(Kuala Lumpur, 30 October 2023) In recent developments, an independent non-executive director at Malaysian Genomics Resource Centre Bhd (MGRC) has taken an unprecedented step by initiating derivative legal proceedings against the company's individual directors and management for alleged breaches of fiduciary duties. However, questions are being raised about the legitimacy of these allegations and whether they mask an underlying agenda, possibly aimed at a hostile takeover of the company.

Case in point, MGRC is not just any ordinary company; it operates in the highly specialised and technically complex fields of genomics and biopharmaceuticals. Additionally, it offers a diverse range of services and products, including cosmeceutical products, genetic screening tests, and CAR T-cell therapy services. These competencies make MGRC a highly valuable asset, not just from a business standpoint but also from a scientific and societal perspective.

The unnamed director's allegations centre around purported breaches of fiduciary duties related to transactions involving MGRC and its subsidiaries with external parties. 

While such a move ordinarily would warrant serious consideration, the timing and recent changes in MGRC's management and board composition add a layer of complexity to the narrative.

MGRC has seen a substantial overhaul in its board and management over the past year, including the appointment of new independent non-executive directors and changes in executive roles. Such transformations are often indicative of a company striving for improvement and transparency, rather than one marred by breaches of fiduciary duties.

Moreover, MGRC's financial downturn, marked by a net loss of RM14.25 million for the fiscal year ending June 30, 2023, could make it an attractive target for a hostile takeover. Thus, initiating legal proceedings could potentially be a strategic move to destabilise the company further, thereby making it easier to acquire.

While the independent director's legal action has thrown a spotlight on MGRC, details about the alleged breaches remain conspicuously absent. This lack of clarity, in turn, raises questions about the real intentions behind the legal proceedings.

The current situation demands a thorough and unbiased investigation to ensure the allegations against MGRC's directors and management are substantiated. Until then, the possibility that this is a prelude to a hostile takeover, rather than a genuine concern for corporate governance, cannot be discounted.

As observers and stakeholders await more information, the onus is on MGRC and its board to engage openly in the ensuing investigations, while being cautious of the potential ulterior motives that may be at play.