With no fanfare, Techtronic Industries last week became the first company, mid-AGM, to amend its proposed general issue mandate to comply with the recommendations of Project Vampire, and also committed to poll voting for future shareholder meetings. Having joined the blue-chip MSCI index last Friday, this success story sets an example to the market.

Techtronic Takes Vampire Drill
4 June 2003

Power tools and electrical maker Techtronic Industries Co Ltd (Techtronic, 0669) is an increasingly rare Hong Kong success story. Its share price has risen from $1.27 at the end of 1999 to $12.30 at yesterday's close, shifting it from small-cap to blue-chip status, and it fittingly entered the MSCI Index last Friday night, when it was Hong Kong's 56th largest company by market value. Webb-site.com editor David Webb is a shareowner of Techtronic.

However, this story is not about the investment merits or demerits of the stock, but about a first for Hong Kong, in which the general issue mandate was amended at the Annual General Meeting last week, to comply with the recommendations of Project Vampire (Vote Against Mandate for Placings, Issues by Rights Excepted), which are:

  1. The mandate to issue shares for cash, other than by a rights issue, shall be in respect of not more than 5% of the issued shares a the time of the mandate
  2. The discount for shares issued other than by a rights issue shall not exceed 5%.
  3. The mandate to issue shares for other purposes, including acquisitions, shall be for not more than 20% of the issued shares

This shows that companies on the growth trail can be responsive to shareholder concerns, and recognise that addressing these concerns will add to the attraction of the stock. In the meeting, Techtronic also told shareholders that poll voting would be standard practice from now on, so shareholder votes will be properly counted.

The poll results do show some votes against the issue mandate, but these are almost certainly votes sent by proxy when investors did not yet know that Techtronic would amend its proposal, so no doubt those voters are happy now. The footnote in the results shows the amendment to the issue mandate.

Last Wednesday was a good day for corporate governance. After the morning AGM of Techtronic, we crossed the harbour for the afternoon AGM of Arts Optical, which as we wrote last month, was the first company to put the Vampire mandate in its notice of AGM.

We hope that other listed companies, large and small, will follow the lead set by these two companies. Already this year, a majority of investors in 8 Hang Seng Index companies have voted against the general mandate. This message is beginning to filter through.

© Webb-site.com, 2003


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