been flagged in the legal dispute initiated by its independent non-executive director Aswath Ramakrishnan.

In defending the transactions, MGRC said the review of transactions with external parties was made to ascertain “the next best move to be taken for the best interest of the company and its stakeholders”.

MGRC said this in its affidavits in response to Aswath's suit filed on Oct 26.

Aswath, in the name of the company, had also applied for leave of court to commence derivative proceedings against all MGRC directors and the management.

The applications accuse MGRC, its directors and management of alleged breaches of fiduciary duties in relation to the transactions in question.

Aswath claims the management officers breached their fiduciary duties in obtaining board approval for the transactions, while the directors had “failed to exercise their duty of supervision of control and failed to make the necessary disclosure at the material time”.

He also claims the board of directors have voted to change the financial year end, instead of resolving the audit issues highlighted by MGRC’s external auditors.

MGRC said that since necessary steps have been taken for the review of the transactions, Aswath “is not acting in good faith and for the best interest of the company”.

The transactions by MGRC and its subsidiaries involved Rinani Renal Bhd, Dynamic Prestige Consultancy Sdn Bhd and Rinani Genotec Sdn Bhd (now known as Genotec Sdn Bhd).

In particular, MGRC paid RM5 million of refundable deposit to Rinani Renal as part of a collaboration agreement signed on Aug 1, 2022 to appoint it as a consultant “in obtaining the exclusive rights to operate haemodialysis treatment centre”.

MGRC also paid RM4 million of refundable deposit to Dynamic Prestige as part of a collaboration agreement signed on Nov 15, 2022, “with the objective of exploiting the areas of interest in running dialysis centres and its related development of the proposed collaboration”.

As for Rinani Genotec, MGRC paid the firm RM3.5 million of refundable deposit on Dec 8, 2022, ahead of the execution of a formal agreement for MGRC to subscribe for new shares in Rinani Genotec.

Aswath is also seeking to appoint an independent auditor to investigate MGRC, its directors and management.

MGRC said that it has yet to determine the potential costs impact arising from the legal matter, aside from the potential costs which may be awarded against the company and the corresponding legal costs.

“The company is obtaining the necessary legal advice from solicitors with regards to the above matter,” it added.

Shares of MGRC closed half a sen or 1.08% higher at 47 sen on Friday, giving the group a market capitalisation of RM63.8 million.