KUALA LUMPUR (March 21): South Malaysia Industries Bhd (SMI) said on Thursday it has decided to hold off proposals to change its directors following a substantial shareholder's bid for a temporary court restraint. 

SMI has immediately called for an emergency board meeting after being served on March 20 with a writ of summons and notice of application for an interim injunction by Mah Sau Cheong, the company said in an exchange filing. The legal counsels advised that the company risks contempt of court if the company preempts a ruling.

“The board agreed with the company’s legal counsels that it would be best for the company to maintain its status quo and let the court make a decision before the company” moves ahead with the proposals, SMI said.

Mah has sought the temporary court order to prevent SMI from tabling resolutions by Honsin Apparel Sdn Bhd and Chong Fu Shen at its annual general meeting scheduled for March 27 as well as at any other general meetings.

He also sought to restrain the Datuk Au Yee Boon and any related parties from moving any resolutions to remove or appoint new directors until full and final disposal of the suit.

Last week, Honsin Apparel filed a notice to SMI, expressing intention to appoint Hong Zheng Hong and Tan Eng Gooi as directors at the March 27’s AGM. However, SMI on Tuesday said that the group is against this resolution.

Apart from Honsin Apparel, another smaller shareholder Chong Fu Shen also expressed intention to appoint himself, Lum U-Jun, Chong Fu Chih and Loo Choo Hong as directors.

SMI’s largest shareholder is Asian PAC Holdings Bhd, which owns a 2.25% direct stake and 9.3% indirect shareholding, while Mah is the single-largest shareholder of Asian Pac Holdings Bhd with a 32% stake. He also owns a 7.65% direct interest in SMI.

Honsin Apparel’s notice of intention came amid a series of ongoing legal battles with SMI, arising from its attempt, together with HIQ Media (M) Sdn Bhd, to wrest control of the listed company’s boardroom since February last year.

Honsin Apparel, which owns a 7.5% stake in SMI, is wholly owned by Techbase Industries Bhd (formerly Prolexus Bhd), which is in turn 17.72%-controlled by YB Ventures Bhd through Yi-Lai Industry Bhd and Yi-Lai Marketing Sdn Bhd.

Techbase Industries also owns a 51.91% stake in HIQ Media. Au holds executive directorships in both Techbase Industries and YB Ventures.

At 3.33pm, shares of SMI were unchanged at 62 sen on Thursday, giving it a market capitalisation of RM130.16 million.

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