Quarz Capital Management and Black Crane Capital have raised concerns over the voting procedure regarding the proposed merger between Sabana Shari’ah Compliant Industrial Real Estate Investment Trust and ESR REIT, a deal the activists want to see rejected.

Along with having its arrangement with ESR REIT put before shareholders, Sabana will also seek to amend its trust deed to impose a so-called ‘one-proxy rule’ at a special meeting on Friday. The amended rule would be applicable with immediate effect and allow custodians, typically banks or brokers, to submit only one proxy instead of two proxies as under its current bylaws.

Quarz and Black Crane, fierce critics of the merger, sent a letter to the Monetary Authority of Singapore (MAS) arguing the one-proxy rule would not fully reflect the will of Sabana shareholders, local newspaper The Business Times writes.

The two activists said certain custodian banks were determining their proxy vote using either an “offsetting” or a “simple majority” rule, neither of which accurately reflects all votes.

Quarz and Black Crane urged custodians to “properly submit” both approving and dissenting votes. Moreover, the activist also called on them to publicly disclose their practice and share the actual underlying vote of shareholders.

But Sabana said in a Wednesday press release that the voting procedures are in line with previous transactions in the REIT sector as well as other takeovers deals involving Singapore-listed companies.

The activists, owners of a combined 11% stake in Sabana, are fighting against the deal, contending it is plagued by conflicts of interests and will destroy shareholder value.

In their most recent presentation, published on Sunday, Quarz and Black Crane said the proposed merger offer is at an “unprecedented and substantial” discount to net asset value “versus all previous REIT transactions in the last 18 years.” The arrangement offers Sabana shareholders 0.94 shares in ESR for each share held.

They also listed a number of steps Sabana can take to boost performance, including the redevelopment of key assets, which the activists said could lead to a SG$10 million gain in gross rental income.

Proxy forms for the December 4 meeting have to be submitted by Tuesday to be counted. The deal needs to be approved by at least 75% of the shares expressed at the meeting in order to go ahead.

Shares in Sabana fell 1.4% on Wednesday to close as SG$0.345 each.