THE board of Kitchen Culture Holdings has confirmed that the recent dismissal of chief executive Lim Wee Li was based on findings in an interim report from Baker Tilly Consultancy.

The group, which is in the business of supplying kitchen equipment, has also suspended the trading of its shares on Monday following a trading halt called on July 7.

In its response to Singapore Exchange (SGX) queries on Monday, the board said its audit committee (AC) appointed Baker Tilly to undertake a review in the area of cash management by Kitchen Culture's management and KHL Marketing Asia-Pacific following fundraising exercises completed in 2020 and related matters.

The review was initiated due to the group's management's unsatisfactory response to questions raised by AC members at a board meeting in February regarding reasons for the re-allocation and utilisation of proceeds from said fundraising exercises.

Separately, the board and Mr Lim are in a dispute over the latter's responses, or lack thereof, to the interim report, according to legal letters dated July 11 seen by The Business Times.

The board had alleged that no written comments were received from Mr Lim on the Baker Tilly report, which Mr Lim has disputed. He claimed that he had repeatedly requested documents and information relating to the report as well as information and documents in meetings he did not attend.

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Mr Lim also maintained his position that the termination of his employment was "unlawful".

In its summary of findings from the interim Baker Tilly report posted in its response to SGX queries, Kitchen Culture's board highlighted that certain fund transfers were made without written approval, supporting documents, business justifications and disclosure to SGX.

There were also inadequacies in the approval process, documentation preparation and priority and mode of repayment of borrowings from private lenders amounting to S$3.7 million and HK$10 million (S$1.7 million).

Moreover, some interested persons and interested person transactions were not identified, monitored, reviewed and disclosed, including the purchase of a motor vehicle and the appointment of a spouse.

There was also no independent approval and business justifications for some executive directors' entertainment expenses. In the case of a specific gift to a third party, there was no acknowledgement from the gift recipient, the board said.

The board has also claimed that there were inadequate planning, monitoring and reporting for the use of proceeds obtained through the group's first and second placement exercises, as well as a convertible loan agreement dated May 3, 2020.

The board alleged that the use of proceeds was not reported timely as required under Catalist rules. Furthermore, the Feb 1 announcement this year had contained inaccuracies pertaining to the amounts used and the periods they were used, it added.

Other matters highlighted include a lack of delegation of authority, segregation of duties and independence in the approval and processing of certain payments. There was also no written approvals and documented justification for the hiring of certain managerial positions and the salary increment of a former executive director.

The board noted there are "breaches and potential breaches" of Catalist rules, laws and regulations. It will conduct further investigations on the depth and breadth as such and make necessary updates to shareholders.

"The board will vigorously protect and defend its interests and pursue all legal remedies against the relevant parties, including but not limited to commencing civil actions to pursue the losses that may have been suffered by the group," it added.

On July 8, Kitchen Culture announced via a bourse filing that its board had on the previous day passed a resolution by a majority of director votes to cease Mr Lim's employment with immediate effect as the board is of "reasonable opinion" that Mr Lim is in "gross default or grave misconduct" in connection with, or affecting the company's business.

Shares of Catalist-listed Kitchen Culture last traded at S$0.08 on July 7.