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YNH Property’s independent review reveals interconnected directors, shareholders in RM1.1b JV deals

YNH Property’s independent review reveals interconnected directors, shareholders in RM1.1b JV deals

The review also found that many JV companies shared common addresses and company secretaries.

KUALA LUMPUR (April 10): YNH Property Bhd’s (KL:YNHPROP) independent review of RM1.1 billion worth of joint ventures (JVs) and turnkey contracts revealed that overlapping directors and shareholdings created an interconnected network, influencing business decisions.

The review also found that many JV companies shared common addresses and company secretaries.

The long-awaited independent assessment by UHY Advisory (KL) Sdn Bhd, which was first commissioned in June last year, said the concentration of power in a small group of individuals across several companies warrants careful scrutiny to ensure that all transactions are fair, properly disclosed and legally compliant.

According to YNH Property’s outline of the key findings of the special independent review filed with Bursa Malaysia, two of the joint venture companies share a common director and shareholder, who is also a former shareholder and employee of YNH Property. The announcement did not disclose the name of the companies or individuals involved.

UHY suggested that the turnkey contracts with certain JV companies could be considered related-party transactions (RPTs) under Malaysian Financial Reporting Standard 124 due to shared ownership or control.

However, a separate legal opinion argued that since the joint venture and turnkey agreements involve profit-sharing without asset transfers, they may not qualify as RPTs under the Companies Act 2016, meaning they could be treated as regular business transactions.

UHY advised the company to evaluate whether it has significant influence over its joint ventures and turnkey contracts.

It should also assess if the JV entities and their directors or shareholders follow the instructions of YNH Property or its directors, to determine if these agreements qualify as RPTs.

UHY said the use of the same address could raise concerns about potential RPTs and interconnected operations which warrant further scrutiny. YNH Property in turn said that the use of common addresses were due to the dormant nature of the entities.

It was also found that the same company secretary was appointed for several JV companies.

On sharing company secretaries, YNH Property clarified that while the company secretary does not influence business transactions, the role provides an additional safeguard to protect subsidiary Kar Sin Bhd’s interests in JV properties when a Power of Attorney (PA) may not be enough.

Among other findings were that YNH Property lacked documented policies or procedures for contracting and payment processes, with authorisation limits either undefined or insufficient for payment approvals.

“Security deposits for JVAs (JV agreements) and TCAs (turnkey construction agreements) were mostly authorised solely by the finance manager, regardless of the transaction size,” the filing said.

UHY recommended that YNH Property implement a formal investment policy to ensure a structured review process for JVAs and TCAs, including measures for identifying and approving RPTs. This is on top of the investment committee which was established on Dec 30, 2025 to oversee and make decisions regarding investments.

In addition, UHY recommended that the company introduce clear guidelines for payment approvals, where payments exceeding set thresholds would require approval from the board of directors, rather than subsidiary boards.

It said new payment policies and procedures would also ensure accuracy, timeliness and compliance, with all payments requiring proper authorisation before processing.

YNH Property, meanwhile, said it will further review the report to implement the recommended improvements.

The independent assessment was initiated after its former external auditor Baker Tilly Monteiro Heng PLT issued a qualified opinion on an amount of RM1.1 billion the company paid to JV parties or landowners for property development work.

In October 2023, theedgemalaysia reported that Baker Tilly issued a qualified opinion because RM1.1 billion was included in YNH’s inventories from contracts with joint venture partners or landowners.

However, Baker Tilly later ceased to be the company’s external auditor, as it notified YNH Property that it did not wish to seek reappointment in December 2023.

UHY was expected to complete the independent assessment within three months from its appointment, but the timeline was extended.

YNH Property’s share price was up 4% to 38.5 sen on Thursday, valuing the company at RM203.5 million. Year-to-date, the stock is down 28.04%.

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Source: EdgeProp.my