Monday, 25 January 2010
Court order sought to oust Sino-Env exec directors
Independent directors (IDs) of troubled Sino-Environment Technology Group have applied for a court order to call for an extraordinary general meeting (EGM) to remove the executive directors and also to strip them of their powers to execute several types of financial transactions.
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Court order sought to oust Sino-Env exec directors
By JAMIE LEE
09 December 2009
(SINGAPORE) Independent directors (IDs) of troubled Sino-Environment Technology Group have applied for a court order to call for an extraordinary general meeting (EGM) to remove the executive directors and also to strip them of their powers to execute several types of financial transactions.
If the court order is granted, the IDs would also be given the authority to dictate the actions of the three executive directors - including chairman Sun Jiangrong - as part of the investigations into the company’s affairs.
The move follows a special audit by PricewaterhouseCoopers (PwC) last week that showed some $85 million worth of transactions were made by Sino-Environment without board approval or authorisation.
Some of these financial discrepancies were flagged by the ex-financial controller, who lodged a police report and was later fired by the executive directors on the grounds of misconduct.
Since his sacking in November, the IDs have challenged several claims made by the executive directors.
The two IDs - Goh Chee Wee and Wong Chiang Yin - filed an application in the High Court yesterday under Sections 182 and 409A of the Companies Act.
They referred to Section 182, which says the court can call for a meeting when it is ‘impracticable’ to convene one otherwise, and Section 409A, which refers to an injunction against a person engaging in conduct that contravenes the Act.
The EGM - to be held within 14 days from the day of the court order - will be deemed to be constituted as long as one shareholder attends it, the IDs noted.
Besides removing the executive directors, the IDs have asked for powers to appoint at least two new directors to the board and either replace the executive directors as authorised signatories of the firm’s bank accounts in Singapore and China, or have their nominated parties do so.
Under the court order application, the IDs have also requested to stop the executive directors from selling any assets worth more than 500,000 yuan (S$102,000), or from negotiating any new contracts of values exceeding five million yuan.
These forms of transactions can only go through with the permission of the IDs, who are also the only two members of the company’s audit committee.
If the executive directors disburse any amount more than 100,000 yuan, they must also inform the IDs through a written report.
In addition, executive directors must be restrained from curtailing or terminating the work of the auditors, who are investigating the affairs of the company.
This comes after PwC said it had been blocked from directly obtaining statements from a number of the company’s banks.
The IDs have also asked for the executive directors to be ordered to ‘take steps to preserve and protect the assets of the company and its subsidiaries in any manner requested by the (IDs), wherever such assets may be situated’.
The executive directors must perform all acts for the current and future investigations of the company’s affairs as required by the IDs under the court order as well.
David Gerald, president of the Securities Investors Association (Singapore), said he was pleased with this move by the IDs, while the Singapore Exchange said it supports the ‘safeguarding of investors’ interest’.
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