Nuffnang & Churp Churp Former CEO Cheo Ming Shen Sues Timothy Tiah, Calling the Move to Remove Ming as Director "a Thinly-Veiled Attempt to Further Their Personal Agenda Against Me"


#1

Nuffnang founders Cheo Ming Shen & Timothy Tiah at the ASX IPO in July 2015.

Netccentric Limited is the parent company of Nuffnang & Churp Churp. The tale of two co-founders who successfully listed their startup in Australian Securities Exchange (ASX), turning each other to be the enemy of a lifetime.

Cheo Ming Shen (aka Boss Ming):

At the outset, I am deeply concerned about the intentians of [Tiah Thee Kian and Tiah Thee Seng (collectively, the “Tiahs”)] and their purported reasons justifying my removal as a director. In my capacity as former CEO and director of the [Netccentric Limited (the “Company”)], I wish to clarify some facts for the benefit of all shareholders so as to assist everyone in making an informed decision.

The Tiahs’ actions are not made in good faith and for a collateral purpose

As some of you may know, I have commenced legal proceedings against Timothy Tiah (“Tim”) in HC/S 244/2017 (“Suit”). Whilst I am advised by my solicitors not to comment on the Suit and the ongoing proceedings and will not do so, I believe that the following information is relevant to these representations:

  1. It is undisputed that prior to the Suit, I have always been at the helm of the Company as CEO and had worked closely with Tim, the then-COO;
  2. In the Suit, I have alleged that a year after the Company’s listing, more specifically around July 2016, Tim and I started having disagreements over the direction and management of the Company. As a result of these disagreements, the both of us initiated a series of discussions from September to October 2016 where Tim and myself agreed that it would be in the interests of the Company for me to continue leading the Company as its CEO and for Tim to step down as COO;
  3. It is significant to note that as part of this agreement, it was agreed between Tim and myself that I would be able to lead and manage the Company as its CEO and director without any disturbance or interference from him. However, this came with a catch Tim expected to be adequately remunerated by the Company;
  4. Subsequently, pursuant to further discussions between myself, Tim, Pierre Pang and Andrew Bursill in early October 2016, it was agreed, inter alia, that in consideration of a total package, summing up to 596,000 AUD to be paid to him by the Company, Tim agreed not to interfere or in any way affect my management of the Company as its CEO for a period of 3 years and in particular, by not returning to C-suite level management of the Company;
  5. The above payment terms were eventually recorded and executed in a written agreement titled “NETCCENTRIC LTD (THE "COMPANY) … NON-COMPETE AGREEMENT AND APPOINTMENT AS ADVISOR dated 1 November 206 which was signed by Tim on that same day which he resigned as COO of the Company; and
  6. My position is that the various agreements as set out in pararaphs 4.b. to e. above formed one over-arching agreement, which I will refer to as the “Agreement”.

However and since as early as 23 January 2017, Tiah Thee Kian wrote to the Company on a TA Global letterhead (“TA Letter’), which I annex to these representations.

The Tiahs are now farcically relying on the exact same reasoning that they cited to demand my removal as CEO 8 months ago, to have me removed as a director on the board.

It is also apparent from the words in the letter, “Collectively we represent a significant shareholding block in the company and we insist this action be taken urgently by the board, that Tim and the Tiahs are working together in concert to wrongfully remove and deprive me of management of the Company and of a seat on the board.

As stated in the Notice itself, the Tiahs only collectively own 10.722% of the Company’s shares, which is barely enough for them to have issued the Notice. It is unbelievable that anyone would consider a mere 10% shareholding as a “significant shareholding block” which I believe must include Tim who owns approximately 36% of the Company’s paid-up shares. Collectively, Tim and the Tiahs own approximately 47% of the total paid-up shares in the Company, which almost gives them a simple majority of votes.

It is therefore clear that Tim, with the support of the Tiahs, have been systematically colluding to completely block me out from management of the Company. I say this because based on their individual shareholdings alone, neither Tim nor the Tiahs have the ability to push for a vote against me.

This is in clear breach of the Agreement which I am now suing Tim for.


#2

The Tiah’s claims that my tenure as CEO was marked by poor financial performance and the fact I am being held solely responsible for the state of affairs in 2016 is disingenuous on several
fronts. Let me elaborate:

a. Firstly, the Tiahs’ narrative conveniently omits Timothy Tiah’s role and involvement in the decisions made by the Company as COO. Whilst I led the company as CEO and before his departure from active management in November 2016, Tim and I worked very closely together and no major decision, on an investment or business level, was made without his express knowledge or approval. And yet, just two months after his departure as COO, I was being fingered by the Tiahs as the person solely responsible for the state of affairs, and their narrative has continued over 8 months after my departure from active management

b. I vigorously refute the suggestion that losses of l.6 million SGD in 2015 and 5.88 million SGD in 2016 reflected poor management strategies and implementations by my management team and I. This is so for the following reasons:

  1. I first refer to the 2015 results which recorded a loss of l.6 million SGD, A majority of this loss (our first loss in 9 years of operations) was attributed to one off IPO expenses of 1.2 million SGD. This was disclosed by the company in our 2015 FY results cover letter and presentation. These costs represented an unavoidable one off expense.
  2. Referring to the 2016 results, and loss of 5.88 million SGD - in multiple statements to shareholders, including the Tiahs, PRE-PO, and POST-IPO, across various mediums including but not limited to electronic and physical meetings, it was made clear that NCL would be utilizing its IPO proceeds POST IPO, to expand and to grow. It, was also highlighted in several results announcements post IPO, that as we continued to deploy IPO proceeds, EBIT would continue to fall. This concept should not have been foreign to the Tiahs, who purport to be experienced businessmen.
    This is an elementary point, and the very reason why we had gone to the markets for capital in the first place! Our plans were laid bare in our IPO roadshow, and subsequently IPO prospectus, andmentioned in several announcements made by the Company. End 2015 and 2016 was the period in which we started deploying IPO funds into investments.
    Notably, we funded expansion of our services into Taiwan and Indonesia, executed user acquisition campaigns for our mobile app Dayre, invested into a self-serve platform, Ripplette for our newly acquired subsidiary, Ripplewerkz. acquired a content travel and lifestyle site, Aroimakmak, and beefed up local operations in Singapore, Malaysia, Australia and other markets. These exact plans were communicated to shareholders PRE IPO and POST IPO, and we followed through on them.
    It should be noted that Nuffinang Taiwan and Indonesia are now considered growth engines for the Neticcentric group, notwithstanding that some of the other investments which have since been mothballed (Ripplewerkz and Aroimakmak amongst them), I was, and remain confident that given the time and our attention, these investments would have borne fruit.

In summary, the complaint that I was executing all the strategic investments I had promised shareholders including the Tiahs, and not getting IMMEDIATE results from them, is a farcical front for the Tiah’s egoistic witch-hunt.

It is also laughable that the Tiahs have chosen to rely on my absence during the 2017 AGM as a justification for my removal as director of the Company.

As mentioned in the Appendix itself, the reason why I could not attend the AGM in person, was because of intense back pains and spasms on the morning of the AGM. I notified the chairman of the board and sent my apologies correspondingly.

In any case, despite my former position as CEO of the Company, I did not work alone. At all times, I worked hand in hand with all members of the board, and our ex COO, Tim. As disappointed as I was for not being able to attend the AGM, my fellow directors are more than capable of answering any questions by any shareholder relating to the performance of the Company in FY 2016. I note that the Tiahs complaint is not that their questions remained unanswered, but simply that I did not attend personally.

Further and even if I was not present at the AGM, at no point in time had the Tiahs directed their questions to me personally to query about the reasons why the Company did not perform up to their expectations in FY 2016. It was only upon having sight of the Notice that I became aware that the Tiahs purportedly wanted to question me on the Company’s past performance.

Conclusion

In light of the above, I therefore urge all shareholders to look past this farcical exercise and to see this for what it really is - a thinly-veiled attempt of Tim and the Tiahs to further their personal agenda against me.

I do not wish to waste everyone’s time by setting out my contributions to the Company since the day it was founded, but suffice to say, I have done everything that I possibly can to ensure that the Company succeeds.


#3

Appendix 1: Reasons for removal of Cheo Ming Shen (a) Tong Ming Shen ("Ming”) as Director of NetcCentric Limited (“the Company”)

1. Loss of confidence

As investors of the Company, we have loss of confidence in Ming’s ability as the Chief Executive Officer (CEO) and Director of the Company. Under his stewardship since listing, the Company’s performance has dropped tremendously by almost 300% from a loss of AUD1456,179.00 in 2015 to AUD5,884,862-00 in 2016.

For financial year ended 31 December 2016, approximately 17 months from its listing on 3rd July 2015, the Company has lost 38.8% of its share capital through accumulated losses incurred under the management of Ming as the CEO.

The Company’s share price has also dropped significantly from AUD 0.20 per share at IPO to its current share price of below AUD 0.05

2. Lack of responsibility and leadership as a Company Director

Annual General Meeting (“AGM) is the main avenue for shareholders to dialogue and interact with the Board. It is an important platform for the shareholders to meet the CEO and the Board of Directors to raise questions on the Company’s past year and future operational and financial performance as well as any other major developments or issues of the Company which may hamper the growth and performance of the Company.

However, during the recent AGM of the Company held on 31 May 2017, Ming as the former CEO and Director of the Company failed to attend the aforesaid meeting to meet the shareholders and to explain the poor performance of the Company during his leadership as the CEO. The reason given for his absentee on 31 May 2017, was that he cannot travel due to back ache. Despite being unfit for travel to Kuala Lumpur for the meeting, he as a Director of the Company should make every effort to attend the AGM via teleconference to take any queries and questions from the shareholders in respect to the cause of the poor performance of the Company during his tenure as the CEO.

By not attending the AGM or failed to show effort of attending the AGM vide teleconference (since he cannot be physically present for the AGM) has indicated to the shareholders his lack of responsibility and accountability as the former CEO and Director of the Company. To move forward we need Directors that are responsible and accountable to shareholders for the decisions they make for the Company.


#4

23 January 2017

The Board of Directors
NetCcentric Limited
38 Kinta Road, #02-03 Kinta Suites,
SINGAPORE 21907

Dear NetCcentric Board of Directors,

We write to you on behalf of TA Enterprise Berhad Group and its Chairman Datuk Tony Tiah Thee Kian, who are the cornerstone investors în Netccentric Limited.

We would like to draw your attention to the deplorable performance of the company under the helm of Mr.Cheo the current CEO of the company and wish to seek clarification on the poor performance of the NetCcentric Limited share price and financials.

Since the IPO of Netcoentric Limited this is what the company has achieved:-

  1. A net loss of almost S$2 million in 2015, the year of its PO.
  2. A net loss of almost S$2.5 million for H1 2016. Both losses resulted in the dwinding of the company’s cash reserves,
  3. Revenue growth of only 5% in these two periods following its IPO.
  4. The share price has dropped 80% from the IPO price of A$0.20 to $0.04 as at today, Since PO its share prices has dropped to as low as A$0.026 towards the end of 2016.
  5. There has also been limited communication to shareholders on what the board and the company has been doing to turn around the dire straits the company is in.

We therefore urge that the board take the following action:

  1. Immediately replace the current CEO Mr Cheo for he is responsible for leading the company during this period of poor results. The Management under Mr. Cheo’s leadership has lost all Credibility and must be held accountable. Failing which, the board will be held accountable by shareholders.
  2. Update the shareholders on the situation the company is in and what plans the board has to bring
    the performance and share price back to its IPO price.

Collectively We represent a significant shareholding block in the company and we insist this action be taken urgently by the board. Unless immediate action is taken by the board to replace Mr. Cheo who is responsible for the dismal performance, the company will be heading towards insolvency, Time is of the essence as the company has lost a substantial portion of its capital in such a short period of time.

We Want to draw your attention to the Company’s Act which states very clearly on the fiduciary duty of the Directors. Take notice that we will hold your board responsible and will resort to civil proceedings for any further fosses if you fail to take necessary action to safeguard the investments of the shareholders in your company.

We hope for a positive response from the board.

Thank you.

Yours Sincerely,
TA Global Berhad
Kimmy Khoo (Ms)
Executive Director


#5

Response from Timothy Tiah:

At paragraph 4 of the Representations, Mr Cheo states that he has commenced Singapore High Court Suit No. 244/2017 (the “Suit”) against our client. He then expressly states that he has been “advised by [his] solicitors not to comment on the Suit and the ongoing proceedings and will not do so”. It is clear that his solicitors have advised him on sub judice and consequently sub judice contempt. Essentially, it is a contempt of court to publish or comment on facts, issues and allegations made in a pending legal action when those facts, issues and allegations have yet to be determined by the court as this would tend to prejudice or interfere with the judicial process. However, immediately after mentioning the advice not to comment on the Suit, Mr Cheo proceeds to do exactly what his lawyers had advised him not to do.

It is for this very reason, i.e. that the facts, issues and allegations in the Suit being sub judice, that neither we nor our client will respond to the same in this forum, suffice to say that Mr Cheo’s allegations in the Suit are expressly denied and our client intends to defend his position at trial. Accordingly, it is of utmost importance that neither the Company nor the shareholders discuss, comment or deliberate on any aspect of the Suit either at the EGM or otherwise, until after the final disposal of the Suit.

Insofar as Mr Cheo is alleging that our client colluded with Tiah Thee Kian and Tiah Thee Seng to propose the present resolution to remove him as a director, the allegation is strenuously denied. Mr Cheo has not put forward an iota of credible evidence save for a presumption that there has to be such a collusion because of the family relationship. The allegation of collusion is a fiction. Our client is confident that the discerning shareholders of the Company are quite capable of separating fact from fiction.

Insofar as the issues which are sub judice are concerned, our client takes a dim view of Mr Cheo’s conduct and we have demanded that he either withdraw the Representations or replace the same with a fresh set of representations which are not sub judice. He has refused to comply with the demand and accordingly our client has instructed us to take this issue further and make the necessary applications to Court, if necessary.


#6

Netccentric board calls for shareholders to dump founder amid legal threats

A fight that’s been brewing for months among the co-founders of Netccentric exploded last night, with legal threats and calls to rid the board of the ex-CEO.

The Netccentric (ASX:NCL) board wants shareholders to vote out Cheo Ming Shen, who resigned as chief executive in January.

Mr Cheo earlier launched a lawsuit against his co-founder and ex-Chief Operating Officer Timothy Tiah, and his relatives shareholders Tiah Thee Kian and Tiah Thee Seng, alleging they colluded to remove him.

Mr Cheo is defying his lawyers, who’ve recommended he stay silent, and is pitching his case to Netccentric shareholders.

The tribal council will vote at a general meeting on November 1.

Former Singapore start-up stars

Mr Cheo and Mr Tiah were stars of the Singapore startup scene.

They’d both dabbled in entrepreneurship before meeting each other in London. They launched Netccentric in 2006 as a holding company for online marketing and social media businesses.

Regional growth was followed by an Australian listing in 2015.

By early 2016 the company had shifted from a full-year profit of just under $1 million to a full-year loss of almost $2 million.

Revenue increased by $2 million, but so did administrative costs, employee expenses, and foreign exchange losses.

My Tiah quit in November, saying he wanted to “pursue other opportunities”. Netccentric told investors “his departure coincides with the streamlining of executive management positions”.

Mr Cheo was gone two months later in January 2017, just before the company reported an even wider loss: $5.5 million as admin and employee costs blew out even further.

A new CEO and COO were appointed this year and the business has started to turn its finances around.

Bad blood spills into court

This month the bad blood spilled into the public sphere.

Mr Cheo alleges in a Singapore High Court suit — has now publicly revealed to Netccentric shareholders — that he and his cofounder Mr Tiah began disagreeing on the direction of the company after it listed.

This came to a head in July last year.

He says Mr Tiah agreed to step down and let Mr Cheo run the company without interference, in exchange for cash — an amount eventually worked out to be $596,000.

Mr Cheo alleges that Tiah Thee Kian and Tiah Thee Seng, who control 10.7 per cent of the company, then used the same reasoning — that they were unhappy with the direction of the company — to work with Mr Tiah to remove him, claiming they represented a substantial block of shares.

“It is unbelievable that anyone would consider a mere 10.7 per cent shareholding a ‘significant shareholding block’ which I believe must include Tim who owns approximately 36 per cent of the company’s paid-up shares,” Mr Cheo alleged in his letter to Neccentric shareholders.

Mr Cheo said the losses were well flagged in pre-IPO roadshows and annual reports, as the company was taking an Uber-like hard-spending, high-growth strategy.

Tim Tiah’s lawyer responded with a scathing answer.

“Insofar as Mr Cheo is alleging that our client colluded with Tiah Thee Kian and Tiah Thee Seng to propose the present resolution to remove him as a director, the allegation is strenuously denied.

“Mr Cheo has not put forward an iota of credible evidence save for a presumption that there has to be such a collusion because of the family relationship.

“The allegation of collusion is a fiction.”

The two Tiahs say Mr Cheo presided over an almost 300 per cent slide in losses, and that he should have appeared by teleconference at the annual general meeting in May to explain himself.

Mr Cheo says he was suffering from back spasms and had already warned them he wouldn’t be able to make it.

Source: Stockhead


#7

Netccentric now has a CEO

Posted on January 7, 2015

I’m in Bangkok this whole week for the Netccentric Regional Summit. You see every year our company holds a summit in January where the managers from our 7 countries in the region come together. In this one week period we share updates on how each country performed in the past year, share best practices and learnings.

That used to be it. But as each year goes by we learn how to make the summit better and better. This year for example, instead of just sharing updates, the regional team plans out directives on what each country has to achieve in the coming quarters of the year. Everything is planned 2 quarters ahead.

It’s a really exciting time for us.
What’s different this year too is that we finally have a CEO.

Yep. Believe it or not, Netccentric never had a CEO or a managing director or a COO or anything like that. Ming and I never saw the need for such titles. Our name cards really just said Co-Founder and Executive Director.

How we ran the company was like how many equal partners might run a company. I would manage some of the companies and he would manage some. We both exercised our freedom to run each company in our own way.

That worked quite well for the past years but today the company has close to 200 employees or so and offices in 7 different countries. We were no longer a startup. The worst part was that because Ming and I were running half the companies each in our own ways, each country had different processes, goals, and strategies. Best practices weren’t shared too. We were like a boat where everybody was rowing in separate directions as opposed to one direction.

It took us a while, but Ming and I finally came to the realization that we had to consolidate. Netccentric and all its companies under it (Nuffnang, ChurpChurp, Reelity, Ripplewerkz, Dayre) would need to have one leader. One leader that would decide on the vision and strategy of the company.

I put my faith and confidence behind Ming. I asked him to be CEO. We made the announcement at the end of last year. Ming was to be CEO of the company, and me COO. Effectively making Ming my boss.

Before the announcement at the end of last year, Ming and I had already been privately playing those roles. He as CEO and me as COO. So we’ve already had a trial run and I can only say that I have never been happier and never been more confident of the future of the company.

I’m a good executor. I’m good at getting things done but I also tend to be really small picture. When a problem happens I go solve it immediately. Firefighting every day, like I’m a fireman.

Ming handles problems differently. He’s not interested in solving a problem once. He’s interested in finding the root of the problem and building a process to solve it forever. He has the ability to see things before they happen in business. When he knows what we need to do, he has the ability and resolve to really focus on what’s important and block out everything else.That’s the difference and that’s why I think he’ll make a great CEO.

We were blessed. Netccentric recorded really great growth last year and this year we’ve lots to look forward to. I’m really excited too for my change in role and our team and I can’t wait to achieve the things we have planned out this year.

Here’s some positive vibes to everyone in Netccentric, and everyone everywhere. May you all have a great year ahead!

Source: Timothy Tiah’s Blog


#8

Results of Extraordinary General Meeting
Melbourne, Australia: November 1, 2017: The Company wishes to advise that the resolution tabled at
today’s Extraordinary General Meeting of members was carried on a show of hands.

In accordance with ASX Listing Rule 3.13.2 and the Company’s Constitution, the following
information is provided in relation to the resolution considered by Members of the Company held
today at 2:00pm (MST).

Resolution 1 - Removal of Director

  • FOR: 132,298,739 57.18%
  • AGAINST: 99,073,234 42.82%
  • TOTAL VOTES: 231,371,973
  • RESULT: PASS

#9

Netccentric Commences Litigation Proceedings

Melbourne, Australia: June 18th, 2018: The Board of Directors (the “Board”) wishes to advise that Netccentric Limited (“Netccentric” or the “Company”), together with two of its wholly-owned subsidiaries, Nom Nom Media Private Limited (“Nom Nom”) and Churp Churp Pte. Ltd. (“Churp Churp”), has commenced proceedings (the “Suit”) in the State Courts of the Republic of Singapore against former CEO and Managing Director of Netccentric Mr Cheo Ming Shen (“Mr Cheo”).

The claim in the Suit is for losses and damages suffered by the Company and its subsidiaries arising from Mr Cheo’s alleged breaches of his fiduciary duties, statutory duties and/or implied duties owed to Netcentric by way of making unauthorised business expenditure claims.

Since 2015, Mr Cheo received reimbursements for expenditure claims amounting to SGD$630,822.46. Of these amounts paid by Mr Cheo to himself as reimbursable expenditure claims, payments of SDG$103,329.74 have been unable to be substantiated and the legitimacy of these claims are in doubt.

Accordingly, this is the amount we are claiming from Mr Cheo in the Suit. Prior to commencing the Suit, we sought clarification from Mr Cheo on these claims but did not receive any satisfactory explanations from Mr Cheo.