Allied Tech adjourns EGM till special audit completed

Singapore

ALLIED Technologies, which recently made headlines over its missing S$33 million escrow fund, will not be holding its extraordinary general meeting (EGM) on June 4 as scheduled.

Instead, the meeting will be convened only after the upcoming special audit has been completed, the Catalist-listed precision engineering company said on Tuesday in a regulatory filing.

This came when The Business Times received anonymous letters purportedly from Allied Tech's minority shareholders who expressed concern about having to approve a deal that the company had entered into in July 2018.

According to the EGM circular, shareholders were to ratify Allied Tech's acquisition of a 51 per cent stake in Activpass Holdings for S$25.2 million in cash.

Allied Tech announced in July 2018 that the acquisition had been completed with shareholders' approval not previously obtained.

Activpass is in the business of operating a suite of Software as a Service (SaaS) solutions that combines a cloud-based intelligent customer engagement system, a business management platform and consumer mobile marketplace application within the fitness, wellness and beauty services industries.

However, the bourse operator has directed Allied Tech to aggregate the Activpass acquisition with another acquisition. Consequently, this would constitute a major transaction under the Catalist rules and shareholders' approval is thus required for the Activpass acquisition.

As it is in the process of appointing a special auditor to look into the areas of concern earlier identified by its independent auditor, Allied Tech decided to adjourn the EGM till the special audit is completed. This is so that shareholders will be able to take into consideration the findings of the special audit, explained Allied Tech in the filing on Tuesday.

A key issue raised by the independent auditor was some S$33 million held in escrow by JLC Advisors. The funds were subsequently reported to be missing.

Singapore Exchange Regulation (SGX RegCo), the bourse regulator, then ordered Allied Tech to expand the scope of its special audit to include developments surrounding the missing funds, and the progress of Allied Tech's attempt to recover the money.

Allied Tech has to finalise by June 14 the appointment of the special auditor, who is to report solely to the regulator on the scope and all findings of the special audit.

In a separate filing - also on Tuesday - the company announced that a complaint has been lodged with the Law Society against JLC Advisors managing partner Jeffrey Ong Su Aun over the missing escrow funds.

It stated that "there are grounds to suspect" that the 42-year-old lawyer has "failed to comply with his professional duties" under the Legal Profession Act.

Mr Ong has been uncontactable for almost two weeks now, and he was said to have instructed the possibly "unauthorised" payout of Allied Tech's S$33 million funds from the escrow account in his firm.

Allied Tech was informed by a hand-delivered letter on May 22 - hours before its ultimatum to JLC Advisors for release of the funds - about the possibly unauthorised payout. The letter's author was then not made known to Allied Tech but JLC Advisors had since informed Allied Tech that it was prepared and approved by JLC's senior partner Vincent Lim.

JLC Advisors said it has no knowledge of any of Allied Tech's demands for the release of the funds or communications with Mr Ong, and requested for copies of all such demands or communications.

The law firm has also appointed Advocatus Law as its solicitors, which would look into a detailed reply by early next week to Allied Tech's letter of demand dated May 17 and another letter sent on May 23.

Allied Tech had fired off a letter on May 23 to question JLC Advisors about the details and circumstances of how its funds could have gone missing, as well as the basis for believing that the funds have been paid out.

Allied Tech shares last traded at 1.1 Singapore cents on May 2, before it requested for a trading halt on May 3 and recommended on May 8 that the trading halt be converted to a voluntary trading suspension with immediate effect.

READ MORE: Allied Tech executive director in S$129m fast property flip