ecoWise CEO 'shocked' by recent developments; alleges decisions were taken without his consent

Singapore

THE troubles besetting Catalist-listed ecoWise Holdings show little sign of abating, and its founder, executive chairman and chief executive Lee Thiam Seng has expressed his "shock" and "concern" over recent moves made by the company, which he says were executed without his consent and over his strong objections.

Recent developments include ecoWise's alleged refusal to announce that an extraordinary general meeting (EGM) of the company would be convened by a group of shareholders on Aug 13. The meeting will vote on the removal of ecoWise's executive director and deputy CEO Cao Shi Xuan as a director and the appointment of three new directors.

The shareholders convening the EGM say they had on July 16 given ecoWise due notice and asked the company to make the announcement, which it has yet to do. The shareholders took out an advertisement in The Business Times on July 29 and July 30, publishing the EGM notice.

This was then followed by a surprise announcement by the company that day that it is parting ways with its sponsor. No replacement was named.

ecoWise's board said a written termination notice was issued to Zico Capital on July 29, and that Zico would cease to be the company's sponsor either in a month (on Aug 29), or when a new listing sponsor takes over - whichever date is earlier.

Queries sent to ecoWise by BT on how and why the two events took place, were fielded by Mr Lee, who said he was "shocked at the sudden move to terminate the sponsor".

"The first I knew about this was near midnight on July 29, when the company secretary circulated a draft board resolution to terminate the sponsor's engagement with immediate effect. There was no discussion, and I objected strongly.

"Notwithstanding this, the resolution was passed. I had asked that my dissent be noted in the announcement of the termination, but this was wholly ignored," he said.

He added that it is his view that Zico has "acted with the utmost professionalism and a great amount of dedication", especially in light of the company's recent troubles.

Under Catalist rules, ecoWise will be suspended until a new sponsor is appointed, although it is not affected by this rule because trading has already been suspended since June 18. But, if it does not have a sponsor for more than three straight months, it risks a delisting.

ecoWise's board said in its announcement that the company is "finalising the appointment of a new continuing sponsor" and will update shareholders when the sponsor is appointed.

Mr Lee said: "No information has been provided to the board as to any imminent arrangements for a replacement sponsor. I am very concerned that this abrupt termination of sponsor could have a negative impact on the company at such a critical time. I have registered my concerns with the board."

The announcement on Zico's termination was fresh on the heels of the appearance of the EGM notice in BT.

The EGM calls for Mr Cao to be removed as a director, and for three new directors - Damien Seah Yang Hwee; Yeo Lai Hock, Nichol; and Tan Siok Sing Calvin - to be appointed.

The three shareholders convening the EGM - Tan Swee Boon, Tan Jin Beng Winston and Sunny Ong Keng Hua - told BT on July 16 that they had notified the company of the EGM that same day, and had provided ecoWise with a notice of EGM and a proxy form for the intended EGM.

They said they had asked ecoWise to confirm by close of business on July 20 that it would release the notice and proxy form in a bourse announcement and on the company's website.

Such an announcement was not made.

These same three shareholders had also requisitioned for an EGM in May, with similar resolutions, which the company had at first said it would hold, but then later decided against doing so.

One of the shareholders, Mr Tan Swee Boon, told BT that they are "surprised at the manner (in which) the company is handling this".

He said they could not understand why ecoWise backtracked on its decision to hold an EGM based upon their requisition, and why it said that "it would not be in the best interest of the company to convene an EGM in respect of the requisition".

"We are exercising our legal rights as shareholders under the Companies Act, and fail to see why and how the company's view on what is in the best interests of the company or not is relevant. As far as we know, most other Catalist companies duly act on a shareholder requisition to convene an EGM, and we have not heard of any cases in recent years where a board declines to act on a shareholder requisition, where the validity of the requisition has been confirmed by the company."

As for the EGM now taking place on Aug 13, Mr Tan said "the company took the unreasonable position that they will 'not be sending the notice of EGM and proxy form through an announcement via SGXNet and placing a copy of the same on its website'".

"Since the advertisement of the EGM, the company has not communicated to us why they have yet to issue an announcement," he added.

In response to BT's queries to ecoWise on this issue, Mr Lee said: "I have repeatedly asked the board and company secretary to issue the announcement, as I believe it is crucial to keep shareholders updated via the appropriate channel, namely SGXNet.

"This lack of information is detrimental to our shareholders. However, such matters need to be approved at board level, where a majority would suffice, and unfortunately I am only one director out of three."

ecoWise's current board is made up of Mr Lee, Mr Cao and lead independent director (ID) Er Kwong Wah. Two IDs had stepped down in May. One cited a lack of proficiency in the Chinese language, and the other said he wanted to channel his focus towards other commitments.

Singapore Exchange Regulation (SGX RegCo) has asked ecoWise to appoint two new IDs in a notice of compliance (NOC) served on the company on June 25. The notice also included directives to the company to commission an internal audit and an audit of its first-half 2021 results, and form a new audit committee.

SGX RegCo had said then it was concerned about the "lack of a strong and independent element on the board", the accuracy of the company's H1 2021 results, the adequacy and effectiveness of internal controls in relation to ecoWise's financial reporting, release of announcements, escalation and information flow to the board, and the safeguarding of the group's assets.

In response to BT's queries on the most recent events, SGX RegCo said it "expects ecoWise to heed and take the necessary actions as required in our (NOC), regardless of any EGM and its possible outcome".

With regard to ecoWise's termination of Zico as its sponsor, SGX RegCo said: "SGX RegCo will continue monitoring the situation and interview the outgoing sponsor. The handover to the new sponsor must be orderly."