Given the recent slew of questionable privatization deals(UIC-Singland, Capitaland-Capitamalls Asia, Wheelock-HPL, etc.)and asset disposals(Jaya) these recent months and adding to the fact that many companies dilute shareholders willy nilly via highly dilutive rights placements or private placements; I'm starting to wonder, is corporate governance even in the dictionary here in our markets?
Here you have family-owned or single entity-owned companies, knowing full-well that shareholders care more about the buffet spread during AGM than anything else, taking advantage of that privilege and rip the minority shareholders off on some corporate dealings.
Example: Resolution to issue new shares in the next FY! Say for example ALL the retail investors say no, but you have majority owners happily voting yes and it all swings in their favour. Why have a vote at all? Is it just an annual smokescreen to let minority shareholders feel that they have some sort of control?
Or a chance to take a company private because of its steep discount to book value, dangle a little carrot of say.. 10% premium above the last done price. Take it or take it, I own 70% any way. And when people make noise, the simple "willing buyer willing seller" argument will shut everyone up.
It's also not their fault that they want to get a cheap deal (albeit at the expense of the small man), who doesn't? But it's getting more prevalent here. What's next? Maybe Keppel Corp buys KepLand at $4 (still below BV I believe) and the shareholders think it's a good deal simply because it's ABOVE their buy price?
The shareholder base here in Singapore is also to be blamed, you head to most AGMs, they're filled with retirees. They couldn't care less about anything else other than that mouthwatering spring roll they saw on the buffet spread on their way in. And if the majority voting power of the company belonging to a single entity isn't enough, they (small shareholders) usually don't have the energy/willpower to fight back against bad corporate decisions.
Nobody really asks hard hitting questions (although there's a slight increase of such incidences, of which I'm glad to hear), and that gives the management even more confidence that they can do whatever they want and get off scot-free (well at least until a year later).
I know there are a handful of examples of shareholders taking directors to task, or trying to change management, but that's just a handful, we rarely hear of it and the cases of success? I can't even remember
Maybe it's just our culture, or we don't have enough activist hedge funds here that will help passive shareholders start wars with the boards to kick them out or keep them in line? I don't know, maybe the lao jiaos here might remember a few good deals that I don't.
In the world of Facebook and Whatsapp, there is no excuse for minority shareholders to be connected and share info.
The 2 mindset of minority shareholders working against themselves
- free-riding mentality. Let others do the fight.
- defeatist mentality. Think that no point fighting since will be out-vote by major shareholders.
Next time, when it is a call to resist low ball offer, actively support:
- write letters to press to KP. Better if can KP as a collective group.
- write letters to ID to KP
- write letters to SGX/MAS/SIAS to KP
- meet up with other shareholders (or send proxy) to attend the Delisting EGM or scheme of arrangements EGM
- support the cause, even if you dont own the shares (Buy odd lot). In time, you will kenna a low ball offer yourself.
(20-05-2014, 12:04 AM)opmi Wrote: [ -> ]In the world of Facebook and Whatsapp, there is no excuse for minority shareholders to be connected and share info.
The 2 mindset of minority shareholders working against themselves
- free-riding mentality. Let others do the fight.
- defeatist mentality. Think that no point fighting since will be out-vote by major shareholders.
Next time, when it is a call to resist low ball offer, actively support:
- write letters to press to KP. Better if can KP as a collective group.
- write letters to ID to KP
- write letters to SGX/MAS/SIAS to KP
- meet up with other shareholders (or send proxy) to attend the Delisting EGM or scheme of arrangements EGM
- support the cause, even if you dont own the shares (Buy odd lot). In time, you will kenna a low ball offer yourself.
Problem is, a majority of minority shareholders are retirees, chances are they won't have Facebook or Whatsapp, let alone the energy to even bother gathering together to fight mgmt.
Yes, those kinds of mindsets are bad! The second one holds true cos it's usually the case, what can you do against majority shareholders? Nothing.
Is it possible to have a proxy fight here in Singapore like they have in the US? Like Icahn buying 10% stake and rallying the minorities to fight with him?
(20-05-2014, 09:18 AM)SpeedingBullet Wrote: [ -> ] (20-05-2014, 12:04 AM)opmi Wrote: [ -> ]In the world of Facebook and Whatsapp, there is no excuse for minority shareholders to be connected and share info.
The 2 mindset of minority shareholders working against themselves
- free-riding mentality. Let others do the fight.
- defeatist mentality. Think that no point fighting since will be out-vote by major shareholders.
Next time, when it is a call to resist low ball offer, actively support:
- write letters to press to KP. Better if can KP as a collective group.
- write letters to ID to KP
- write letters to SGX/MAS/SIAS to KP
- meet up with other shareholders (or send proxy) to attend the Delisting EGM or scheme of arrangements EGM
- support the cause, even if you dont own the shares (Buy odd lot). In time, you will kenna a low ball offer yourself.
Problem is, a majority of minority shareholders are retirees, chances are they won't have Facebook or Whatsapp, let alone the energy to even bother gathering together to fight mgmt.
Yes, those kinds of mindsets are bad! The second one holds true cos it's usually the case, what can you do against majority shareholders? Nothing.
Is it possible to have a proxy fight here in Singapore like they have in the US? Like Icahn buying 10% stake and rallying the minorities to fight with him?
Well, I am always skeptical on comments that minority shareholders should get what they want, over-riding the majority shareholders' wishes. That is constricting to my version of "fairness".
There are means for minority shareholder to "reject" special resolutions with 10% AGAINST votes, but we do see many excuses not to do so. They are not even bother to fill-in the paper proxy form, and send to Chairman to vote on their behalf. FYI, nowaday, resolutions are mostly voted by poll.
One last point, if your interest doesn't align with majority shareholders', you always has a choice, sell you share and walk away.
I had done so before
I think firstly we have to agree that there is structural asymmetry in the first place
Major shareholders have inside info through directorship representations, controls cashflows and remunerations, business structures and related entities, corporate actions etc
Minority shareholders OTOH can sell shares easily, don't have to "work" for the company per se, can have a much shorter view that could be negative to business prospects or strategy, hold odd lots and go for free AGM lunch
So
in the first place there is no such thing as fair. It is whether it is reasonable and equitable. OPMI cannot demand a higher return than the major shareholders. Takeovers inevitably will be priced positively to the buyer rather than OPMI, otherwise no buyer would do it. Question is whether the pie is split equitably leaving some for shareholders.
One well structured deal is actually CMA. It is not fantastic but very few people can gripe. Usually because the buyer cares much more about their reputation.
Nonetheless sometimes OPMI has to be more active like opmi mentioned else will be trampled upon and people think corporate governance is moot. If the mindset is that the rest are retirees and don't care then it falls under the defeatist mentality mentioned. If there are no laws for OPMI then logically any company that does not need market access to capital would SIMPLISTICALLY make their PnL equals zero through remuneration payments. That's the nature of the capitalistic beast.
Well known shareholders revolt happened as well: K1 and Neratel relatively recently. Usually people just need a banner to rally those who have heavy vested interest and bothered to gather 10%. People with small or odd lots have little interest and are not going to care
That's where alignment of interest comes in.
It's a matter of balance. As usual 中庸之道
The market is made for companies to raise capital from investors, and not the other way around. "Letting shareholders participate in the next growth phase of the company" statements are generally cinderella-type of seductive talks that investment bankers/brokerages continue to use (to good effect i must say). In this market, Sharks and GodFathers (terms that forumers use here) are aplenty, intelligent and ever ready to squeeze minorities to the last blood.
There is little that me or you, the average retail investor can do..Success cases (eg. CK Tang?) of David vs Goliath are the exception, rather than the rule. Do we hope for a Moses to arise to lead us? (David Webb type of character from HK) Do one lose hope, and switch to other types of assets (property, gold, landbanking) in his seek for his bucket of gold?
Think like a Godfather, swim with the sharks..maybe that is the better way forward?
Why most of the time ,market is efficient ? Don't expect life is always fair.
There are various cases whereby one can vote against unfair offers. For example, NeraTel uses Scheme of Arranagement and was voted out in the scheme meeting by majority number of shareholders present and voting. Shareholders need to know the differences between various types of M&A actions, for example, Scheme of Arrangements, Voluntary general offers, Involuntary general offers, Voluntary delisting offers, Involuntary delisting offers, disposal of all the assets in the company etc.
Some instances of privatization deals you can win, some you cannot. Some you can block, some cannot.
The Jaya case is a classic example whereby there is no chance that minorities can stop the disposal of assets. I mean it is just an ordinary resolution at an EGM which requires a simple 50%+1 share majority to pass. And since it is not an IPT, majority shareholders can vote on the resolution and accordingly given their undertaking to vote for it. What chance does minorities has in this case?
How come there seems to be such bad opinion of retirees as shareholders? Now I'm wondering if I'm retired, should I go for agm...in case people see me eating the buffet...
Most minority shareholders also blur blur one. Dont know which is which.
That's why someone must take lead and the press must pick it up for mass dissemination.
SIAS is the natural choice, but been passive. I feel that SIAS has lost its way. SIAS is doing all kind of things - research, investor education, investor relations etc. They have forgotten their roots of standing for minorities in CLOB saga.
For the Jaya disposal EGM, the proceeds still goes back to the company. In an takeover/privatization, the potential upside is taken away from minorities to the majority shareholders with insider operational info. Not the same scenario.
(20-05-2014, 12:27 PM)ghchua Wrote: [ -> ]There are various cases whereby one can vote against unfair offers. For example, NeraTel uses Scheme of Arranagement and was voted out in the scheme meeting by majority number of shareholders present and voting. Shareholders need to know the differences between various types of M&A actions, for example, Scheme of Arrangements, Voluntary general offers, Involuntary general offers, Voluntary delisting offers, Involuntary delisting offers, disposal of all the assets in the company etc.
Some instances of privatization deals you can win, some you cannot. Some you can block, some cannot.
The Jaya case is a classic example whereby there is no chance that minorities can stop the disposal of assets. I mean it is just an ordinary resolution at an EGM which requires a simple 50%+1 share majority to pass. And since it is not an IPT, majority shareholders can vote on the resolution and accordingly given their undertaking to vote for it. What chance does minorities has in this case?