Dear IR@JAKS,

 

I refer SC Corporate Governance Monitor 2020 report:

https://www.sc.com.my/api/documentms/download.ashx?id=ff69ce0d-a35e-44d4-996a-c591529c56c7

Principle C – Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders

MOVING FORWARD: Meaningful reporting and transparency is a core element of corporate governance as reflected in the CARE (Comprehend, Apply, Report) principle of the MCCG. Companies should ensure that the disclosures provide the explanation, discussion and data required for readers to understand and assess their corporate governance policies and practices. Disclosures should also be viewed as an opportunity to demonstrate the company’s commitment to good corporate governance and the values as well as practices it subscribes and adopts.

Stakeholders, including shareholders require access to regular, reliable, comparable and integrated information, and should there be gaps in the disclosures, stakeholders should engage the company and its board accordingly to ensure the information required is forthcoming.

As shareholders of JRB, I would like to engage the company Board/Management about JRB recent announcement: https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3091961

PROPOSED DISPOSAL BY JAKS SDN BHD (“JSB”), A WHOLLY-OWNED SUBSIDIARY OF JRB, OF ITS ENTIRE 510,000 ORDINARY SHARES (“SALE SHARES”), REPRESENTING 51% OF EQUITY INTEREST IN JAKS ISLAND CIRCLE SDN BHD (“JIC”) FOR A TOTAL CASH CONSIDERATION OF RM1.00 (“DISPOSAL CONSIDERATION”) (“PROPOSED DISPOSAL”)

 

Refer JAKS published 18^th AGM summary of key matters discussed in answer to question 14: Even the current rights issue exercise is not intended for LAD payment. Our focus is on recovery from and claims against the Star Media Group.

 

Question 1: With the disposal of JIC, do JRB still have legal locus standi to counter claim suit for RM595 million against SMG, seeking damages for prematurely initiating the claim in bad faith when the Sale and Purchase Agreement dated 19 August 2011 (“SPA”) entered into is between STAR and JIC?

 

Question 2: What will happen to the 50 million bank guarantee paid previously by JAKS to Star Media Group?

 

Refer JAKS Annual report 2019 page: 106

Summarised statements of financial position as at 31 December 2018: JIC (RM)

Non-current assets: 144,366

Current assets: 127,165,593

Current liabilities: 268,263,388

Total equity: (140,953,429)

Attributable to:

Non-controlling interest: (69,067,180)

 

Question 3: Please give detail what are inside:

Non-current assets: 144,366

Current assets: 127,165,593

Current liabilities: 268,263,388

 

Refer Affin Hwang Research: https://klse.i3investor.com/servlets/staticfile/403027.jsp

JIC would still need to raise new funding to pay the buyers the LAD owed which is currently around RM165m (accumulated since 4Q16). Apart from that JIC also owes JAKS around RM35.4m, which JAKS had previously loaned to JIC for the construction cost and bank guarantee of the Pacific Star project

 

Question 4: Please explain how JIC will settle this RM35.4 m with JAKS?

 

Question 5: Is 50 million Bank Guarantees paid previously by JAKS to Star Media Group part of JIC current liabilities?

 

Question 6: Is JIC current liabilities involved bank borrowing guarantee by JAKS? 

 

By the way, I am still waiting for a copy of the Board response to my submitted in advance questions for JAKS 18^th AGM as of which questions involve confidential, price sensitive, irrelevant, beyond the scope of shareholder communication and which the company is not obligated to answer.

Thank you

 

 

Dear SC and Bursa,

 

My congratulation to SC on Corporate Governance Monitor 2020 report:

Principle C – Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders

I quote from the report, “Malaysia’s corporate governance framework consists of several requirements and measures to support shareholders in exercising their rights. The shareholders’ right to speak, vote and participate in general meetings is provided for under the Companies Act 2016. To facilitate shareholders in forming a view or decision on a matter, the regulatory framework mandates the disclosure of information to shareholders, including in notices of general meetings, annual reports, financial statements and corporate governance reports”

 

I appeal to SC, please support my efforts in exercising my shareholder rights to hold the external auditor and Board/Management accountable and answerable: Example of my AGM questions:

Question 3:  To external auditor: Did auditors visit to Pacific Star worksite to do an audit and verification whether the completion dates stated by management is achievable? And if not achievable should auditors raise an alarm in key audit matters? By not highlighting the delay in key audit matters should external auditors be held accountable and answerable that JAKS is now involved in lawsuit with Star and paying millions of LAD to purchasers of the service apartments?

Question 4: Aside from the dispute with Star, that Completion Period for JIC to deliver STAR’s entitlement under the SPA is on 20 June 2020. Whose responsibility, accountability and duties to ensure timely delivering of service apartment units to the purchasers? Any action taken / claim against sub contractors found guilty of incompetent and failing/neglectful of duties to deliver these service apartments to purchasers timely?

Question 5: Should the Board of Directors be held accountable and answerable for the delay from original completion of service apartment blocks end August 2016 to the second half of 2020.

 

Will SC please compel the Board/Management to give answers to my submitted in advance questions for JAKS 18^th AGM as of which questions involve confidential, price sensitive, irrelevant, beyond the scope of shareholder communication and which the company is not obligated to answer.

 

 

THEMATIC REVIEW 3: BOARD REMUNERATION: DESIGN, DELIVER, DISCLOSE

Well-designed and appropriate levels of directors’ remuneration is a critical factor in delivering good

corporate governance and long-term value creation of listed companies. It provides a mechanism to motivate directors’ behaviour towards becoming responsible and effective stewards. The MCCG emphasises that directors’ remuneration, which is well-structured and clearly linked to the strategic objectives of a company are important to promote business stability, growth and contributes to the long-term success of the company.

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3094013

Date of Offer of LTIP Shares: 6 October 2020

Number of LTIP Shares to the Selected Employees under the 2018 RSP Grant: 19,945,000.

Executive Director/Chief Executive Officer: 15,830,000

Senior Management: 3,867,000

Other Selected Employees/Executives: 248,000

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=2925315

Date of Offer of LTIP Shares: 30January 2019.

Number of LTIP Shares to the Selected Employees under the 2018 RSP Grant: 38,709,760

Executive Director/Chief Executive Officer: 27,625,760

Senior Management: 10,645,800

Other Selected Employees/Executives: 438,200

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=2762224

Reference is made to the approval obtained from the shareholders of the Company on 28 June 2016 to establish a new Long-Term Incentive Plan (“LTIP”). The Board of Directors of JRB wishes to announce that the Company has offered the following Share Options under the LTIP (“LTIP Options”) to the eligible directors and employees of JRB and its subsidiaries, the details of which are set out below:

(a) Date of offer: 24 May 2017

(b) Exercise price of LTIP options offered: RM1.40

(c) Number of LTIP options offered: 24,500,000

(d) Market price of JRB shares on the date of the offer: RM1.58

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=2670722

On 28 June 2016, the shareholders of JRB have at Extraordinary General Meeting approved the establishment of a LTIP of up to fifteen percent (15%) of the total number of issued shares of the Company (excluding treasury shares) at any one time for the Directors and employees of JRB and its subsidiary companies. The Group’s LTIP comprises the Share Option Plan (“SOP”) and Share Grant Plan (“SGP”) for its employees.

 

I support the Share Option Plan or ESOS because both the interest of management and minority shareholders are aligned but for Share Grant (free shares) what is the justification?

My question to SC and Bursa:

1.     Should SC revoke LTIP established during The Company Act 1965?

2.     The Share Grant does not align the interest of minority shareholders with Directors/Management. It gives rise to abuse of power or conflict of interest where due to vested interest LTIP of up to fifteen percent (15%) of the total number of issued shares of the Company (excluding treasury shares) hence the unnecessary RI to increase the total number of issued shares for self-interest.

Please investigate the JAKS management claims “Local banks will not finance our equity investment particularly for overseas investment in Vietnam” have any truth to it?

 

My thousand thanks in advance. Stay safe, stay healthy and stay well.

 

Yours Sincerely,

Lee Soon Sheng

Disclaimer: This is not a Buy, Sell or Hold recommendation but a one man quest to exercise his minority shareholder’ rights. Will this be an exercise in futility? Only time will tell.

If only KYY had exercised his substantial shareholder rights in making requisition to hold an EGM to vote in his nominees to the JRB Board of Directors.

If only many more minority shareholders will to exercise their shareholders’ rights to hold the Board, Management and External Auditors accountable and answerable. Then investment will be more informative less manipulative, more transparent less speculation, more rewarding less pitfalls, more value play less value trap,  more fulfilling less heartbroken, more wealth generating less wealth destroying and make Bursa a great place to build your wealth.