It alleged that the actions of the directors – Lim Chang Huat, Lim Chee Kon and Chow Chun Pooi@ Chow Chan Leong – were “oppressive” or “unfairly prejudicial” to VS Industry or its interests as a member of NEP.
“In view of the lack of visibility as to the financial position of NEP, the company is seeking an order for NEP to be wound up and two private liquidators to be appointed to liquidate NEP and investigate into the affairs of NEP,” VS Industry said in a filing with Bursa Malaysia today.
It said its originating summons was filed in the Kuala Lumpur High Court yesterday. The two private liquidators are Ooi Woon Chee and Wong Ching Yong of DC Restructuring Solutions Plt, according to the filing.
Boardroom drama
The saga began in 2016 when VS Industry invested in a subscription agreement with NEP and Chang Huat, acquiring the option to subscribe up to 251,451 new ordinary shares or 20% of NEP’s shares, for a total cash consideration of up to RM60 million.
Additionally, a shareholders’ agreement was established among VS Industry, NEP, Chang Huat, and Chee Kon, outlining their respective rights, responsibilities, and liabilities concerning the management, operations, and subsidiaries of NEP.
NEP operates as a holding company, and its subsidiaries designs, manufactures, and distributes water filtration systems in Malaysia, Singapore, China, Hong Kong and Taiwan.
According to VS Industry, NEP has been non-compliant in conducting board of directors’ meetings for over two years since May 2021, despite repeated requests.
It also said NEP failed to hold its annual general meeting (AGM) for the financial years 2021 and 2022 (FY2021 and FY2022), and its audited financial statements for those years were neither shared with shareholders, nor presented during the AGM.
Denied statutory rights
VS Industry also claimed it has been denied its statutory rights as a member of NEP to know the financial position, performance and health of NEP and its subsidiaries, ask the directors and management to explain the company’s affairs at the AGM, and vote on the election or re-election of directors.
Interestingly, despite NEP’s board agreeing to a dividend policy of distributing 50% of its profits, it did not declare or pay any dividends for the financial year ended 30 June, 2020 (FY2020), even though it recorded a profit after tax of RM19.86 million.
The bourse filing stated the oppression is not expected to have any material financial and operational impact to VS Industry, with the carrying amount of the company’s investment in NEP standing at RM7 million.
At the market close, VS Industry’s shares were up 3.5 sen or 4.07% to 89.5 sen, giving it a market capitalisation of RM3.46 billion.