Wednesday, July 27, 2011

Just Another Feedback On Corporate Governance

Claire Barnes of Apollo Investment Management has given her feedback on the Corporate Governance Blueprint 2011. Her article is here: Open letter to Securities Commission Malaysia: Feedback on Corporate Governance Blueprint 2011

Do give it a read.

As mentioned before, SC welcomes feedback from everyone on the Blueprint issue. Yes, everyone!

So please, if you some bright ideas or strong criticism, just send your feedback or email your opinions and views to You need to do this by 15 September 2011.

Or if you prefer to send in writing, mail it to:

CG Blueprint Team
Securities Commission Malaysia
3, Persiaran Bukit Kiara, Bukit Kiara
50490 Kuala Lumpur, Malaysia


Here are some small views from me.
I like to see a more independent MSWG. MSWG should not be funded/sponsored by any corporations at all. It must be truly independent. And none of the board of directors should have any links to any listed companies.
I like to see more protection for the minority shareholders. The minority shareholders is still a business partner of the company. They deserve more respect and they are certainly not there as OPM (other people's money) waiting to be screwed!

For example. The privatisation of a listed company. I am not suggesting that privatisation should be banned but I really wish minorities needs to be better protected and most of all I would like to see a much fairer deal. Premium over share price is simply not enough because in the bearish market conditions, share prices generally tank and for the majority shareholder to take advantage of the market conditions and offer the minorities a premium during these times is meaningless. Really. If the minorities are willing to stick with the company thru the bad times, then is it asking too much for the majority shareholders to do the same?

And why are privatisations often offered with price valuations based on current earnings? Isn't it absurb when the flipside of privatisation, a stock is valued based on future earnings?

And it gets even ludicrous when the the same company relist back at a much higher valuation or minus some key assets.

Have we not seen a stock taken private a few years back based on a currents earnings multiple of 7x? And have we not seen the same stock being relisted recently based on a earnings multiple of 25x?

Doesn't this make the stock exchange irrelevant?

Me say? Allow the delisting. There's nothing we can do but there's so much we can do when it comes to the relisting of the same company. Make them relist based on the very same valuation they were delisted.

And do make sure no crafty underhand is done like listing the same company minus some key asset.

Yes, make relisting a much harder process.

Don't allow Bursa Malaysia to be a bloody cheap stock exchange where companies can waltz in and out, list and delist anyhow and anyway they like!

And then Bursa being a listed entity. This is a huge hamper against progress. Why? When the company is a listed entity, profitability will be an issue.


And with profitability an issue, certain decision will be hampered because Bursa Malaysia will have to address the profitability perspective!

And I want to see more done on the issue of related party transactions ( RPT ). Nowadays, related party transactions seems to be increasing more and more. It's rather shocking and sometimes I wonder how the company manage to get the votes of approval for all these transactions. I have seen so many listed companies with so many RPTs that it so unreal. Why do these major shareholders have links to almost most of the transactions done by the company? For example, I looked at a retail business. The company rent shop lots. Understandable. But why are most of the shop lots rented from related party? Why? Know the implications?
Private placements. I seriously think what we have is lacking. Share placements ultimately means more share in a company or more slices to a cake and ultimately, the minority shareholder will see their earnings per share being diluted with all these placements.

However, what irks me most about share placements is private placements is privileged placements!!!!

Exactly! Who are the lucky privileged party being offered these new shares at the discounted prices? And talking about discounted prices, why are the some placement made with such huge discounts?

Yes, I would like to see control over the placement prices.

And I would also like to see control over the percentage of placement shares being offered. I would like to see the limit set at 10 percent placement. Anything more than 10%, it's ludicrous. It's sinful. The minorities would be screwed big time from the dilution in earnings with all these new shares being offered.


Got some feedback to give?

Don't be shy... just do it.... and send your feedback to SC.


M.A. Wind said...

Yes, completely agree, especcially the Private Placement, RPT and delisting. SC must be carefull with anything that can be abused, because it will be abused.

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Moolah said...


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