Most minorities didn't follow PNB's cue to block proposed mandate to issue shares

KUALA LUMPUR (Oct 27): Most minority shareholders of Hong Leong Bank Bhd did not not agree with HLB’s third-largest shareholder Permodalan Nasional Bhd's (PNB) decision to vote against giving the bank the mandate to issue and allot shares at the bank's 81st annual general meeting (AGM) on Thursday.

All the nine resolutions in the shareholders meeting were passed, including the mandate to issue and allot shares, the re-elections of the group's directors and reappointment of PricewaterhouseCoopers PLT as the bank's auditor.

According to the group's filing with Bursa Malaysia, 685 shareholders who collectively hold 1.74 billion shares (representing 95.1% of voting shares) voted in favour of giving the group the mandate to issue and allot shares.

In comparison, 28 shareholders with a total of 88.5 million shares (representing 4.83% of voting shares) voted against the resolution.

PNB, the third largest shareholder of the bank, said it voted against the proposal because the bank did not reveal details of the rationale for the exercise and the utilisation purpose of the funds to be raised.

According to PNB's voting guidelines on allotment and issuance of new shares or other financial instruments, shareholders must be informed of the planned utilisation of the proceeds and the manner in which funds are to be raised such as private placement and rights issues.

"Such disclosures would enable shareholders to make an informed decision in approving the resolution.

"PNB is generally supportive of the issuance of financial instruments at no cost to existing shareholders such as bonus issues provided that the issuance is not detrimental towards the financial position of the company and is in the best interest of the shareholders," stated the asset management group on its website.

However, PNB still voted in favour of the remaining eight proposals at the Hong Leong Bank's AGM on Thursday.

PNB, via Amanah Saham Nasional Bhd, holds a 2.96% stake in the bank.

Meanwhile, Hong Leong's second-largest shareholder Employees Provident Fund, which has a 9.3% stake, also voted in favour of all the resolutions including the proposed issuance and allotment of shares.

Hong Leong Financial Group Bhd is the bank's largest shareholder, with a 61.82% stake.

According to a shareholder The Edge spoke to at the AGM, the general mandate to issue not more than 10% of its total issued shares will be reflected in shareholders' return in the long run.

"HLB (Hong Leong Bank) is a pretty well-run company with no issues at corporate governance. They do not have the track record of simply issuing new shares. The most important thing is the industry they are involved in, which is the banking industry, which is capital intensive and ticks all the boxes for me," said the shareholder.

Hong Leong Bank's share closed 10 sen lower at RM21 for a market capitalisation of about RM45.52 billion.