Fu Yu Corporation Limited Issues Detailed Update on Termination of Group CEO and Corporate Governance Measures

Key Highlights for Investors

• Termination of Group CEO with Cause: Mr. Seow Jun Hao David, Executive Director and Group CEO, was terminated for gross default and misconduct, including alleged breaches of fiduciary duties and using his position for personal gain.
• Ongoing Investigations: The company is still investigating Mr. Seow’s conduct and is withholding further details for now, but promises future disclosures as appropriate.
• Consecutive Years of Losses: Fu Yu Corporation posted losses for FY2023 and FY2024, raising concerns among minority shareholders regarding financial performance and executive remuneration.
• Compensation and Governance Concerns: Serious issues were uncovered relating to share awards, undisclosed employment clauses, and special bonuses to senior management, all during a period of financial underperformance.
• Potential Legal Proceedings: Mr. Seow has issued letters of demand to the company for alleged wrongful termination and defamation, seeking substantial monetary compensation and a public apology.
• Assurance of Continued Operations: The Board assures shareholders that business operations will continue unaffected and reaffirms commitment to high standards of corporate governance.
• Clarification on Related Investigations: The Board clarifies that the CEO’s termination is unrelated to ongoing investigations at subsidiary Fu Yu Supply Chain Solutions, and that those matters are now considered closed.

Detailed Report

Background and Trigger for Review

After recording two consecutive years of financial losses in 2023 and 2024, Fu Yu Corporation faced probing questions from minority shareholders during its AGM in June 2025, particularly regarding the Group’s performance and CEO compensation. This prompted the Independent Directors (IDs) to initiate an internal review, engaging external financial auditors, corporate advisors, and lawyers. These investigations highlighted gross default and/or misconduct by Mr. Seow, necessitating further action.

Key Issues Leading to Termination

1. Vesting of Shares under Restricted Share Plan:
   – In November 2022, Mr. Seow was awarded two categories of shares (Annex A and Annex B) and cash under a Restricted Share Plan.
   – Annex A rewarded past contributions, totaling 5 million shares and S\$1,012,500 cash, on top of regular salary and bonuses.
   – Annex B was meant to incentivize future performance, with an “accelerated reward clause” allowing Mr. Seow to receive shares for both 2022 and 2023 if the 2023 revenue target was met in 2022.
   – The IDs found that as of early November 2022, both Mr. Seow and the then-board were already aware that 2022’s revenue target (S\$215 million) had been surpassed (actual: S\$240 million). This triggered the accelerated award, even though 2023’s actual revenue (S\$190.4 million) missed its S\$237 million target.
   – There were no “clawback” provisions for shares in the event that future targets were missed, and Mr. Seow was the sole beneficiary of this plan.
2. Five-Year Lock-In Clause in CEO’s Contract:
   – An addendum to Mr. Seow’s service agreement in December 2022 included a clause entitling him to full salary through December 2027 if terminated early.
   – Mr. Seow extended the same clause to two other senior managers.
   – This clause was not disclosed in company filings, potentially breaching disclosure obligations. Annual reports misleadingly stated that no such termination or post-employment benefits existed.
3. Special Bonuses to Key Personnel:
   – In January 2024, Mr. Seow awarded six-figure “Special Bonuses” to the same two senior managers, despite the company’s poor financial performance. No other staff received such bonuses.
   – When questioned, Mr. Seow justified the bonuses as a consistent practice for retaining key staff.

Board Actions and Aftermath

Mr. Seow was given opportunities to explain these actions during board meetings on 28 and 29 October 2025. The IDs found his explanations unsatisfactory and, after seeking legal advice, unanimously decided to terminate his employment with cause.

Following his termination, Mr. Seow’s lawyers sent two letters of demand:

• A claim for S\$1,853,548.39, representing his remaining contract salary and annual wage supplements through December 2027, alleging wrongful termination.
• A defamation claim, demanding a retraction of the termination announcement, a public apology, and S\$200,000 in damages.

The company is seeking legal advice and intends to respond appropriately. The Board assures shareholders these legal disputes will not affect the company’s ongoing business operations.

Clarification on Separate Investigations

The Board confirmed that Mr. Seow’s termination is unrelated to previously announced investigations into Fu Yu Supply Chain Solutions Pte Ltd. The company’s legal advisers, Nine Yards Chambers LLC, were retained to ensure continuity and thoroughness in the review. The Board found no grounds to disagree with their advice and now considers that matter closed.

Implications for Shareholders

• Potential Share Price Sensitivity: The revelations of undisclosed compensation arrangements, special bonuses, and governance lapses may impact investor confidence and valuation.
• Litigation Risks: Ongoing legal claims by the former CEO could result in financial liabilities or further disclosure requirements.
• Governance Reforms: The Board’s actions signal a drive towards greater transparency and accountability, which could have positive long-term implications for corporate governance standards.

Conclusion

Fu Yu Corporation’s decisive action against its former Group CEO, coupled with ongoing legal and governance reforms, marks a pivotal moment for the company. Investors should closely monitor developments as further disclosures, legal outcomes, or management changes could materially impact share value.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. The author and publisher are not liable for any losses arising from reliance on this information.

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