Voting in a vacuum

by **Cals** Sat 15 Aug 2015, 16:42

Voting in a vacuum

Saturday, 15 August 2015
By: ERROL OH

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Wintoni shareholders to decide on boardroom revamp, but some may not know why
IF THERE were a club for directors of listed companies who have faced bids to force them out, Datuk Larry Tey Por Yee (pic) could run for president. After all, he has accumulated more experience in less than a year than most people have in a lifetime.
Last November, he lost his board seat in Protasco Bhd after almost all the shareholders present at an EGM supported the resolution to remove him although he was then the company’s second largest shareholder.
And on Thursday, it was announced that several shareholders of Wintoni Group Bhd had proposed resolutions to drop the entire eight-man board, including Tey, who’s an executive director. There are other resolutions to appoint three new directors. These resolutions will be tabled at an EGM in Petaling Jaya on Sept 11.
Coincidentally, Tey is also Wintoni’s second largest shareholder, with a 4.5% stake. But that’s a lot less than the 19.8% owned by Yap Kok Weng.
Yap became a substantial shareholder in February but has yet to be appointed to the board. If he turns up at the EGM or appoints a proxy, will his votes be for or against the resolutions? This matters because he may well be a decisive factor.
At the moment, there are no obvious indicators. He’s not among the 10 shareholders who teamed up to requisition for the Sept 11 EGM. Nor is he one of the trio who have been nominated to be the replacement directors. So there’s nothing to show that Yap is part of this attempt to oust the directors.
What’s strange though is that the notice for the EGM was carried in newspapers on Thursday. People could learn about the meeting in the morning but Wintoni, a provider of automation systems, only announced the requisition and relevant details that evening. Somebody had jumped the gun. Or the Wintoni management was slow to release the information. Either way, the disclosure rules may have been stretched in this case.
This is not the first time that the Wintoni shareholders have displayed a desire for boardroom changes.
During Wintoni’s AGM in June, shareholders holding about 90% of the meeting’s voting power blocked the re-election of four directors. The outcome was short-lived though. Later that day, the four men were appointed to the board to continue in their previous roles.
This time, if the EGM passes the proposed board shake-up, there’ll be no chance of a quick comeback because the new directors will be in charge.
The requisitionists aren’t obliged to give their reasons for wanting to revamp the board, but it’s perfectly reasonable to believe that they’re not happy with recent developments at Wintoni. A prime example was the rude shock in May when the company filed its audited financial statements for 2014.
The external auditors, SJ Grant Thornton, had qualified their opinion on the accounts because they had yet to see for themselves the company’s computer equipment, valued at RM3.7mil, which are in the United States. The auditors said the management was “still in the process of obtaining the necessary approval from the custodian to grant us the physical access to the said computer equipment”.
That was as at April 21, the date of the audit report. The company hasn’t offered an update on this situation so far.
Also in May, the company scrapped a proposed disposal of two subsidiaries (because it took too long to complete the deal) and proposed rights issues of shares and loan stocks (because of weak market sentiments).
If this news dampened the enthusiasm for the stock, the events after the AGM in June, when four directors rejected by shareholders were speedily re-installed, certainly did nothing to boost confidence in the way the company was run.
We don’t know if there’ll be a spirited campaign by the current directors to persuade shareholders to leave the board unchanged. During the Protasco boardroom brawl, both Tey and his adversary went public with allegations and counter-allegations. It was a messy and confusing fight, and often, the line that separated disclosure and negative campaigning was non-existent.
The other extreme, which is more common in Malaysia, is when the two sides say nothing, and yet the shareholders are expected to vote on whether to allow a wholesale boardroom transformation.
Every time there’s a fight in corporate Malaysia that’s driven by murky motives, minority shareholders can never be sure if they’re rooting for the right guys. This is because the law doesn’t make it compulsory for the requisitionists to give a rationale for their actions. Can somebody explain why this is acceptable?