Last night (4 April 2023) at 10:24 pm, ASTI Holdings announced that it had received a letter from four requisitioning shareholders giving notice to the company that they are calling for an extraordinary general meeting (EGM) pursuant to section 177 of the Companies Act.
The EGM is to be held on 5 May 2023 at 10 am.
The purpose of the EGM is to consider and pass resolutions: (a) to remove four out of the five existing directors of the company, including the non-executive non-independent chairman, the sole executive director, and the two independent directors; (b) to remove any director of the company who may be appointed between 3 April 2023 and the date of the EGM, with effect from the date of the EGM; and (c) to appoint five new directors to the company, including two to be designated as executive directors (one of whom is one of the requisitioning shareholders), and the other three to be designated as independent directors.
In its announcement, the company disclosed that the board had on 24 March 2023 received a letter from the requisitioning shareholders inviting three incumbent directors to resign and inviting the board to appoint five new directors. It said: “No reasons for any of the above proposals were provided other than that this would purportedly ‘facilitate an overhaul and change of the Company for the betterment of shareholder’s value’.”
It added that the board had insufficient information to determine whether the proposals were in the best interests of the company, and that it replied on 29 March 2023 to the requisitioning shareholders to provide more information “on how their proposals would lead to the betterment of shareholder’s value.”
The board could have simply gone into yahoo finance and looked at the company’s abysmal share price history to see how shareholder value has been battered over the years.
Further, on 6 June 2022, the company received a delisting notification from SGX, which required it to announce its exit offer proposal by 4 July 2022. On 11 February 2023, the company responded to a series of queries from SGX, one of which notified the company that it is in breach of regulatory requirements to announce its exit offer. It said that Dato’ Michael Loh, who owns 19.89% of the shares and was the company’s former executive chairman and CEO, was in discussion with Capital Engineering Network Public Company Limited (CEN), which is listed on the Stock Exchange of Thailand, about a possible exit offer.
However, on 9 February 2023, the company announced that CEN has signed a share purchase agreement to acquire Dato’ Loh’s entire shareholding, but the company is not aware of any formal exit offer made by any party, including CEN. In other words, there is an exit for Dato’ Loh but no escape for other shareholders.
On 17 March, ASTI disclosed that the approval of CEN shareholders has been obtained for the sale of Dato’ Loh’s stake in exchange for ordinary shares in CEN. The completion of the proposed transaction is subject to SGX’s approval.
It would be hard to imagine anyone doing worse if they are appointed as new directors.
The board could also have referred to my series of articles and case study on the company, to understand why a total overhaul of the board has been sorely needed for a long time. It is not simply a case of poor business judgement, or even a series of poor judgements.
The company did not announce the receipt of the letter from the shareholders on 24 March 2023 and its reply on 29 March 2023.
About an hour later last night after the first announcement, the company posted another announcement. This includes the letter from the requisitioning shareholders calling for the EGM. This letter said: “The rationale for the EGM are plain and obvious”. I would clearly agree.
Nevertheless, the letter set out the reasons as follow:
“5. The adverse developments of the Company and the deteriorating value of our shares are also self-evident. We expect that any reasonable and long suffering shareholder who has been following the SGXNET announcements of the Company diligently would share our concern, which are entirely legitimate.
6. Prior to issuing this letter, we had on 24 March 2023 issued a letter to the Company to amicably invite the incumbent directors to resign voluntarily to take responsibility for the state of affairs in the Company. Disappointingly, they had refused to do so. The facts speak for themselves, and we will not delay ourselves further by remonstrating with them.
7. Suffice to state, we have exhausted any hope, faith or confidence whatsoever in the current team, and it is definitely time for an overhaul and change at the Company. We have the most at stake, and we are now acting in accordance with our statutory rights to call for the EGM and will leave the decision to be determined by the shareholders of the Company.”
The letter explained what the new directors plan to do:
“8. Once appointed, the new directors will take prompt action to ascertain the business and financial position of the Group, streamline business functions, maximise cost and operational efficiencies, maintain organisational discipline and integrity, as well as work towards ensuring compliances with the relevant laws and regulations governing the Company (including continuing listing obligations of the Company and the directives of the SGX-ST). The new Board, together with the new management of the Company, will work towards securing an exit offer for the Shareholders as soon as practicable.”
I would also hope that the new directors will ensure that there is a thorough review of the actions of the current and former directors to determine whether there have been any breaches in director duties, listing rules, and relevant laws and regulations. Where there have been breaches, they should consider taking action against the relevant individuals on behalf of the company and reporting to the regulators.
This is an opportunity for shareholders of ASTI Holdings to hold the current and former directors of the company accountable and have a possible chance to receive an exit offer which has not been forthcoming.
I would urge all shareholders to vote in favour of all the resolutions proposed by the requisitionists at the EGM.
If they need any further convincing as to whether to vote in support of the resolutions, they may wish to read my case study and series of articles on ASTI Holdings and its related companies, Dragon Group International and Advanced Systems Automation, links to which I have provided below:
https://governanceforstakeholders.com/2023/04/05/case-study-on-asti-holdings/
https://governanceforstakeholders.com/2021/12/23/asti-holdings-a-discounted-termination-payment/
https://governanceforstakeholders.com/2020/03/30/asti-holdings-star-search/
