For the 5th time this season, investors in a Hang Seng Index company, this time Cheung Kong Infrastructure Holdings Ltd (CKI, 1038) have voted against the general mandate, as we show below. Thanks to our Project Poll, all 14 companies in the project so far have conducted their votes on a poll, 1 share 1 vote, rather than a show of hands where proxies are ignored. For readers not familiar with it, Project Vampire (Vote Against Mandate for Placings, Issues by Rights Excepted) urges shareholders to vote against the general share issue mandate unless it complies with our recommendations, based on international best practice, which are:
Despite being included in the index on the basis of its entire market capitalisation, CKI only has a free float of 15.17%, with 84.58% being held by Hutchison Whampoa Ltd (0013), 0.24% by Li Ka-shing's private trust, and just one director holding 100,000 shares. One of the little mysteries of Hong Kong is why the Hang Seng Index committee continues to retain CKI when it's free float is worth only HK$5.1bn and parent HWL and in turn, its controller Cheung Kong (Holdings) Ltd are both already in the index. It certainly doesn't help the credibility of the index, but those who manage HSI-tracking funds have no choice but to scramble after the small CKI float in order to get their fair weighting. Together, the insiders account for 1,906,681,945 votes, or 84.83% of the company. Assuming they voted in favour of their board's proposal, and deducting that from the votes "in favour" in the official poll results, then the voting of independent investors on the issue mandate was as follows:
In other words, public investors voted by a margin of 50.18% against the general mandate. Total votes cast were 47.95% of the free float, the highest yet in Project Poll. We are assuming that the "In favour"' vote did not include any group pension funds or other related entities that may not show up on the disclosure screen. We hope investors will continue to voice their opposition to the general mandate. Eventually, issuers and regulators will get the message, and the market will be a safer place in which to invest. Copyright Webb-site.com, 2003 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. |