Puzzling developments of Menang Corporation and its Board

By the Minority Shareholders Watch Group (MSWG)

 

ON Feb 15, 2021, Menang Corporation (M) Berhad suspended its two non-independent non-executive directors (NINEDs) namely Datuk Shun Leong Kwong and Marianna Aly Shun, with the latter being suspended “to investigate her conduct in the planning and the organising of the last AGM of the Company held on Dec 30, 2020”. 

At the same time, Shun was suspended “to investigate his managing and handling of some land transactions in Seremban 3 and the Company’s subsidiaries”.

Menang Corp also announced an Independent Investigative Committee consisting of two independent directors and an independent external advisor had been formed to examine and/or investigate the matters.

More questions than answers

It is rare, if not never, for a company to suspend a director for their conducts related to an annual general meeting (AGM).

Although there was no detail on the alleged misconducts that lead to the suspensions, the actions taken showed that the Board is serious in seeking accountability for the conduct of the AGM. Therefore, the actions taken and the setting up of the Independent Investigative Committee, is commendable.

Below are events prior to and during the AGM of Menang Corp on Dec 30, 2020, which may have contributed to the suspension:

  • On Nov 11, the Board announced that two shareholders, Liew Sook Pin and Toh May Fook had proposed the appointment of each other as directors of the company for consideration by the shareholders at the AGM. Accordingly, the Board would table the additional resolutions on the proposed appointment as Ordinary Resolutions 7 & 8 during the AGM.
  • On Dec 3, the Board announced that it had received notice from two shareholders, Siow Pei Tee and Nicholas Pun Chee Cheang, to remove Dr Christopher Shun Kong Leng (NINED) from the board at the upcoming AGM. Accordingly, the additional resolution was tabled as Ordinary Resolution 9 for the AGM.
  • On Dec 11, Menang Corp appointed two new company secretaries, Chua Siew Chuan and Cheng Chai Ping without notices of resignation from its two existing secretaries, namely Khoo Wei Lee (appointed on 14 October 2019) and Wong Youn Kim (appointed Jan 31 2019). As such, the company had four company secretaries when the AGM was held.

Wong Youn Kim resigned as a company secretary of Menang on Jan 6, 2021, leaving it with three company secretaries.

  • During Menang Corp’s AGM on Dec 30, Ordinary Resolutions 7, 8 & 9 were withdrawn by the chairman of the AGM citing non-compliance with the provisions of the Companies Act 2016.

The MSWG representative who was at the AGM (virtually) then sought clarification from the Chairman as to the section of Companies Act 2016 under which the resolutions were being withdrawn with no answer given. The same question was repeated; and again, but still to no response from the board.

There were also complaints from other shareholders that their questions were not answered at the AGM.

Besides Ordinary Resolutions 7,8 and 9, Ordinary Resolution 3 on the re-election of Marianna Aly Shun was also withdrawn as she had indicated her intention to retire as a director and would not seek re-election as a director of the company during the meeting. Accordingly, she retired as executive director of the company, effective Dec 30.

Strangely, in the company announcement on her retirement, it was stated that “notwithstanding her retirement as director of the company today, Shun will continue to serve in her executive capacity as the group executive director of the company”.

Later, she was re-appointed as a NINED of Menang Corp on Jan 29, 2021, less than a month after her retirement. The announcement also stated that her new designation is executive director.  Which means, there is some ambiguity here; Was she re-appointed as executive director or NINED?

Who should be responsible for the meeting conduct of public listed companies (PLCs)?

Rightfully, there are several parties involved in the planning for and conduct of a successful AGM, which include the company secretaries, the chairman and the board members.

Given that AGMs of PLCs is typically the only time during the year when shareholders and the Board members/management interact, it is of utmost importance that it is properly planned and organised according to the relevant laws, rules, and best practices.

In the context of PLCs, the Board must ensure that the appointed secretary has “the requisite knowledge and experience to discharge the functions of a secretary of the company”.

With increasing emphasis on corporate governance, the role of the company secretary has grown in importance. In many ways, the company secretary is now seen as the guardian of the company’s proper compliance with both the law and best practices, coupled with being the subject matter specialist in corporate governance.

One of the most important duties of the company secretary is arranging meetings (board meetings, AGMs, EGMs) of the directors and the shareholders.

Thus far, no action has been taken by Menang Corp’s Board against the chairman and the company secretaries, who also play an important role in the conduct of the AGM.

Presumably, there is nothing to hold them accountable. The Independent Investigative Committee will probably investigate to see who else is accountable for the conduct of Menang’s recent AGM.

Against this backdrop, on Jan 18, Menang Corp’s shareholders, namely Toh May Fook and Liew Sook Pin had commenced legal action against the group executive chairman, Raja Shahruddin Rashid and the company, claiming that the withdrawal of the Ordinary Resolutions 7, 8 and 9 during its recent AGM was wrongful, illegal, in breach of the chairman’s duties and abuse of his power conferred by law.

Liew and Toh also claimed that Raja Shahruddin had conducted the AGM in an oppressive and prejudicial manner, and disregarded their interest as the members of Menang Corp.

We hope the independent investigation will be done without fear or favour, or even impartially, and to be completed as soon as possible. The Board should be transparent in announcing the outcome of the investigation. – Feb 22, 2021

 

The MSWG was established as a government initiative to protect the interests of minority shareholders through shareholder activism. It was evolved into an independent research organisation on corporate governance matters.

The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.

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