This article first appeared in The Edge Malaysia Weekly on April 1, 2024 - April 7, 2024

The outcome of the shareholders meeting of South Malaysia Industries Bhd (SMI) seems to suggest that the existing board and management do not seem to have complete control over the company.

Of the seven resolutions that were put to vote for shareholders, five motions were rejected. The only two resolutions that were passed by shareholders were the motion to reappoint the auditor and non-executive chairman, Dr Abdullah Sepien.

Another board member, Leow Thang Fong’s offer to be re-elected to the board was rejected by shareholders holding 28.7% of the company.

Leow is associated with Asian Pac Holdings Bhd, which is the largest shareholder in SMI with a direct and indirect stake of about 11.5%. Asian Pac’s single largest shareholder, Mah Sau Cheong, has a direct 7.7% interest in SMI.

Among the other resolutions that did not pass muster with shareholders were the approval for directors’ fees, to allow the company to issue 10% of shares and a motion to adjourn the shareholders meeting.

It is not often that so many resolutions are rejected during an AGM. The fact that only some resolutions were carried through and others did not seems to suggest that the shareholding in SMI is split.

The rejected motions were defeated by a narrow margin. For instance, the motion to adjourn the AGM and re-election of Leow was defeated by a narrow margin of less than 2%.

Interestingly, the AGM was held a year after SMI filed a complaint with the Securities Commission Malaysia (SC) alleging that parties associated with Honsin Apparel Sdn Bhd and HiQ Media (M) Sdn Bhd had acquired more than 33% in the company and had not done a mandatory takeover. Honsin is the second largest shareholder in SMI with 7.5%.

The SC stated that the complaint could not be substantiated, resulting in SMI filing a judicial review on the decision.

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