Sino Land voting advice
4 November 2003
|Company:||Sino Land Company Limited (Sino Land)|
|Date of meeting:||18-Nov-03|
|Time of meeting:||09:30|
|CCASS voting cut-off||14-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.
|1||Adopt the accounts||FOR|
|2||Declare a final dividend||FOR|
|3(i)||Re-elect Ronald Joseph Arculli||AGAINST|
|3(ii)||Re-elect Raymond Tong Kwok-tung||FOR|
|3(iii)||Elect Ivan Lee Wank-hay||FOR|
|3(iv)||Elect Yu Wai-wai||FOR|
|3(v)||To fix remuneration of directors||AGAINST|
|4||Re-appoint Deloitte Touche Tohmatsu||FOR|
|5(i)||Mandate the directors to repurchase shares||FOR|
|5(ii)||Mandate the directors to issue additional shares||AGAINST|
|5(iii)||Mandate the directors to issue repurchased shares||AGAINST|
Ronald Joseph Arculli (Mr Arculli) is proposed for re-election as an independent non-executive director, a position he has held since 1981. He was once a partner of Woo, Kwan, Lee & Lo, which is listed first in Sino Land's non-alphabetic list of solicitors, but has since left to establish his own firm, Arculli & Associates.
However, we oppose his re-election because he is also a director of Sino Land's parent, Tsim Sha Tsui Properties Ltd (TSTP, 0247). That means that if TSTP ever decides to make an offer to privatise Sino Land, or engages in connected transactions with it, he will be unable to participate in giving any advice to independent shareholders of Sino Land on whether to vote in favour of the deal. Our opposition has nothing to do with whether he is a competent or qualified person, but everything to do with avoiding conflicts of interest for independent directors.
There is only one other INED of Sino Land, Paul Cheng Ming-fun, who is also the only other INED of TSTP, so he has the same problem, but is not up for re-election this year. The biographies of both directors in the accounts of Sino Land and TSTP state that they are directors of a number of listed companies in HK, but neither their Sino Land biographies nor their TSTP biographies mention their cross-directorship with the other company.
Lodge your votes in protest. The conflict of cross-directorships is a real one - Mr Arculli had exactly that problem when, as an "independent" director of both Grand Hotel Holdings Ltd and Hang Lung Properties Ltd (0101), he was unable to advise minorities on whether to accept the privatisation bid by HLP for GHH.
The reason for voting against item 3(v) is that the proposal is undefined and meaningless - neither the notice of AGM nor the proxy form specifies the level at which the remuneration is proposed to be fixed. As a result, only those shareholders who make it to the meeting will find out what the proposal is, by which time it will be too late for absent shareholders to send proxy voting instructions. So vote against.
Items 5(ii) and 5(iii)
Webb-site.com urges all investors to vote against the general issue mandate for all listed companies, for the reasons explained in Project Vampire, unless they comply with the recommendations set out in that article. The non-pre-emptive issue mandate allows management to choose the shareowners by allotment of shares. This corrupts the governance mechanism. Shareowners should choose management, not the other way around. If a company wishes to raise cash by issuing shares, then it should do so by rights issue.
If your company offers new shares to other investors at a discount, but not to you, then your company is transferring value from you to the new investors. Their gain is your loss. That's why we believe an issue for cash should be done by rights issue, failing which it should be limited to 5% of existing issued shares and a maximum discount of 5%.
This year so far, a majority of independent investors in 10 Hang Seng Index companies: Cathay Pacific, Cheung Kong Infrastructure, China Unicom, CITIC Pacific, Legend, MTRC, PCCW, Shanghai Industrial, Swire Pacific and Television Broadcasts have all voted against the issue mandate. In July, another index member, Johnson Electric, became the first member to modify their mandate to partially comply with the Project Vampire recommendations by cutting the size of the mandate to 5% of existing issued shares. HSBC, as a UK company, also complies.
Their fellow index members (and in the case of Sino Land, former index members) would do well to take note of this. After all, we don't mandate boards to buy back shares from chosen shareholders at a premium to market price, so why should they be allowed to issue shares to chosen shareholders at a discount?
© Webb-site.com, 2003