HC Surgical: Minority shareholder wants to sue CEO on behalf of the firm
Ms Tiong claimed that HCSS chief executive officer (CEO) and executive director Heah Sieu Min breached his duties as a director in relation to the group's acquisition of an additional 19 per cent interest in Dr Ong's private practice in late 2019.
HC Surgical Specialists (HCSS) has constituted a litigation committee and continues to liaise with its legal advisers in relation to an allegation by minority shareholder Serene Tiong, whom the group's surgeon Julian Ong had separately sued for defamation unsuccessfully in his personal capacity.
In an April 30 letter from her solicitors Ong Ying Ping, Ms Tiong claimed that HCSS chief executive officer (CEO) and executive director Heah Sieu Min breached his duties as a director in relation to the group's acquisition of an additional 19 per cent interest in Dr Ong's private practice in late 2019. HCSS said last week that it believes this allegation is "frivolous" and "without merit".
On May 8, Ong Ying Ping sent another letter to HCSS's legal advisers WongPartnership, informing the company that Ms Tiong is giving the requisite 14 days' notice of her intention to apply to the court under Section 216A(2) of the Companies Act for leave to bring an action in the name and on behalf of the company against the CEO in respect of the allegation.
Section 216A allows minority shareholders to bring an action in the company's name to redress wrongs done to the company where those in control of the company are allegedly causing harm. Any complainant must, however, obtain the court's permission before pursuing such as an action.
HCSS on Sunday said that as the matter is the subject of impending litigation, it shall not comment further except where appropriate and necessary to update its shareholders of any material developments as may be required under Catalist rules.
In June 2018, Ms Tiong lodged a complaint with the Singapore Medical Council (SMC) against Dr Ong, claiming that he and another specialist colluded to have sex with "vulnerable" female patients. She then forwarded the complaint to other doctors, prompting Dr Ong to file the defamation lawsuit against her. He lost the suit early last month. District Judge Lynette Yap dismissed his action with costs, finding that Ms Tiong's claims were justified.
HCSS had bought a 51 per cent stake in Julian Ong Endoscopy & Surgery (JOES) for S$2.2 million in 2017, before raising its stake by 19 per cent for S$3.8 million in a deal proposed in September 2019 and completed in October 2019. Ms Tiong bought 100 HCSS shares in September 2019.
On Saturday, the board also said it was of the view that Dr Ong has "sufficient financial strength" to buy back the company's 70 per cent stake in his practice in the event that a put option is exercised to require him to do so. The board has assessed the surgeon's financial ability to repurchase the shares, taking into account the value of Dr Ong's assets - including his property and investments. HCSS will also be able to sue Dr Ong should he not fulfil his contractual obligations, and legal remedies will be available to the company.
The directors were responding to further queries from the Singapore Exchange. They had said in a May 4 filing that HCSS will receive more than what it paid for the 70 per cent interest in JOES if the put option is exercised in the event Dr Ong's employment is terminated.
SGX also asked HCSS to assess whether Dr Ong's notification to the board of the SMC investigation was material information that required immediate disclosure. HCSS previously said that Dr Ong informed the company of the complaint on Feb 27, 2019, before the management took steps in early 2019 to assess Ms Tiong's allegations.
On Saturday, the board of directors said it determined that the complaint was not, at the time, trade-sensitive information or materially price-sensitive information that required immediate disclosure under Chapter 7 of Catalist rules.
Shares of the Catalist-listed medical services group fell S$0.01 or 2.9 per cent to close at S$0.33 on Monday.
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