English

MSWG Weekly Newsletter 25 May 2018 (English)

MSWG’S AGM WEEKLY WATCH 28 MAY 2018 – 1 JUNE 2018

For this week, the following are the AGMs/EGMs of companies which are in the Minority Shareholder Watch Group’s (MSWG) watch list.

The summary of points of interest is highlighted here, while the details of the questions to the companies can be obtained via MSWG’s website at www.mswg.org.my.

Company Points/Issues to Be Raised
Xinghe Holdings BHd 
(AGM)

As stated in the Company’s public announcement dated 16 October 2017, most of the proceeds raised from the private placement are expected to be utilised as working capital for the Company and/or to fund its future investments/business projects in Malaysia, but we do not see the cash raised being held in the Company.

(i)        We note on page 62 of AR2017, the Group has generated strong operating cashflows in FYE 2017. What was the justification to raise additional working capital by placement resulting in EPS dilution? What is the optimal level of working capital for the Group?

(ii)       Note 14 on page 93 of AR2017 states that the Company’s issued ordinary share capital was increased from RM285,258,833 to RM297,158,833 by the following placements:

(1)    200,000,000 new ordinary shares at an issue price of 5.2 sen per share on 26 January 2018; and

(2)     25,000,000 new ordinary shares at an issue price of 6.0 sen per share on 5 February 2018.

What is the justification to raise additional working capital through the abovementioned placements especially since the Group has generated strong operating cashflows in FYE 2017 (page 62 of AR2017)?

Placements generally result in dilution of earnings per share and net assets per share and this is not favourable to minority shareholders.

(iii)       What will be the selection criteria and credentials required for potential placees?

(iv)       What will be the expected contributions in terms of value-add or strategic inputs from the placees?

MSWG Weekly Newsletter 18 May 2018 (May)

18 May 2018

MESSAGE FROM THE CEO

It has been an eventful two weeks.

Active politicians as directors of listed companies

Bank Negara Malaysia (BNM) is clear with its Corporate Governance requirement that a director of a financial institution must not be an active politician.

An active politician refers to an individual who is a member of any national or state legislative body, or who is an office bearer of, or holds any similar office or position in a political party.

In fact, when it comes to Anti Money Laundering requirements, Politically Exposed Persons (PEPs) are to be subjected to Enhanced Customer Due Diligence as opposed to normal Customer Due Diligence.

These requirements are testament to the fact that there is an increased risk when politics mixes with business and when we have politicians on the board of listed companies.

Even now, we can think of two or three listed companies, which have politicians or politically linked persons on their board, which are suffering negative publicity on allegations of fraud or malpractices.