Worrisome article in The Edge Financial Daily, regarding a legal tussle regarding Ho Hup Construction Company Bhd. If this ruling by the Court of Appeal is upheld by the Federal Court, it means that subsidiaries of public listed companies can pursue large corporate transactions (including disposal of core assets) independently, without approval by the shareholders of the listed mother company. It is very normal for a listed company to organize its activities in subsidiaries, for good reasons. But this ruling means that the influence of shareholders on those subsidiaries is minimal. Which goes against the listing rules of Bursa Malaysia, and also against the principles of Corporate Governance. I am rather shocked by this ruling. Let's wait and see what will happen at the Federal Court.
Ho Hup's Net Assets per share are minus RM 0.41, it is in need of a restructure. Recently its share price has come down sharply, from above RM 0.70 to the current price of RM 0.45.