Voting recommendations
Note to journalists:
ReasonsDr David Sin Wai-kin (Dr Sin), 74, is proposed for re-election as an independent non-executive director (INED) of HSB. He has been a director since November 1991. He is also an executive director of New World Development Co Ltd (NWD, 0017), which has spent several years struggling with a post-bubble debt burden. The extent of the loans and deposits between NWD and HSB is unknown, but NWD lists HSB and its parent, The Hongkong and Shanghai Banking Corporation Ltd as "Principal Bankers" in its annual report (where bankers are listed alphabetically) while a subsidiary, New World TMT Ltd (0301) lists HSB as its only Principal Banker, another subsidiary, New World China Land (0917) put the two banks at the top of its non-alphabetic list of Principal Bankers, and a third subsidiary, NWS Holdings Ltd (0659) also includes the two banks in its list of Principal Bankers. We regard these banking relationships as a potential conflict of interest for Dr Sin, and so cannot regard him as independent of HSB. As we remarked in last year's recommendations, there is a strong historic bond between HSB and NWD. The Chairman and controlling shareholder of NWD, Cheng Yu-tung, 78, is also an INED of HSB and has been a director since 1985. Lee Quo-Wei, 85, Honorary Chairman of HSB, has been a director of NWD since 1972. Ho Tim, 95, who joined the bank in 1933, has been a director of NWD since 1972. Michael Sandberg, former Chairman of HSBC, has been a director of NWD since 1987 (just after he left HSBC) and was a director of NWD from 1972-1977. These three are listed as INEDs of NWD. Side note: While it is not relevant to HSB's meeting, there is a tangled mess of cross-directorships between HSB, NWD, Miramar Hotel and Investment Co, Ltd (Miramar, 0071) and King Fook Holdings Ltd (King Fook, 0280), which will be relevant to those companies. This is so complicated that a table is the best way to describe it:
Hang Seng bites VampireWebb-site.com is delighted to note that HSB has complied with one of the principal recommendations of Project Vampire, by limiting its general mandate to issue new shares for cash to 5% of the existing issued shares. Project Vampire also recommends a maximum discount limit of 5%, to guard against the transfer of value from existing shareholders to placees. This limit applies to UK-listed companies, including HSB's parent HSBC Holdings plc. HSB didn't go that far, but to reward them this year, we recommend you vote in favour of the general mandate. Next year, we hope they will include a discount limit. HSB joins Johnson Electric Holdings Ltd (0179) and HSBC as the first 3 members of the Hang Seng Index which comply with part or all the recommendations of Project Vampire, which are:
As we noted earlier this week when HKEx almost lost its general mandate by shooting for a 20% cash mandate, the tide has turned in the battle for pre-emptive rights in Hong Kong. Copyright Webb-site.com, 2004 Sign up for our free newsletter Recommend Webb-site.com to a friend Important notice: All material on this site, except where otherwise accredited, is copyright to Webb-site.com. Media and researchers are welcome to quote from articles on this site, provided that such quotation is attributed to Webb-site.com. The information in this site should not be relied upon by any person in making any investment decision. No responsibility or liability is accepted by Webb-site.com or any person related to it for any loss arising from or in reliance upon the whole or any part of the contents of this site. Persons who are in any doubt about an investment or potential investment should take professional investment advice. From time to time parties associated with Webb-site.com may own long or short positions in securities issued by or related to companies or governments on which we comment. |