ecoWise responds to CEO's allegations; says it 'regrets' the forum he used

Singapore

STRIFE-HIT ecoWise Holdings has responded to comments made recently by its chief executive officer (CEO) that alleged the company acted without his approval, as well as to those made by a group of shareholders convening an extraordinary general meeting (EGM) to vote on the removal of its deputy CEO.

In its response, which was sent to The Business Times (BT) and posted as a bourse announcement on Aug 6, the Catalist company's "majority directors" - executive director and deputy CEO Cao Shi Xuan and lead independent director (ID) Er Kwong Wah - said they "regret the forum in which (founder and CEO) Lee Thiam Seng has voiced such disagreements".

They added: "This is not the first time Mr Lee has resorted to the use of the media to disclose the affairs of the company, which is not an appropriate forum for such dissenting views, which seems to have disregarded Regulation 120(1) of the company's constitution which provides that questions arising at any meeting of the directors shall be decided by a majority of votes."

ecoWise's board is currently made up of three directors - Mr Lee, Mr Cao and Mr Er - after two IDs stepped down in May.

Mr Lee had told BT on Tuesday that he was "shocked" by ecoWise's recent moves, and alleged that they had been executed without his consent and over his strong objections. Recent developments include ecoWise's surprise announcement on July 30 of the termination of its sponsor Zico Capital, and its alleged refusal to announce the EGM to be convened by three shareholders on Aug 13.

Mr Lee told BT that the first he had heard of the sponsor's termination "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."

Mr Lee added that "no information has been provided to the board as to any imminent arrangements for a replacement sponsor".

In its response on Friday, ecoWise said "the board had adhered to its internal processes in relation to the termination of Zico Capital" and that "the termination was made pursuant to the provisions of the engagement letter which was entered into between the continuing sponsor and the company on Sept 9, 2019".

It added that Mr Er and Mr Cao had passed a board resolution approving Zico's termination, and that the basis of the termination had been explained and minuted, with Mr Lee in dissent. It said that Mr Lee's written request for his dissent to be noted in the announcement was sent to the company only after the bourse announcement was made.

It added that its "appointment of a new continuing sponsor is expected to be finalised shortly and the company will make the appropriate announcements in compliance with Catalist Rules".

ecoWise's July 30 announcement on Zico's termination had come fresh on the heels of a notice of EGM being taken out in BT on July 29 and 30.

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 release the notice and proxy form in a bourse announcement and on the company's website, but ecoWise has not done so, to date. These same shareholders had requisitioned for an EGM in May, with similar resolutions; the company had at first said it would hold the EGM, 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 added that, for the EGM on Aug 13, "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'".

In its response, ecoWise said: "As announced by the company (in a filing to SGXNet) on July 2, in view of the notice of compliance (NOC) issued by Singapore Exchange Regulation (SGX RegCo) on June 25, the company had adopted various safeguards to fulfil the requirements under the NOC and had explained why it would not be in the best interest of the company to convene the EGM for the purposes of voting on the proposed resolutions."

SGX RegCo's NOC had directed ecoWise to appoint two new IDs, commission an internal audit and an audit of its first-half 2021 results, and form a new audit committee, amid concerns 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.

ecoWise had said, in its July 2 announcement, that it would " ensure that there are minimal disruptions to the company and its operations, as well as to the composition of the current board, all of whom are familiar with the company's matters, to ensure that the board would be able to address the SGX RegCo directives satisfactorily", and that "the proposed removal of Mr Cao from his office as a director of the company would result in unnecessary disruptions to the company".

In its response on Aug 6, ecoWise said: "The company is cognisant of the rights of all shareholders under the Companies Act, in addition to those set out under Catalist Rules.

"The company will be making a separate announcement by Aug 10 to update shareholders on the company's views on, in addition to the validity of the EGM notices, the suitability of the three candidates as proposed by the remaining requisitioning members to be appointed as directors of the company."

ecoWise also said that, of the three directors proposed by the shareholders convening the EGM, Mr Seah and Mr Yeo were previously recommended by Mr Lee to Mr Er, "to fill the casual vacancies and be appointed as independent non-executive directors of the company and Mr Lee had prepared directors' resolutions in writing to that effect".

"These directors' resolutions in writing were validly passed, with their appointments subject to further interview by all the directors and clearance by the sponsor, which were not completed as at the date of this announcement," it said. ecoWise shares have been suspended from trading since June 18.