Fu Yu IDs ‘surprised’ at EGM requisition by largest shareholder following his failed application to be a director 

PRECISION plastic components manufacturer Fu Yu Corporation’s independent directors (IDs) Royston Tan and Christopher Huang were surprised that substantial shareholder Victor Lim has requisitioned for an extraordinary general meeting (EGM) to have them replaced, they said on Monday (Jan 13).

In a bourse filing released last Thursday (Jan 9), Fu Yu announced that Lim had called for both Huang and Tan to be removed as directors of the company in the EGM.

Lim also called for the appointment of Gilbert Rodrigues, Ralf Pilarczyk and Yang Zhenrong as independent non-executive directors.

In his requisition notice, Lim said that substantial shareholder value had been erased since both Huang and Tan were elected to the board.

Tan and Huang were elected to the board as IDs on Jan 31, 2022, and Jul 19, 2021, respectively.

Tan, who is chairman of the board’s nominating committee, told The Business Times that the board had rejected Lim’s application to join the board on Dec 26. However, he declined to specify their reasons for doing so.

On Dec 19, the company issued a clarification notice about the status of Lim’s stake in the company.

Local fund management firm Pilgrim Partners Asia had earlier purchased a 29.8 per cent stake in Fu Yu from the company’s co-founders and placed it in a fund in January 2021. Lim later became the sole shareholder of this fund on Nov 22, 2024, and opted to wind down the fund on Dec 11, 2024. As a result, he currently holds a 29.45 per cent stake in the company. (*see amendment note)

In addition, the company noted that he had also applied to join the company’s board.

BT understands that he has been a director of strategy at Fu Yu since 2021, but was not on the company’s board.

Huang added that as an ID, he would not bend to shareholder pressure, no matter how substantial their stake.

“We cannot, in good conscience, say that it is in the best interest (of the company) for him to be admitted as an executive director at this juncture,” he said, adding that he would leave it to the company to address why Lim was rejected.

Meanwhile, Tan said that he was surprised by the move to try and remove the company’s IDs for its performance, since a company’s financial performance is typically tied to the executive team’s performance.

“The IDs don’t get involved in the day-to-day execution of running the business. This is very, very clear,” he said.

He added that from a financial perspective, he felt that the company’s management team has done a “very good job” amid a difficult macroeconomic environment post-pandemic.

In the nine months leading up to Sep 30, 2024, the company posted a 55.2 per cent increase in revenue to S$162 million and a net loss of S$1.9 million, narrowing from a net loss of S$5.8 million a year earlier.

Huang said that as with any strategic reset, a company’s performance would likely follow a sort of “J curve” as its performance dips and the company recalibrates on a growth path.

“It’s up to the market to decide how they view the company’s trend to be,” he said.

In a bourse filing on Monday, Fu Yu said that the company and the board have appointed lawyers to advise on the requisition of the EGM.

Both the company and board also reiterated that Huang and Tan are IDs, and are not involved in the day-to-day operations of the company.

BT has reached out to Fu Yu to understand Lim’s role at the company, as well as the reason that he was declined a seat on the board.

Fu Yu’s shares closed flat at S$0.128 on Monday.

*Amendment note: The article has clarified when Lim became a sole shareholder of the stake in Fu Yu originally purchased by Pilgrim Partners Asia.