Independent shareholders oppose delisting Malaysian palm oil firms
View(s):Four palm oil companies listed in the Colombo Stock Exchange (CSE) this week confirmed plans to delist from the CSE, amidst opposition from independent minority shareholders (IMS).
The plan was earlier announced in the annual reports of the companies and further stated at its AGMs held on Thursday.
K.C. Vignarajah, an IMS who has consistently fought for justice and fairplay to all stakeholders, said he vehemently opposed the move by the company using new delisting rules introduced recently by the Securities and Exchange Commission (SEC) which provides for a compulsory minimum public float of 20 per cent or an option of delisting.
“There are loopholes in these rules and these companies are making use of this to delist, fleecing IMS,” he said, adding that he has also urged that in case of delisting a fair value should be given to shareholders to sell their shares. He said while the market price is now Rs. 1,600 per share of these companies, a fair value should be at least Rs. 7,000 per share.He accused the holding company of buying shares in the market over a period of time and deliberately reducing the public float which is now at around just 5 per cent of total shares.
In a separate statement, he questioned why the SEC and the Colombo Stock Exchange (CSE) was allowing these ‘four golden Malaysian Palm Oil PLCs (4MPCs) to slip away impoverishing the IMS the Colombo bourse and our country?’
Excerpts of his statement:
‘The accumulation of 4MPCs shares by CI&RP (Controlling Interests & Related Parties) was curious furtive and unethical at start, but brazen now, utilizing the loop holes and escape routes, under the recent SEC rules. The SEC and CSE have been made scapegoats by the Chairman and Directors of MPCs.
These 4MPCs which are more than 100 years-old Sri Lanka-owned firms together with Bukit Darah, Carsons, Ceylon Investments Ceylon Guardian Investments Trusts, (with Rubber Investments Trust controlled by the Sri Lankan PLCs) were the real golden stocks of the CSE. They had at least 52 known subsidiaries and associates companies. They should have been consolidated as per our repeated request, into a maximum of about 10 or 12 companies one for each sector plus five more giving ample leeway to the CI, while reducing costs tremendously, increasing efficiency, and transparency.
Shareholders were during the earlier years of risk, assured that there was glorious growth potential and that, they should be patient and would benefit immensely from this growth. IMS have been repeatedly re-assured over the last many years by the Chairmen and Board of Directors of the 4MPCs, and the Group controlling Interests, that delisting would not happen.
Extract from the Selinsing AGM (last year) minutes: Mr. H. Selvanathan states; “The Board at previous AGMs had also stated that the management had no plans to delist the company.”
Compensation for the 4MPCs shares even at a very generous discount has to be many multiples of the current ‘market’ prices. It has to take into account their earlier ‘Restructuring’, ‘Re-organization of Capital’, ‘Return of monies held for years pending capitalization’, and other activities which have spun off assets/siphoned off profits to private holding companies and to make it even less accessible/accountable, floated overseas.
GoodHope Asia Holdings (GAHL) in Singapore seems to be the biggest CI&RP. An allocation of GAHL, SDSB and Agro Bukit shares to shareholders of Buki, Carsons, the 4 MPCs and the Investment Trusts CINV and GUAR may be a way forward, to retain equitable value with the IMS, CSE and our country.
CI&RP unjustly enrich themselves when they shun good corporate governance. They create ‘Shareholder Fatigue’, to depress prices, deprive IMS of fair and equitable share of profits and benefits; share of reserves maintained for growth.”