THE Singapore Exchange Regulation (SGX RegCo) has served ecoWise Holdings a notice of compliance to appoint two new independent directors (IDs), commission an internal audit and an audit of its H1 2021 results, as well as form a new auditing committee (AC).

The move comes amid a board disagreement that led to chief executive Lee Thiam Seng changing the locks of the company's server rooms and suspending deputy chief executive Cao Shixuan.

A bone of contention was over the release of ecoWise's financial results for the first half of 2021, with Mr Lee's concerns stemming from receiving insufficient information provided by the finance team reporting to Mr Cao, according to the group's response to SGX queries on Friday.

Mr Lee had requested information on several transactions so the board could make an informed determination whether the group's H1 results provided an accurate and updated position of the group's financial and cash flow position and whether any further disclosures were needed.

These transactions include status updates on ecoWise's ongoing arbitration against contractor China Huadian Engineering Co; the liquidation of China-UK Low Carbon Enterprise Co; and the disposal of Malaysia subsidiary Saiko Rubber. There is a dispute between Mr Lee and Mr Cao over the use of Saiko Rubber's disposal proceeds.

The company's board was also divided on the timing to release the group's H1 2021 results on June 14, with Mr Lee requesting a delay until after trading hours so he could seek the clarifications needed.

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However, the results were released in the early hours of the same day as Mr Cao and lead independent director Er Kwong Wah were concerned over the deadline, even though releasing it after trading hours would still be within said deadline.

In a bourse filing on Friday, the SGX RegCo flagged concerns over the "lack of a strong and independent element on the board", particularly a well-constituted AC comprising at least three non-executive directors.

As two independent directors - Hew Koon Chan and Tan Wei Shyan, had resigned in May 2021, the company's AC no longer has the requisite minimum of three members. Only Mr Lee, Mr Cao and Mr Er remain on the board.

The SGX RegCo is also concerned over 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 safeguarding the group's assets.

The group will need to commission its statutory auditor RSM Chio Lim to perform an audit of its H1 2021 results. The scope of work must cover transactions and concerns raised by Mr Lee, movements of cash in the group and its cash balances. The auditor will report to the new AC, SGX RegCo and sponsor Zico Capital.

A separate internal audit will determine the adequacy and effectiveness of internal controls over SGX's aforementioned concerns. The new AC will see through the completion of both audits. It will also comprise the two new IDs as well as Mr Er.

In a June 22 filing, Mr Lee claimed he engaged IT firm Stone Forest as there was an "urgent need to preserve the assets, evidence, books and records of the company in order for him to investigate various corporate governance and internal control issues of the group".

The company said in its June 25 response to SGX that it refutes Mr Lee's allegations that there were possible lapses in corporate governance by the management team.

The Catalist-listed environmental solutions provider suspended the trading of its shares on June 18 following a trading halt called on June 15. The counter last traded at 7.8 Singapore cents on June 14.