This article first appeared in The Edge Malaysia Weekly on February 20, 2023 - February 26, 2023

Will a minority shareholder be able to block the sale of three companies by Pan Malaysia Capital Bhd (PMC) to NewParadigm Capital Ventures Sdn Bhd?

On Feb 14, PMC’s 34.84% shareholder Pan Malaysia Holdings Bhd (PMH) and Malayan United Industries Bhd (MUI), which has a 68.32% stake in PMH, disclosed that they had received an originating summons and notice of application for an interim injunction against the sale, filed by Chan Weng Fui who has 4.78% equity interest in PMC.

Chan is seeking to block the sale of PMC’s three wholly-owned subsidiaries — PM Securities Sdn Bhd, PCB Asset Management Sdn Bhd and Miranex Sdn Bhd — to NewParadigm Capital for RM90 million cash. The grounds for his case include the failure to notify him of the extraordinary general meeting that passed the resolutions on the disposal, and that PMH is a party related to the transaction and should have been precluded from voting.

The plaintiff is also seeking a declaration to set aside the share sale and purchase agreement (SSPA) related to the sale and an injunction to restrain any action from executing the SSPA.

PMC was delisted from Bursa Malaysia in 2014.

On the issue of public disclosure to the exchange, the transactions undertaken by PMC could be considered immaterial to PMH and MUI as the three companies are indirect associates of the listed companies. However, the listed companies are now compelled to disclose the suit as they are both named as defendants in the case.

PMH and MUI said last Friday that they categorically deny any impropriety alleged by Chan through the action.

On whether the transactions are indeed related-party transactions, that is something Chan, who is an investor in a few companies on Bursa, will have to prove in court. 

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