KUALA LUMPUR – Major shareholders of public listed companies must be transparent and keep minority shareholders in the loop when the former makes significant decisions such as restructuring of shareholder value, assets, or debts.
Watchdog groups opine that for far too long minority shareholders have been kept uninformed on major decisions in companies in which they own shares.
This also is inconsistent with the spirit of Budget 2022 which was tabled on the Keluarga Makmur (shared prosperity) platform where all are regarded as equal stakeholders.
Hence, they said, should major shareholders fail to ensure that minority shareholders are being treated reasonably and fairly, the latter could have legal recourse.
Speaking to The Vibes, Transparency International Malaysia (TI-M) president Muhammad Mohan said minority shareholders are accorded the same rights as other shareholders, under the capital market framework.
Muhammad said minority shareholders have three basic rights – to voice an opinion, seek information, and seek redress – and major shareholders must respect them.
“Keeping minority shareholders in the dark reflects poorly on major shareholders and the board.
“Typically, a shareholders’ agreement is a good tool to protect minority shareholders where certain provisions can be inserted to protect them besides the legal protection afforded to them by any corporate law,” he said.
His comments come in light of market talk about the Employees Provident Fund (EPF) wishing to increase its stake in Malaysian Resources Corp Bhd (MRCB).
The Edge Weekly had reported that EPF, MRCB’s largest shareholder which holds a 36.21% stake – is looking at consolidating its real estate assets, hence potentially undergoing a restructuring exercise.
One of EPF’s strategies in increasing its hold was said to be acquiring part or all of Gapurna Sdn Bhd’s stake.
Gapurna is MRCB’s second-largest shareholder with 15.48% equity interest and is the vehicle of deputy executive chairman Tan Sri Mohamad Salim Fateh Din.
Aside from enlisting the help of Maybank Investment Bank by EPF in the restructuring, The Edge reported that plans are also being explored for the urban property and construction company which includes a merger or privatization.
However, MRCB in a Bursa announcement said the group has not received any proposal or offer pertaining to the potential restructuring.
It said that it had “conducted due diligence with its directors, major shareholders, and such other persons reasonably familiar with the matter and that it wishes to clarify that none of the parties has any transaction plan for MRCB, nor have they engaged with any investment banks for such a plan”.
Muhammad said if the minority shareholders are excluded from full knowledge or disclosure of a certain matter, calling for an annual general meeting (AGM) would be the best avenue for the former to express their displeasure.
“They can also request for MSWG (Minority Shareholders’ Watch Group) to take up the matter with the major shareholders, as minority shareholders are represented by MSWG to protect their interest.
“Also, minority shareholders have a right to nominate a director and in the shareholders’ agreement protection against removal, rights to be heard can be stipulated clearly,” he said.
MRCB’s 51st Annual General Meeting is scheduled to take place virtually tomorrow around 10am.
Meanwhile, MSWG chief executive officer Devanesan Evanson shared Muhammad’s sentiments, saying that major shareholders must ensure that minority shareholders are treated reasonably and fairly.
Devanesan stressed that all shareholders affected by any restructuring plans must be informed once the plans are reasonably certain, not in explorative or in a state of flux.
“There are rules and laws that apply to takeovers, mergers, and privatisations.
“If they are breached, the regulators will take action,” he said. – The Vibes, June 1, 2022
