Article & Commentaries
GOLDEN PLUS BOARD TUSSLE – MINORITIES TO EXERCISE RIGHTS
11 March 2008
It is generally assumed that board members would first seek shareholders’ approval for any proposed material acquisitions and disposals. Curiously, CEPCO’s board members are assumed not to have done so. Often, the most common source of conflict between directors and shareholders is the lack of shared vision and corporate goals between them.
CEPCO has called an Extraordinary General Meeting (EGM) to be held on 27 March 2008 to seek shareholders approval for ratifications of its board decisions for the following acquisitions and disposal.
Misunderstanding, disappointment and anxieties of shareholders can leave the board with bitter legacies. It is only hoped that shareholders’ ratification can be obtained easily, failing which the board cannot move ahead quickly and the Company’s business will ultimately suffer.
Against the backdrop of the above ratifications was the date of the first acquisition by the board on 18 January 2005 along with another subsequent acquisition and disposal completed respectively up to 12 December 2007.
This issue of dates is a matter of concern for shareholders to inquire whether or not there was bad faith in the breach of directors’ fiduciary duties. Firstly, directors need to explain why they ought to seek shareholders’ approval, secondly, why they have taken so long a time to call the EGM, given that the first acquisition was completed on 18 January 2005 and thirdly, were the prices fair and reasonable by prudent standards.
MSWG is of the view that as many shareholders as possible are encouraged to attend this particular EGM in order to voice out and express their votes to ratify or not to ratify as they may so decide. Their voting rights must be seen as an important and necessary means of ensuring that the effectiveness of fiduciary duties has been maintained at all times.
The Companies Act 1965 makes little provision for ratification of breaches of statutory duties by directors. Nevertheless, shareholders have the power to conduct “check and balance” against abuses and bad practices attributed to breach of fiduciary duties by directors. Only shareholders’ ratification can operate to absolve the directors against personal liability.
MSWG is hereby calling all minority shareholders to attend such an EGM and to voice out their concerns and unhappiness if they have against directors for not acting within their fiduciary obligations.
Abdul Wahab Jaafar Sidek
Chief Executive Officer
Minority Shareholder Watchdog Group (MSWG)
Dated: 11 March 2008
11 March 2008
It is generally assumed that board members would first seek shareholders’ approval for any proposed material acquisitions and disposals. Curiously, CEPCO’s board members are assumed not to have done so. Often, the most common source of conflict between directors and shareholders is the lack of shared vision and corporate goals between them.
CEPCO has called an Extraordinary General Meeting (EGM) to be held on 27 March 2008 to seek shareholders approval for ratifications of its board decisions for the following acquisitions and disposal.
- Ratification for the acquisition of 499,700 shares of Great Britain Pound 0.10 each in Inch Kenneth Kajang Pubber Limited Company (IKK) (IKK shares) by CEPCO on 18 January 2005 for cash consideration of RM24,235,450;
- Ratification of the acquisition of 25,006,900 IKK shares by CEPCO from 28 November 2006 to 12 December 2007 for cash consideration of RM15,587,399; and
- Ratification of the disposal of 8,046,000 IKK shares by CEPCO from 22 May 2007 to 12 December 2007 for sales proceeds of RM5,257,995.
Misunderstanding, disappointment and anxieties of shareholders can leave the board with bitter legacies. It is only hoped that shareholders’ ratification can be obtained easily, failing which the board cannot move ahead quickly and the Company’s business will ultimately suffer.
Against the backdrop of the above ratifications was the date of the first acquisition by the board on 18 January 2005 along with another subsequent acquisition and disposal completed respectively up to 12 December 2007.
This issue of dates is a matter of concern for shareholders to inquire whether or not there was bad faith in the breach of directors’ fiduciary duties. Firstly, directors need to explain why they ought to seek shareholders’ approval, secondly, why they have taken so long a time to call the EGM, given that the first acquisition was completed on 18 January 2005 and thirdly, were the prices fair and reasonable by prudent standards.
MSWG is of the view that as many shareholders as possible are encouraged to attend this particular EGM in order to voice out and express their votes to ratify or not to ratify as they may so decide. Their voting rights must be seen as an important and necessary means of ensuring that the effectiveness of fiduciary duties has been maintained at all times.
The Companies Act 1965 makes little provision for ratification of breaches of statutory duties by directors. Nevertheless, shareholders have the power to conduct “check and balance” against abuses and bad practices attributed to breach of fiduciary duties by directors. Only shareholders’ ratification can operate to absolve the directors against personal liability.
MSWG is hereby calling all minority shareholders to attend such an EGM and to voice out their concerns and unhappiness if they have against directors for not acting within their fiduciary obligations.
Abdul Wahab Jaafar Sidek
Chief Executive Officer
Minority Shareholder Watchdog Group (MSWG)
Dated: 11 March 2008
