ecoWise responds to CEO's claims that it acted against his wishes, says it 'regrets the forum' Mr Lee used to air disagreements

STRIFE-HIT ecoWise Holdings has responded to comments made recently by its chief executive officer (CEO), which alleged that the company has made decisions without his approval, as well as to those made by a group of shareholders requisitioning 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 Friday, the company said that its "majority directors" - which comprise its executive director and deputy CEO Cao Shi Xuan and lead independent director (ID) Er Kwong Wah - "regret the forum in which (founder and CEO) Lee Thiam Seng has voiced such disagreements".

The majority directors 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 seem 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 current board is made up of three directors: Mr Lee, Mr Cao and Mr Er. Two IDs had stepped down in May.

Mr Lee had told BT earlier this week that he was "shocked" and concerned about recent moves made by the Catalist-listed company, 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, which will be convened by three shareholders of the company on Aug 13.

Mr Lee had said 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," he had said.

In its response, 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".

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

The announcement on Zico's termination had come fresh on the heels of the 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.

These same three 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".

As for the EGM on Aug 13, Mr Tan Swee Boon 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'".

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.

In its July 2 announcement, ecoWise had said 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".

It had said that the requisitioning shareholders had not given a reason as to why they have proposed to remove only Mr Cao, instead of all the executive directors, given that their reasons relate to the performance of the group as a whole. "In any event, the proposed removal of Mr Cao from his office as a director of the company would result in unnecessary disruptions to the company and may not allow the board to address the SGX RegCo directives satisfactorily," it said.

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 shares have been suspended from trading since June 18.