COMPONENTS manufacturer Fu Yu Corporation on Thursday (Feb 6) said that it has received a second letter from Victor Lim, its largest shareholder, seeking to requisition an extraordinary general meeting (EGM) to vote on the removal and appointment of directors.
This comes after Fu Yu Corp announced that it would not convene an EGM requisitioned by Lim in his first letter to the company.
In Lim’s first letter, he said that he called for the meeting as he believes a “strategic reset” and reorganisation of the board is needed amid the company’s “poor performance”. He had thus sought to remove two independent, non-executive directors, Christopher Huang and Royston Tan, from Fu Yu Corp’s board, as well as appoint Gilbert Rodrigues, Ralf Pilarczyk and Yang Zhenrong to the roles of independent, non-executive directors.
The proposed resolutions in the second letter dated Feb 5 seek to remove the same two directors from the board, as well as appoint the same three individuals to the roles of independent, non-executive directors.
Fu Yu Corp’s board had previously announced it would not convene the requisitioned EGM as it had obtained legal advice stating that the requisition did not meet the legal requirements and was insufficient to invoke Section 176 of the Companies Act.
The board also said that Lim is not a member of the company as defined by the Act, even though he owns the beneficial interest described in his first letter – some 29.45 per cent of Fu Yu Corp shares.
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In Thursday’s bourse filing, the company and board reiterated that Huang and Tan, who Lim is proposing to remove, are independent, non-executive directors and are not involved in the day-to-day running of the business of the company.
They added that the group recorded an operating profit for the nine months ended Sep 30, 2024, compared with an operating loss in the corresponding year-ago period, and that its revenue rose more than 50 per cent.
The company and board are reviewing Lim’s second letter and will be taking legal advice on the requisition of the second EGM.
Investigation update
The group also provided an interim status update on Fu Yu’s investigations into its business unit Fu Yu Supply Chain Solutions, which it started investigating after an internal audit.
The board said that it had received an update report dated Feb 5 from law firm Damodara Ong, and noted that investigations revealed that the business unit made one or more unverifiable arrangements in respect of a payment of about US$3 million to a third party, for which services did not appear to have been rendered.
There are also “potential” conflict of interest issues in the arrangement.
Investigations also found that there was unauthorised usage of the e-mail account bd@fuyu-scs.com by third parties.
Questions were also raised about the secondment of an individual to Fu Yu Supply Chain Solutions as its general manager from May 2023 to May 2024, as well as about the individual’s conduct.
In addition, some expense claims made to Fu Yu Supply Chain Solutions by a former employee for herself and on behalf of a current employee of Fu Yu appear to be from “irregular” documents.
These matters warrant further review, said Fu Yu Corp.
As at the date of the report, some current and former employees of Fu Yu Supply Chain Solutions or Fu Yu Corp have participated in interviews conducted by Damodara Ong.
The law firm is also scheduling an interview with Lim’s lawyers, as it had reached out to Lim for assistance in December last year.
Separate to the investigation, directors of Fu Yu Supply Chain Solutions raised concerns about potential compliance issues in respect of the matters in the internal audit report dated Jul 26 last year to Fu Yu Corp’s audit committee chairperson. The committee is looking into the matter, said the bourse filing.
Fu Yu’s shares fell S$0.002 or 1.6 per cent to S$0.123, before the announcement.
