Investor Central: Protasco Berhad’s EGM — Are minority shareholders adequately informed?

KUALA LUMPUR, Nov 25 — Protasco Bhd’s shareholders will gather tomorrow at Multipurpose Hall, Unipark Suria, Jalan Ikram-Uniten, Selangor, to vote on resolutions demanding the removal of directors Tey Por Yee and Ooi Kock Aun.

Protasco Bhd and its Group Managing Director cum promoter Dato’ Sri Chong Ket Pen have also filed a suit against Tey and Ooi, asking them to refund US$22 million the company paid to acquire a 63 per cent stake in Anglo Slavic Indonesia (PT ASI) alleging that there was fraud and forgeries among other matters.

But Tey’s investment vehicle Kingdom Seekers Ventures Sdn Bhd filed a countersuit against the company and Chong claiming that he made RM10 million illegitimate gains in the transaction.

All of this because Protasco Bhd’s acquisition of a controlling stake in PT ASI, which was initiated in December 2012 and amended in January this year, was terminated in July.

Protasco alleges that Tey and Ooi didn’t disclose their interests in the acquisition.

Tey bought a 27.11 per cent stake in Protasco Bhd from its former Deputy Executive Chairman Dato’ Mohd Ibrahim bin Mohd Nor in November 2012.

Ooi was appointed as Protasco Bhd’s independent director on December 10, 2012.

He was a nominee of Tey, as mentioned in Protasco Bhd’s lawsuit.

In response to our email, Protasco Bhd said Tey nominated Ooi on the basis of the shares he owned in it, which does not necessarily mean the company or its Board knew at the time of appointment that Ooi would be his proxy or agent on the board.

It further replied, no company would be able to recruit/nominate anyone to become, for example, independent directors if the bare fact of nominating them meant they were proxies/agents. And at the end of the day, all directors owe statutory and fiduciary duties to the company and its shareholders especially the minorities, which in this case Tey and Ooi have breached.

In its lawsuit, Protasco Bhd said the Board decided to form an Investigation Committee (IC) to look into the sale and purchase agreement and other matters related to the acquisition of ASI after it was terminated in July.

The IC found out that Tey had an in-principle agreement with Protasco Bhd’s Group Managing Director Dato’ Sri Chong Ket Pen on November 3, 2012 to develop oil and gas based projects in Indonesia jointly with Protasco Bhd.

It was subject to that agreement that Tey bought a 27.11 per cent stake in Protasco Bhd in December 2012.

Protasco Bhd also said that Tey introduced the PT ASI deal to the company.

Apparently, Protasco Bhd’s Group Managing Director Dato’ Sri Chong seemingly knew a few things about Tey’s interests in the transaction.

Responding to our email, Protasco Bhd said the fact that Tey was promoting the deal was known to the Board and it was not prohibited. However, what was not known was that Tey hid his beneficial interest (an actual stake) in PT ASU, which is something that has to be declared and prevents him from participating in Board decisions on the deal.

In his counter suit, Tey claimed Chong made illegitimate gains of RM10 million in the acquisition of PT ASI.

To that, Chong responded that Tey borrowed RM20 million from him in December 2012 to buy shares in Protasco Bhd and the RM10 million that Tey claims to be illegitimate gains was actually a part repayment of the loan.

Sadly, the minority shareholders are stuck between the suit filed by Protasco Bhd that will next be heard on December 8 and the countersuit filed by Tey that will be heard on January 12.

Ultimately, it is up to the courts to decide on these matters.

When they gather for the EGM on Wednesday, the minority shareholders might wonder how independent Ooi was despite being a nominee of Tey.

On the other hand, Bursa Malaysia and the Securities Commission would be watching closely to see if Protasco Bhd obeyed the Listing Rules and other securities laws in the last couple of years.

Certainly, Wednesday’s EGM will not be the final word in what seems to be a long drawn battle. — Investor Central

 

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