SINGAPORE (June 18): SGX RegCo has blocked an attempt by Sen Yue’s executive chairman Koh Mia Seng’s bid to oust his fellow directors. Koh had called for an extraordinary general meeting to be held on June 23, with the intention of getting rid of his fellow directors, including CEO Neo Gim Kiong.
However, according to an on-going independent review by Foo Kon Tan Advisory Services, Koh was found to have links with multiple clients that owe SMC Industrial, a wholly-owned subsidiary of Sen Yue, some $35.5 million.
The late payments have been a source of contention within Sen Yue’s board. The faction led by CEO Neo called for the independent review over the arrears; Koh, exercising his rights as the largest shareholder, wants to replace the board.
“SGX RegCo is concerned that changes to the Board could compromise the continuing independent oversight and completion of the ongoing Independent Review,” says June Sim, SGX RegCo’s senior vice president and head of listing compliance.
“SGX RegCo requires that the Company’s board composition shall remain unchanged until completion of the Independent Review and satisfactory resolution of the findings by FKT,” says Sim.
In addition, SGX RegCo requires FKT to report to SGX RegCo and Sen Yue’s audit committee concurrently on the findings of the Independent Review and may require FKT to report directly to SGX RegCo if need be.
Koh, who founded SMCI in the 1980s, sold this company to Sen Yue between 2015 and 2017 and was paid via new Sen Yue shares, thereby becoming the largest shareholder of Sen Yue with a stake of 42.71%.
The independent review has established multiple close links between Koh and the clients who are overdue in their payments. For example, an individual owns 44% of Foshan City Nanhai District Sea Sheng Waste Materials Recycling Co. This same individual has worked at SMCI since 2006 and would have reported to Koh.
A former legal representative of Tai Zhou Yi Ze Metal Co, another of the SMCI customers, was concurrently an employee of SMCI. Management accounts of this customer was found to have been sent to Koh.
Similar relationships were found for SMCI’s customers in Malaysia and Thailand.
These clients account for total receivables of $35.5 million as at Feb 29 2020, or 76.9% of SMCI’s total.
According to Foo Kon Tan, the credit terms extended by SMCI to these customers are longer than industry average.
Sen Yue’s audit committee has recommended that Sen Yue will halt all trades with these SMCI customers until all investigations are completed satisfactorily.
The review of SMCI’s accounts receivables, inventory and bank facilities (including loan covenants) is on-going.
