Hang Seng Bank voting recommendations
8 April 2004
Voting recommendations
| Company: | Hang Seng Bank Limited (HSB) |
| Stock code: | 0011 |
| Date of meeting: | 22-Apr-04 |
| Time of meeting: | 15:30 |
| Advice date: | 08-Apr-04 |
| Notice of Meeting: | Click here |
| Voting method: | Webb-site.com will require a poll, all proxies will be counted |
Note to journalists:
We have up to 4 proxy seats available inside this AGM. Please contact
us if you want one.
| Item | Description | Vote |
| 1 | To adopt the accounts | FOR |
| 2(a) | To re-elect Eric Li Ka Cheung as INED | FOR |
| 2(b) | To re-elect Jenkin Hui Ching Kim as INED | FOR |
| 2(c) | To re-elect David Sin Wai Kin as INED | AGAINST |
| 2(d) | To elect Simon Jeremy Glass as Director | FOR |
| 3 | To re-appoint KPMG as auditors | FOR |
| 4 | To appoint Simon Jeremy Glass as Managing Director | FOR |
| 5 | To mandate the Directors to repurchase shares on-market | FOR |
| 6 | To mandate the Directors to issue additional shares (see note) | FOR |
Reasons
Dr 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:
| HSB | NWD | King Fook | Miramar | |
|---|---|---|---|---|
| Cheng Yu Tung | INED | Ch | ||
| Peter Cheng Kar Shing | MD | INED | ||
| Dr Sin | INED | ED | INED | |
| Richard Tang Yat Sun | INED | Vice Ch | Dir | |
| Ho Tim | Dir | INED | Hon Ch | |
| Lee Quo-Wei | Hon Ch | INED | ||
| Howard Yeung Ping Leung | INED | Ch | Dir |
Hang Seng bites Vampire
Webb-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:
- The mandate to issue shares for cash, other than by a rights issue, should be for not more than 5% of the outstanding shares a the time of the mandate
- The discount for shares issued other than by a rights issue may not exceed 5%.
- The mandate to issue shares for non-cash purposes, including acquisitions, should be for not more than 20% of the outstanding shares
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.
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