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) iii. Commencement of Arbitration by TTCL against DNeX Semi and Silterra The Company had on 14 December 2022 received a Notice of Arbitration from TTCL (“the Claimant”) to commence arbitration proceedings against the Company’s subsidiaries namely, DNeX Semi (“1st Respondent”) and Silterra (“2nd Respondent”) (collectively referred to as “the Group” or “the Respondents”) under the Asian International Arbitration Centre Arbitration Rules, 2021 (“AIAC Rules”). (a) Background TTCL had entered into the Shareholders’ Agreement dated 8 July 2021 (“SHA”) with DNeX Semi. Silterra become party to the SHA pursuant to the Joinder Agreement TTCL (“JA”), the Company and Silterra dated 18 February 2022. Disputes and differences have raised between TTCL, DNeX Semi and Silterra (collectively, “the Parties”) in relation to or arising out of the SHA (“the Disputes”). Disputes between TTCL, DNeX Semi and Silterra arise from the SHA, read with the JA and a further agreement as contained in a letter dated 8 July 2021 between DNeX Semi and the Company on the one part and TTCL, Beijing Integrated Circuit Advanced Manufacturing and High–End Equipment Equity Investment Fund Center (Limited Partnership) and Mimastronics Technologies Company Limited, on the other part (“Collateral Agreement”). The Collateral Agreement was entered into in connection with the SHA. In connection with the SHA, the Collateral Agreement was entered into for the purposes of, amongst other things, regulating the composition of Silterra’s Board. In respect of the appointment of Directors of Silterra, it was agreed under Clause 4 of the SHA, read with the JA and the Collateral Agreement, that: 1. Unless otherwise unanimously agreed upon by TTCL, and DNeX Semi in writing, Silterra’s Board shall consist of not more than 5 Directors. 2. The composition of Silterra’s Board shall be mutually agreed upon TTCL and DNeX Semi in writing. 3. Silterra’s Board shall at all times comprise of 2 persons appointed by DNeX Semi and 3 persons appointed by TTCL, DNeX Semi and TTCL have the right to remove from Silterra’s Board the person that they have respectively appointed as Director. However, the Company have been advised that the SHA is not binding in the Respondents for legal reasons that shall be made clear in the formal reply to be filled under the AIAC Rules. Further, the Respondents have been advised that they have legal authority and basis to appoint additional directors. The 1st Respondent has passed the necessary Members’ Written Resolutions to appoint additional directors in accordance with the prevailing terms of the Constitution (“Appointment MWR”). Integrated Report 2023 303
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