[SINGAPORE] A board dispute has left components manufacturer Fu Yu Corporation with no independent directors and only one executive director.
Three independent directors, Royston Tan, Christopher Huang and Daniel Poh resigned last week amid relentless efforts of its largest shareholder to have Tan and Huang ousted.
Tan and Huang resigned on Jun 11 after persistent attempts by the group’s largest shareholder and former director of strategy Victor Lim – who owned some 29.5 per cent of Fu Yu shares as at Jan 9 – to remove them from the board.
Poh resigned the same day, citing differences in opinion over Fu Yu’s direction on matters unrelated to the company’s day-to-day business as his reason for leaving. Tan and Huang gave the same reason for resigning.
Their exits leave the group’s chief executive officer David Seow as the sole director of Fu Yu, which has a market capitalisation of around S$72.4 million and a share price of S$0.095 cents, as at market close on Monday (Jun 16).
It also puts Fu Yu at risk of breaching the Singapore Exchange’s (SGX) mainboard listing rules, which require at least one-third of the board to be independent and that the group has at least two independent non-executive directors.
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Apart from Fu Yu’s boardroom troubles, the company is seeking claims from six individuals, including Lim.
This relates to a probe into the group’s supply chain arm, Fu Yu Supply Chain Solutions (FYSCS) over unverifiable arrangements for a payment of millions made by the unit.
The Business Times takes a closer look at Fu Yu’s boardroom woes.
Internal audit uncovers cause for concern; Lim makes unsuccessful directorship bid
Aug 7, 2024: The board of Fu Yu receives an internal audit report, dated Jul 26, saying that there is “cause for considerable concern” at its unit FYSCS.
“Significant weaknesses” in FYSCS’ risk management process could expose it to unacceptable risk levels if left uncorrected, indicates the report. Further risks beyond the report’s initial scope are also identified.
Oct 8, 2024: In response to the internal audit’s findings, Fu Yu’s board engages law firm Damodara Ong to investigate FYSCS’ affairs.
Nov 22, 2024: Victor Lim becomes the sole shareholder of a fund holding a controlling 29.8 per cent stake in Fu Yu. He winds down the fund on Dec 11.
Dec 19, 2024: Fu Yu says that Lim applied to join its board.
Dec 26, 2024: The board rejects Lim’s directorship application.
First call for EGM to oust directors; FYSCS probe comes to light
Jan 9, 2025: Lim makes his first requisition for an extraordinary general meeting (EGM) to oust Tan and Huang, who at that point are still independent directors of Fu Yu, from the board. He cites the need for a “strategic reset” of Fu Yu amid what he describes as its poor performance and falling shareholder value.
Lim points to the group’s share price falling more than 60 per cent, from S$0.33 in 2021 to S$0.13 as at Jan 9, 2025, as well as its earnings deteriorating from a S$17.6 million net profit in 2021 to a S$10.1 million net loss in 2023.
He claims that “substantial shareholder value has been erased” since Tan and then non-executive chairman Huang joined the board.
This comes even as Fu Yu swung into the black with a S$72,000 net profit for its first half ended Jun 30, 2024, reversing a S$3.9 million loss in the year-ago period.
Lim’s requisition aims to table five resolutions in total. The first two seek to remove Tan and Huang as directors, and the others seek to appoint three individuals – Gilbert Rodrigues, Ralf Pilarczyk and Yang Zhenrong – as independent, non-executive directors of the group.
In response to Lim’s letter, Fu Yu says its board will convene an EGM in due course.
Jan 13, 2025: In his response, Tan expresses surprise that Lim is seeking the removal of independent directors on the basis of the Fu Yu’s performance, as the company’s financial performance is typically tied to the executive team; Huang says that any strategic reset entails a company’s performance following a “J curve” pattern where it initially dips before the company recalibrates to a growth path.
Fu Yu says it has appointed lawyers to advise it on requisitioning an EGM. The group and the board reiterate that as independent directors, Tan and Huang are uninvolved in the group’s day-to-day operations.
Jan 16, 2025: The Securities Investors Association (Singapore), or Sias, questions Fu Yu’s board about Lim’s bid to oust the two directors, asking it to substantiate his claim that Tan and Huang should be removed due to Fu Yu’s performance.
Sias further asks whether the board actively engaged Lim on Fu Yu’s strategic direction, and if there had been disagreements between the board and the company’s management of its strategy.
Jan 24, 2025: Fu Yu says its reason for rejecting Lim’s bid to become a director was due to potential non-conformance to the “directors’ integrity requirements” set out by the Singapore Exchange (SGX).
The company says it is open to engaging Lim and has instructed its legal advisers to reach out to him for information and documents concerning the requisition.
Feb 1, 2025: Fu Yu’s board declines to convene the EGM Lim requisitioned, stating that it obtained legal advice that the requisition failed to meet the legal requirements, being insufficient to invoke Section 176 of the Companies Act.
The group says that the probe into FYSCS’ affairs is ongoing, with the board awaiting updates.
Second and third attempts to oust directors
Feb 6, 2025: The group says it received a second letter from Lim, dated Feb 5, reiterating his request for an EGM to vote on removing Tan and Huang as directors and on appointing the same three individuals he had named in his first requisition as directors.
It says it is reviewing Lim’s second letter and is seeking legal advice on requisitioning an EGM.
A report dated Feb 5 from law firm Damodara Ong provides an update saying that the investigations into FYSCS’ affairs revealed that the unit made one or more unverifiable arrangements in respect of a payment of around US$3 million to a third party, for which services did not appear to have been rendered.
The probe also uncovered unauthorised use of the e-mail account bd@fuyu-scs.com by third parties.
The report raised questions about the secondment of an individual to FYSCS as its general manager from May 2023 to May 2024 and about the said individual’s conduct.
Expense claims made to FYSCS by a former employee for herself and on behalf of a current employee of Fu Yu appeared to be from “irregular” documents, the report also found.
Separate from the investigation, FYSCS directors raised concerns about potential compliance issues linked to the internal audit report dated Jul 26, 2024, to Fu Yu’s audit committee chairperson. The group said the committee was looking into the matter.
Feb 14, 2025: In a profit warning, Fu Yu says it expects a net loss for the financial year ended Dec 2024 due to two one-off impairments totalling S$3.8 million.
The first is a one-off non-cash impairment of the remaining goodwill of S$3.3 million in connection with the group’s investment in FYSCS, primarily due to the cessation of all business activities of FYSCS in Q4 FY2024.
The second is a one-off non-cash impairment of around S$500,000 on the property, plant and equipment of a China subsidiary due to its recoverable amount being under its carrying value.
Feb 26, 2025: Fu Yu rejects Lim’s second call to convene an EGM, stating that this attempt did not meet the necessary requirements as he did not serve the required special notices to Tan and Huang.
The board says Lim did not explain how his proposed director replacements would improve the group’s share price and performance.
It adds that it will appoint independent professionals to assess the suitability and independence of Lim’s proposed appointees to comply with the Singapore Exchange Regulation’s (SGX RegCo) directive given on Feb 11.
In an update on the FYSCS probe, the group says that Lim, as well as former and current FYSCS employees, had attended interviews.
It adds that professionals appointed by the company are reviewing and evaluating the information from the interviews to advise the board on potential next steps, as well as conducting forensic analysis of electronic data to uncover evidence.
Mar 11, 2025: Lim made a third request to table resolutions to oust and appoint directors to Fu Yu’s board at its upcoming annual general meeting set to take place on Jun 27.
Fu Yu begins claims against Lim and five others
Apr 2: Fu Yu says it is pursuing claims against six individuals, including Lim, over the FYSCS probe. It adds that the claims are for its acquisition of FYSCS, the purported misuse of the unit’s resources, and the payment of a pre-paid commission of around US$3 million.
The group sent letters of demand against the individuals it is seeking claims from, to commence the pursuit of claims. They are: Victor Lim, Frank Zhang, Hazel Cai, Yasmin Lim, Wong Ka Wing and Tan Xin Yi.
Its claims against Victor Lim and Zhang are over the acquisition of FYSCS – formerly known as Avantgarde Enterprise – as it alleges that there was a “breach of duties, misrepresentation, and a conspiracy to cause loss” to the company.
Its claims against Victor Lim, Cai and Yasmin Lim are linked to the misuse of FYSCS resources, while its claims against Victor Lim, Cai, Wong, Tan and Yasmin Lim are over the pre-paid commission, as it alleges that there was a breach of duties and a “conspiracy to cause loss to FYSCS”.
Jun 15, 2025: Fu Yu announces that all of the three independent directors, Tan, Huang and Poh, have resigned from its board, leaving its CEO as the sole executive director.
Rule 210(5)(c) of the SGX mainboard’s listing rules stipulate that boards must have at least two non-executive independent directors and that independent directors must comprise minimally one-third of a company’s board.
Given this, Fu Yu must fill deficiencies in its number of independent directors within two months or no later than three months, an SGX RegCo spokesperson said.
The SGX RegCo spokesperson noted that a shareholder of Fu Yu had proposed certain individuals to be appointed as directors at the group’s upcoming annual general meeting set to be held on Jun 27.
In response to queries from BT, Fu Yu said that it would make announcements when there are material developments.
Jun 17, 2025: Fu Yu says that it has agreed to table resolutions for the removal and appointment of directors in response to Lim’s Mar 11 request that it do so, having been legally advised that the request is valid and must be acted upon.
It adds that it is searching for independent, non-executive directors and has reached out to the Singapore Institute of Directors to invite suitable candidates to apply.
