A COURT has ruled that USP Group : BRS 0%’s extraordinary general meeting (EGM), which was due to be held on Friday (Apr 21), need not proceed.

In a judgement delivered on Wednesday, Judicial Commissioner Goh Yihan declared the requisition notice for the EGM invalid, as the requisitioning shareholders were not deemed “members” of USP under the Companies Act.

Goh said, however, that it was “unacceptable that USP is trying to disrupt the democratic processes of the company”.

“I do not think it is satisfactory for USP to stifle the requisitionists’ attempts to call for an EGM,” Goh noted.

USP had filed an originating application against the requisitioning shareholders, noting that they may not be entitled to call for an EGM as the shareholders are not “members” of the company.

USP chief executive Tanoto Sau Ian also sought to bring an injunction against the requisitioning shareholders to prevent them from further requisitioning an EGM under the Companies Act.

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The shareholders – Hinterland Energy, Harmonic Brothers, Hia Yi Heng and Lim Shi Wei – had requisitioned for an EGM to wrest control of USP’s board, and to attempt to take the company out of the Singapore Exchange’s (SGX) financial watch-list.

The resolutions of the EGM included the removal of Tanoto and the company’s non-executive chairman Djohan Sutanto, as well as the appointment of four new directors – one of them an executive director.

Goh said that the requisitioning shareholders are not “members” as their names plainly do not appear on USP’s register of members.

In the requisition notice, the shareholders had signed off in their own capacities, on behalf of various brokerage houses. In turn, the names of these brokerage houses appear on USP’s register of members.

As per the Companies Act, there are also no other means for the requisitioning shareholders to be recognised as “members”, Goh added.

Despite the judgement, Goh said he would have preferred to allow the democratic processes of USP to take their course, and not to intervene to prevent shareholders or members from having a voice in the affairs of a company except where absolutely necessary.

He also noted that USP Group had ignored an earlier court order to hold the EGM, before it filed the current orginating application. He said: “This is a blatant disregard of a court order that cannot be countenanced.”

Meanwhile, Goh said that Tanoto has no basis to bring a derivative action for a permanent injunction against the requisitioning shareholders, as he has not shown that USP has any reason to obtain that injunction. Tanoto was also not acting in good faith, Goh said.

Goh noted that the requisitioning shareholders would need to take certain steps to come within the definition of a “member” under the Companies Act, such as opening CDP accounts to hold the shares of USP.

He granted the requisitioning shareholders the liberty to apply for the relevant orders, to compel USP to furnish them with the relevant documentation that would enable them to set up the accounts to hold the shares in question.

Melvin Tan, who is chief executive of Hinterland and the intended chair for the Apr 21 EGM, said he is planning to file a new requisition in due time. He added that the requisitioning shareholders are in discussion on how to proceed.

It has taken a long time for the requisitioning shareholders to get the Apr 21 EGM underway. While the shareholders submitted a notice of requisition last October, USP’s board declined to convene the EGM.

The shareholders, who collectively control 12.2 per cent of USP, had to turn to Singapore’s courts to push the EGM through.