This article first appeared in The Edge Financial Daily on September 27, 2018

KUALA LUMPUR: The High Court of Malaya has granted Apex Equity Holding Bhd’s orders applied to validate its past share buy-back exercises that were conducted between 2005 and 2017.

The share buy-back schemes in the past years were carried although the company’s memorandum and articles of association (M&A) did not provide the company with the requisite authority to such an exercise.

In a filing with Bursa Malaysia yesterday, Apex Equity said that the court has granted the orders applied for in the company’s application to the court pursuant to Section 582(3) of the Companies Act 2016 and Section 355(3) of the Companies Act 1965 to the High Court of Malaya in Kuala Lumpur on Aug 29, 2018.

A copy of the sealed validation order was extracted on Sept 4 and thereafter served on the relevant parties.

Some corporate advisers commented that whether the court order is granted would set the precedent.

Besides seeking a relief or order pursuant to a declaration validating the share buy-back transactions, Apex Equity also sought declarations ascertaining the validity of these shares being held as treasury shares, as well as the validity of these shares being distributed to the company’s shareholders as share dividend.

To recap, on Aug 1, Apex Equity, which owns stockbroking firm JF Apex Securities Bhd, said that the validity of its share buy-back exercises conducted between the years 2005 and 2017 were “questionable” as the company’s M&A did not provide it with the requisite authority to such an exercise.

Last Friday, Apex Equity announced that it is proposing a merger with Mercury Securities Sdn Bhd through a RM140 million cash plus share deal. The group will be taking over Mercury Securities’ stockbroking, corporate advisory and other related businesses for RM140 million, of which RM48 million will be settled in cash and RM92 million via issue of new shares.