I am pleased that there is now a new board of directors and management team in place at ASTI Holdings, following the resignation of all the former directors and CFO/acting CEO.
On 24 January 2024, the new board released an announcement titled “Control and Management by New Board of Directors” which sets out three things, amongst others things, that the new directors and management intend to focus on:
- stabilise the business, operational and other affairs of the ASTI Group with a view to maximising cost and operational efficiencies, maintaining organisational discipline and integrity, and complying with relevant laws and regulations (including listing obligations of the Company and the directives of the SGX-ST);
- review the corporate and business dealings and transactions of the ASTI Group including engaging with ASTI Group’s key customers; and
- where it is considered to be in the best interests of the Company’s stakeholders, take steps to secure or further exit offer(s) for the shareholders of the Company.
With regards to item 2, I would like to suggest that the new board and management look into the following matters, amongst others:
- the determination of the remuneration of the former executive chairman/CEO, given that the remuneration appears very high over a number of years while the company made significant losses and did not pay a dividend from FY2013, except for FY2018 after it made a net gain from the disposal of its wholly-owned subsidiary, Semiconductor Technologies & Instruments Pte Ltd (STI SG)
- the payment of a S$17 million fee to the financial advisor, VSA Capital Shanghai Limited, which amounted to more than 19% of the consideration, from the sale of STI SG, and the consultancy agreement that the former executive chairman/CEO entered into with STI SG in conjunction with its disposal, with all consultancy fees to be paid to him while he was also executive chairman/CEO of ASTI
- the S$10 million purchase of Yumei Technologies and its associated companies in 2018 by Advanced Systems Automation (an associate company of ASTI at that time, but a subsidiary before that). This was an interested person transaction that was not disclosed. Yumei Technologies was wholly owned by the then COO of ASA and his wife, and the acquisition resulted in the then COO becoming the controlling shareholder of ASA with a 29.12% stake.
- The bonus of S$8 million that was initially paid to the then executive chairman/CEO for FY2018 following the sale of STI SG, when ASTI briefly returned to profitability, which also coincided with the decision to change the remuneration policy for the then executive chairman/CEO to be more performance-based. Although it was subsequently revised to S$2.182 million and announced as an interested person transaction, there are questions relating to the change in remuneration policy, the initial award of the bonus, and the subsequent “U-turn”.
- The termination payment of S$1,378,270 to the then executive chairman/CEO in December 2021 when he was terminated as CEO whilst remaining as Chairman, even though the company’s corporate governance report had stated: “There are no termination, retirement or post-employment benefits provided for in the employment contracts with the Directors, CEO or top five key management personnel.” The company later clarified that there was an “inadvertent oversight” and that the then executive chairman/CEO’s “employment contract dated 8 August 2020 does contain a clause on termination benefits.” In addition to when and why the termination clause was introduced, the new board may wish to look into whether section 168(1), subject to section 168(1A), has indeed being complied with, as stated by the company.
Some of the above matters were queried by SGX but queries often do not deliver any meaningful outcomes from an investor protection point of view, and this was largely the case for ASTI. Perhaps there were good business reasons for the decisions made by the board that were in place at the relevant time with respect to the above matters and if so, it would at least comfort shareholders who have lost a lot of their investment that the directors were at all times acting in the best interest of the company and with reasonable diligence.
I wish the new board and management all the best as they try to set things right and bring the company forward.
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Note: The writer is a very small shareholder in ASTI Holdings.