Darco shareholders' legal proceedings against deputy chairman fall through

A GROUP of minority shareholders of Darco Water Technologies have failed in their bid to sue two individuals on behalf of the company, after the High Court on Sept 14 dismissed their application for leave to commence statutory derivative proceedings against the individuals.

The court also ordered that the group pay legal costs to Darco.

The 10 shareholders, who hold a collective stake of 16.1 per cent in Darco, intended to pursue claims against director and deputy chairman Wang Zhi and Pek Thiam Keong over various alleged wrongdoings.

The shareholders alleged that the two individuals had breached director's duties and/or fiduciary duties, and were involved in a conspiracy to injure the company through lawful and/or unlawful means.

They also intended to sue Mr Pek for alleged fraudulent and/or negligent and/or innocent misrepresentation, Darco disclosed on April 26 after being served an originating summons issued by the High Court.

The shareholders were also seeking for any legal costs incurred in the lawsuit to be borne by Darco. They had earlier urged the company to commence legal action against the two individuals.

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Darco said on March 17 that it received a letter sent on behalf of the shareholders, who alleged various wrongdoings by the duo.

This included breaching their duties in transactions pertaining to payments for a consultancy agreement entered into by the company; the undertaking by Mr Wang to procure the transfer of a water treatment asset or concession; and the now-aborted acquisition of a majority stake in Panghegar Energy Indonesia in relation to a waste-to-energy project in West Java.

The complainants also said they would apply to the court to commence legal proceedings in the name of the company, if the board fails to take out legal action as called for within 14 days.

Shares of Darco last traded on July 30 at 18.6 Singapore cents.