New World Dev AGM voting advice
21 November 2003
Company: | New World Development Company Limited Limited (NWD) |
Stock code: | 0017 |
Meeting type: | Annual |
Date of meeting: | 2-Dec-03 |
Time of meeting: | 15:30 |
Advice date: | 21-Nov-03 |
CCASS voting cut-off | 28-Nov-03 VOTE NOW |
Notice of Meeting: | Click here |
Proxy form: | Click here |
Voting method: | Webb-site.com will require a poll, all proxies will be counted |
How to vote: | See our voting guide |
Note to journalists:
We have up to 4 proxy seats available inside this AGM. Please contact
us if you want one. Don't risk getting shut out of the meeting!
Item | Description | Vote |
1 | Receive and consider the accounts | FOR |
2 | To re-elect the Directors and to authorise the Directors to fix their remuneration | AGAINST |
3 | To re-appoint Joint Auditors and authorise the directors to fix their remuneration | AGAINST |
Note: the share buy-back and new issue mandates are dealt with in a separate EGM to follow immediately after the AGM. Click here for voting advice on that.
Reasons AGAINST
Item 2 - Breach of Listing Agreement
There is a fundamental defect in this proxy form. Take a look at it. Some genius has simply copied the "purposes" set out in the notice of AGM into the proxy form, without specifying the resolutions to be proposed at the meeting. So shareholders are expected by NWD to submit proxies approving the re-election of any and all directors in one go!
This in our view is a breach of the Listing Agreement, which is part of the Listing Rules. Paragraph 35 of the Listing Agreement states:
"The Issuer shall send with the notice convening a meeting...proxy forms with provision for two-way voting on all resolutions intended to be proposed thereat". (emphasis added)
Now since there will be a separate resolution for the election of each director, this rule clearly requires that the proxy form contain a separate "for" and "against" box for each such resolution, not an all-or-nothing box which combines 5 resolutions into one.
We urge the Stock Exchange to intervene and require this breach of the Listing Agreement to be rectified by adjourning or postponing the meeting in order to circulate new and proper proxy forms. A spokesperson for NWD contacted by Webb-site.com declined to do this.
But in the meantime, assuming the Stock Exchange does not react in time (which is usually a safe assumption), we recommend that you vote against the 5-in-one resolution on the proxy form.
According to the directors' report, the directors standing for re-election are Henry Cheng Kar-shun (Mr Cheng), Michael Sandberg, David Liang Chong-Hou and Payson Cha Mou-sing (Mr Cha). If shareholders had been able to vote on these separately, then we would have been in favour of the first three and against the re-election of Mr Cha, who is listed as an "independent non-executive director". The reason is simple - Mr Cha is the Deputy Chairman of HKR International Ltd (HKR, 0480) and is also the son of its chairman and controlling shareholder, while Mr Cheng (son of the chairman and controlling shareholder of NWD) is one of the two "independent non-executive directors" of HKR. So the two hereditary tycoons sit on each other's boards as independent directors. This creates obvious conflicts of interest due to the risk of reciprocity.
Whenever a company combine separate proposals into the same resolution (as they have done here), if we are against part of a resolution (in this case, Mr Cha's re-election), then we always vote against the whole thing.
Item 3
NWD has not one but two auditors, PriceWaterhouseCoopers and H.C. Watt & Company Limited. You might think that two is better than one, but consider what happens when something goes wrong and the auditors fail to spot it - one could blame the other for the failure, unless they have both done all the work (stock-taking, invoice verifying, fixed asset checks etc).
Furthermore, there is a question of duplication. Either they divide the work between them, or they double-up on each part of the audit, which would increase costs compared to having a single auditor. And if they divide the work up between them, then each is relying on the other and investors cannot know which part is done by which firm, and might simply be trusting the "brand" of the larger firm for areas of work it has not done.
So for this reason we would vote against the re-election of joint auditors in any company, including NWD. We want a single auditor on whom we can pin liability.
Don't forget to vote in the EGM too!
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