RECENT developments at property developer South Malaysia Industries Bhd (SMI) have raised eyebrows among shareholders, prompting calls for regulatory scrutiny over governance practices within the company.
An industry observer has raised concerns over actions taken by SMI board that appear to cast doubt on the board’s commitment to shareholder interests as they contradict the outcome of certain key resolutions voted by shareholders at the company’s 52nd annual general meeting (AGM) on March 27.
“During the AGM, shareholders decisively rejected the re-election of executive director Leow Thang Fong and voted down the proposed directors’ fees and benefits,” the industry observer told FocusM on condition of anonymity.
“Despite this clear message, Leow was appointed CEO less than a month later on April 20, sparking criticism over whether SMI’s board is truly responsive to shareholders’ decision.”
In an unusual move, an industry observer noted that SMI’s 2024 Annual Report disclosed that directors’ fees and benefits – previously rejected by shareholders – appear to have been replaced by other emoluments.
“The continuation of payment to the directors raises questions about whether SMI’s management is side-stepping shareholder resolutions, potentially undermining the intent of the AGM vote,” the industry observer pointed out.
“In addition, the Annual Report 2024 shows payments of directors’ fees and meeting allowances during SMI’s financial year ended June 30, 2024, yet no explanation has been provided as to why these payments were made despite the AGM outcome.”
In any case, the industry observer noted that ordinary resolutions No. 2 and 3 in relation to payment of directors’ fees and benefits for the period from June 29, 2022 to March 27, 2024 as well as up to the next AGM were rejected by shareholders during the March 27 AGM.
“Since the resolutions were rejected, has SMI/the company’s management been acting according to the shareholders’ decision?” he asked.
“These actions have left shareholders questioning the company’s governance practices while urging authorities like Bursa Malaysia and the Securities Commission Malaysia (SC) to investigate.”
Moreover, the industry observer said shareholders further argued that re-appointing Leow to a higher role coupled with the payment of fees and benefits despite shareholders’ rejection suggests that the board may be prioritising internal interests over those of shareholders.
“For now, all eyes are on SMI’s next moves as shareholders continue to demand greater transparency and adherence to corporate governance standards,” he added.
At the close of today’s market trading, SMI was unchanged at 42 sen with no trading done thus giving it a market capitalisation of RM88 mil. – Nov 5, 2024