Frankly Speaking: IOI Properties still in sticky conflict of interest position
Last Thursday, IOI Properties Group Bhd (KL:IOIPG) announced that it had received a letter dated Nov 6 from its CEO and major shareholder Lee Yeow Seng to retract a proposal related to the redevelopment of Shenton House in Singapore that would have been deliberated upon by its shareholders at an extraordinary general meeting scheduled for the same day.
According to the developer, Lee decided to withdraw the proposal after considering, among others, “feedback from various institutional shareholders” on the matter. Among those who raised objections was the Employees Provident Fund which, as at Nov 5, had a 7.741% stake in IOI Properties.
As a result, “Lee wishes to reconsider the options available to address the potential conflict of interest (COI) position and plans to engage further with the institutional shareholders to constructively address their concerns,” IOI Properties said.
The potential COI emerged as Yeow Seng, who controls IOI Properties with his brother Datuk Lee Yeow Chor, in June offered to sell Singapore company Shenton 101 Pte Ltd (which is privately owned by Yeow Seng) to IOI Properties.
Last November, Shenton 101 won a tender to redevelop Shenton House in the city’s central business district into a commercial development with a bid of S$538 million (RM1.8 billion).
The proposed acquisition will align the interests of IOI Properties and Shenton IOI and mitigate a potential COI situation.
However, on Aug 28, IOI Properties’ board decided not to accept the offer due to its ongoing capital commitments. Nevertheless, the board (with the exception of the Lees) agreed to enter into management agreements to develop the project.
Then, on Sept 18, Yeow Seng requested a shareholders’ meeting to get their consent to be engaged in a business that is in competition with IOI Properties, as required under Section 218 of the Companies Act 2016.
The 11th hour move to retract the proposal may have been a tactical one to avoid it being rejected, given the concerns raised by the institutional shareholders. Yeow Seng has up to the first quarter of 2027 to reconsider the options and “address concerns held by all relevant stakeholders” as redevelopment work is scheduled to commence then.
Will he succeed? Meanwhile, the issue will hang over IOI Properties.