China Sky’s independent directors step down with immediate effect
The board split at China Sky Chemical Fibre came to a head yesterday after the group failed to appoint special auditors by the final deadline set by the Singapore Exchange.
Remisier kings
The cousins who have taken over Peter Lim’s throne View PDF
Comments
By LYNETTE KHOO
06 January 2012
The board split at China Sky Chemical Fibre came to a head yesterday after the group failed to appoint special auditors by the final deadline set by the Singapore Exchange.
All three independent directors (IDs) stepped down with immediate effect given the group’s continued defiance of SGX directives.
The deadline for China Sky to appoint special auditors expired yesterday without a word from the group on the matter.
But the company issued late night announcements to say that its IDs - Er Kwong Wah, Yeap Wai Kong and Lai Seng Kwoon - have resigned, citing the ‘company’s non-compliance with Singapore Exchange Securities Trading Ltd’s directive dated Nov 16, 2011’.
BT understands that the IDs of the Fujian-based textile group have contacted a few audit firms, including PwC, Ernst & Young and RSM Chio Lim, but none has been appointed.
The IDs could not be reached for comment yesterday and SGX did not respond by press time.
One of the two joint company secretaries of China Sky, Tao Li, also resigned.
SGX, with the backing of the Monetary Authority of Singapore, ordered China Sky on Dec 29 to ‘cease all non-compliance’ by Jan 5 and appoint special auditors without further delay.
China Sky has come under fire from SGX for failing to comply with the directive for more than a month to appoint special auditors to look into certain areas of concern.
Signs of a board split at China Sky started showing up when the IDs distanced themselves from China Sky’s bold responses to the public rap by SGX on Dec 22, saying that they had encouraged the board to work closely with SGX.
Mr Er said that he had not even seen or approved the drafts of announcements issued by the group in response to SGX’s reprimand.
Last week, Mr Lai told BT that ‘all the independent directors have always been urging the company to comply with listing rules’ but they do not form the majority of the board.
Mr Lai himself is a subject of the exchange’s queries for accounting services rendered by his accounting firm SK Lai & Co to China Sky from 2008 to 2010.
The resignations of the IDs followed a board reshuffle last week that saw Mr Lai stepping down as audit committee (AC) chairman in favour of Mr Er.
SGX first directed China Sky on Nov 17 to appoint special auditors to probe transactions involving 72 million yuan (S$14.8 million) of repairs and maintenance costs in the first quarter of fiscal 2009; major acquisitions that include the purchase and return of a piece of land in Fujian province; and interested person transactions between the company and its independent director, Mr Lai.
But China Sky resisted the directive, appointing Asia Ascent as its legal adviser instead.
It further levelled certain accusations against SGX when the group and its directors were publicly reprimanded by the exchange on Dec 16 for the non-compliance.