38. SIGNIFICANT EVENTS DURING THE FINANCIAL PERIOD (CONTINUED) Significant events during and subsequent to the financial year are as follows:- (continued) (c) Material litigation between Dagang NeXchange Berhad, DNeX Semiconductor Sdn. Bhd., Mimastronics Technologies Company Limited and Tethystronics Technologies Company Limited: (continued) i. Arbitration proceeding against Mimastronics Technologies Company Limited (“MIMAS”) (continued) Accordingly, DNeX and CGP had sought clarification with the Ministry of Investment, Trade and Industry (“MITI”) in relation to the possible breach of any regulatory conditions pursuant to the Proposed Investment. Vide MITI’s letter dated 28 February 2022, DNeX and CGP learned that the prior approval of MITI was required in relation to the Proposed Investment. Despite the clarification letter from MITI, MIMAS purported to stamp the SSA and SHA, utilising scanned copies of the signing pages of the said agreements on which DNeX and DNeX Semi signed. This was despite the understanding of the parties that only wet ink copies would be stamped. At all material times, the original wet ink copies of the SSA and SHA are kept in trust by DNeX’s solicitors and have not been released to CGP, MIMAS or its solicitors. MIMAS took, and still takes, the position that such approval was not required and maintains that the SSA and the SHA are valid and enforceable. It is, further, MIMAS’s position that these agreements should not be understood as being conditional upon such approval. DNeX and DNeX Semi, however, consider such approval as necessary, more so in light of the terms and conditions of the SSA and the SHA which provide for MIMAS becoming a shareholder upon the issuance of the ICPS and not their conversion. If so, this puts the Licence, and thus the operations of Silterra, at risk. This is also after taking into account the MITI’s letter dated 28 February 2022 which stipulates that the prior approval of MITI was required in relation to the Proposed Investment. It is the position of DNeX and DNeX Semi that the SSA and the SHA are void by reason of Section 21, Contracts Act 1950 as the parties were under a mistake as to a matter of fact essential to the said agreements. In view of the foregoing, DNeX and DNeX Semi demand that the dispute be referred to arbitration pursuant to the Arbitration Agreements in accordance with the Asian International Arbitration Centre Arbitration Rules, 2021. DNeX and DNeX Semi will seek the necessary relief to have the SSA and SHA declared null and void. Integrated Report 2023 301
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