Hock Seng Lee needs to make disclosures as per High Court order

PETALING JAYA: The family feud in construction, marine engineering and civil engineering firm Hock Seng Lee Bhd (HSL) has finally come to an end, following the withdrawal of an appeal to set aside the High Court order.

In a Bursa Malaysia filing on Wednesday, the Sarawak-based company announced that the series of litigation matters involving HSL and the Yu/Yii family has concluded.

On Sept 20, the Court of Appeal, with the consent of parties, granted an order to set aside the High Court order previously granted on June 29, 2017.

The High Court order stated that HSL would have to make disclosures on the acquisition and disposal of shares in HSL and its holding company Hock Seng Lee Enterprise Sdn Bhd (HSLE).

However, the appeal was later withdrawn and struck out accordingly, drawing court proceedings, and ultimately, the family feud, to a close.

With the appeal withdrawn, this would mean that the High Court order still stands, and the board of HSL will have to make disclosures on the acquisition and disposal of shares in HSL and HSLE.

There has yet to be any further announcement or information on the company’s next course of action regarding the High Court order.

When the lawsuit seeking to remove four directors from the board of HSL was announced on Dec 21 last year, the company’s share price fell 2.44% to RM1.575 on Dec 30.

On a year-to-date basis, HSL’s share price has declined by 8.47% to RM1.46.

The family altercation began back in November 2013, when HSL shareholder Yii Chee Ming, who holds a 1.47% stake in the company, filed an originating summons against HSL’s holding company HSLE.

Chee Ming was seeking a rectification order to amend HSLE’s register of members.

He had requested to remove the names of his sisters, Chee Hiong and Chee Ping, from the register, and replace them with his name, for their combined 1.39 million shares held in HSLE.

Chee Ming claimed that his sisters had been holding the shares in trust for him since 1998. Besides the Yii family members, HSL managing director Datuk Paul Yu Chee Hoe has a 33.33% stake in HSLE, making him the largest shareholder.

Brothers Datuk Yii Chi Hau and Yii Chee Sing, an executive director of HSL, as well as the estate of Yii Chee Lieng, each hold 16.67% equity in HSLE.

The joint administrators of Chee Lieng’s estate are son Tony Yu Yuong Wee and widow Tan Sing Ngiik.

Following a series of suits and appeals, the Court of Appeal in August 2014 ordered that the rectification order set by the Kuching High Court was to be tried with a related conspiracy suit.

The conspiracy suit alleged that Chee Ming, Chi Hau, and the Yii sisters had conspired to allow Chee Ming and Chi Hau to cause harm and damage to HSL by unlawfully taking control of HSLE.

It also alleged that declarations made by the Yii sisters, that they held the HSLE shares in trust for Chee Ming, were false.

In addition, the two Forms 32A in which the Yii sisters transferred their shares to Chee Ming, were called out to be illegal and set aside.

Chee Ming did not provide disclosures on any trust arrangement despite declaring such disposals to the relevant authorities, which include the Securities Commission, Kuala Lumpur Stock Exchange (now Bursa Malaysia) and Companies Commission Malaysia.

According to the material litigation document, Chee Ming was HSL executive chairman and substantial shareholder in 1998 when he transferred the shares to his sisters.

In September 2015, HSL filed a summons against Chee Ming, Chi Hau, and the Yii sisters.

The summons sought a declaration that announcements made by HSL consequent to Chee Ming’s disclosures about his disposal of shares in HSLE in November 1998 were valid, with him ceasing to be a substantial shareholder of HSLE and not having any deemed interest in HSL.

In March last year, the Kuching High Court striked out the summons and later dismissed an appeal to reinstate the summons that August.

Then, in December, Chee Ming filed another originating summons seeking to remove HSL managing director Paul as well as executive directors Tony, Lau Kiing Kang, and non-executive director Lau Kiing Yiing from the board.

To recap, Tony is Paul and Chee Ming’s nephew, while Kiing Kang and Kiing Yiing are Paul’s brothersin-law, who are related to his wife.

The originating summons refers to the acquisition and disposal of shares in HSLE by the directors, their spouses, or company connected to them.

In June this year, the Kuching High Court dismissed Chee Ming’s claim to remove the four directors from the board of HSL.

“The court decision is a full vindication of the four present board members, Paul, Tony, Kiing Kang, and Kiing Yiing, in the originating summons, and proof that the allegations made by the plaintiff (Chee Ming) were baseless, given the fact that the court had concluded that there were insufficient materials to support the plantiff’s allegation,” says HSL in a Bursa Malaysia announcement dated June 29.

However, the High Court ordered the four directors to make disclosures concerning the acquisition and disposal of shares in HSL and HSLE, much to the dissatisfaction of the board of HSL, intending to appeal against the court’s decision.

This appeal was later withdrawn and struck out accordingly, leading to the end of the series of litigation matters for HSL and the Yu/Yii family.

For the first half ended June 30, HSL registered a net profit of RM20.8mil, compared to RM28.34mil the previous corresponding period.

The company has added RM558mil worth of new projects to its construction order book this year, among which are the Miri wastewater project, a vocational facility in Mukah, a collector road in Samalaju as well as a school in Miri.

As of August, HSL’s total order book amounts to RM3bil. The company also has over RM340mil worth of ongoing property development projects.

HSL is also working on the PanBorneo Highway project with its joint-venture partner, Dhaya Maju Infrastructure (Asia) Sdn Bhd.

The package covers 75.97km of road and involves the construction of several interchanges and bridges including the 1.7km Durin Bridge over the Rajang River.