City Developments (CDL) has addressed the “serious lapses” in its corporate governance, according to a second statement released by CDL’s executive chairman, Kwek Leng Beng.
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After a court hearing on Feb 26, the two recently appointed directors, Jennifer Duong Young and Wong Su Yen, have agreed not to exercise their powers as directors until further notice from the court. These two directors were previously appointed through directors’ resolutions in writing, which Kwek considered to be irregular and rushed.
Kwek has also stated that his son, Sherman Kwek, and the other directors who acted with him, including Philip Lee and Wong Ai Ai, have also agreed not to make any further changes to the board committees or management of CDL’s subsidiaries until the court makes a ruling. The nominating and remuneration committee, which was deemed to be irregularly constituted, has also been suspended from taking any further actions.
According to Kwek, this means that CDL’s board committees and management of its subsidiaries are now protected from any further attempts to destabilize or reconstitute them.
Kwek emphasizes that strong corporate governance is crucial for a successful and sustainable business. It ensures transparency, accountability, and responsible decision-making, which are essential for maintaining investor confidence and protecting the interests of shareholders.
The morning of Feb 26 saw CDL announce a temporary halt in trading of its shares and the last-minute cancellation of its FY2024 results briefing. CDL cited a disagreement within the board regarding the composition and constitution of the board and its committees as the reason for the suspension.
However, CDL reassured stakeholders that its business operations remain unaffected, and Sherman Kwek will continue to serve as group CEO until there is a board resolution to change leadership.
In his initial statement, Kwek accused his son, Lee, Wong, and other directors of attempting to gain control over the board and the company. He also mentioned that he had filed court documents on Feb 25 to address the situation, which he deemed necessary to deal with this “coup.”
Kwek stated that they intend to change the CEO at the appropriate time and will explore all legal options to defend and protect the interests of CDL and its shareholders. If Sherman is removed as CEO, Kwek Eik Sheng, the current COO, will take over as interim CEO.
CDL’s shares were last traded at $5.12 before the trading halt on the morning of Feb 26.