Re my earlier comments to fairplay on S224 of the Companies Act. It was paraphrased from the Act, not the actual wordings, which are as follows:Loans to director
224. (1) A company shall not—
(a) make a loan to a director of the company or of a company
which by virtue of section 7 is deemed to be related to
that company;
A “director” includes any person occupying the position of
director of a corporation by whatever name called and includes
a person in accordance with whose directions or instructions the
majority of directors of a corporation are accustomed to act and
an alternate or substitute director;
So a director includes a shadow director, the person effectively running the company.

It is important to get a breakdown of the reimbursements as to how much was paid to outside service providers and how much was incurred by Capital Dynamics on a related party transaction basis. The latter requires shareholders' approval as this is not covered under the recurrent related party transactions mandate.

Great that you can also do a Chinese language version, as most of the shareholders are Chinese and may not be well versed in English.

Just a reminder, the accounts are for information only. There is no requirement for it to be adopted by members. So you may ask questions, but there is nothing to be 'adopted', as this is not a resolution. The most that can happen is for your questions and answers minuted.
As for the M&A, unless you go there personally and demand to buy a copy as per your rights, I doubt they will bother to entertain you, as I per my experience last time. The company obviously don't like people to probe deeper into their operations.

In Table 4 above, the cumulative returns for cash reduced from 2006 to 2013. How can this be? Nobody double checked the numbers?

None of the BOD members have any experience in portfolio management or professional qualifications in securities analysis, and the only time someone with such expertise, including being a director of Amanah Millenia Fund (AMF), a PNB associated closed end fund, was proposed as a director, the fund manager threw a fit and threatened to resign. Here is how AMF proposed to tackle the price discount problem:
"PROPOSED CASH TENDER OFFER
“THAT, subject to (i) the passing of Ordinary Resolution 9 above and the Special Resolution
below, (ii) compliance with the Companies Act 1965, the Memorandum and Articles of
Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad
and any applicable laws, regulations and guidelines issued by other regulatory authorities
and (iii) approval by the Bursa Malaysia Securities Berhad and the Securities Commission in
relation to the proposed waiver as per item (8) (i) and (ii) of the Circular to the shareholders
of the Company dated 31 May 2007; the Company and the Directors of the Company be
and are hereby authorised to give effect and implement the Tender Offer to be made by
the Company to the Entitled Shareholders, half yearly (in March and September of each
year) to buy back up to ten per centum (10%) of the Company’s issued and paid-up share
capital (for each Cash Tender Offer made in March and September of each year) at the offer
price of ninety seven per centum (97%) of the net asset value per share to be determined
by Board of Directors as of the close of trading of the shares at a price-fixing dates to be
determined and announced from time to time (“Proposed Tender Offer”).
AND THAT, the maximum amount of funds to be utilised for the Cash Tender Offer shall not
exceed the cash and cash equivalents balance of the Company.
AND THAT, the Directors of the Company be and are hereby authorised to retain the
Purchased Shares as treasury shares or cancel the said shares or retain part of the said
shares as treasury shares and cancel the remainder. The Directors of the Company are
further authorised to resell the treasury shares on Bursa Malaysia Securities Berhad or
distribute the treasury shares as dividends to the Company’s shareholders or subsequently
cancel the treasury shares or any combination of the three.
AND THAT, the Directors of the Company be and are hereby authorised to carry out the
above immediately upon the passing of this resolution and Special Resolution below until
the Board of Directors of the Company undertake a voluntary liquidation of the Company in
accordance with its Articles of Association.
Source: AMF 2006 Annual Report

WB pays himself $100K a year instead of 1.5% of AUM, and he didn't need an interest free advance on his pay either.

@fairplay Under S224 of Companies Act 2016
A Company shall not make a loan to a director of the company or any related company. A Company also shall not enter into any guarantee or provide any security in connection with a loan made to such a director by any other person.
This section shall not apply if:

the company is an exempt private company
the loan is a fund to meet the expenditure incurred or to be incurred by the director for the purpose of the company
the loan is provided to a full time director in purchasing or acquiring a home
a passed resolution to approve a scheme for the making of loan to employees of the company and the loan is in accordance with that scheme.

The question is -Is a prepayment in effect an advance/loan to a related party? If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck. The wording unsecured, interest free, repayable on demand in cash (not offset against future fees) are the usual terms used in describing a 'friendly' loan.

Going through the past accounts of the company makes interesting readings.
In the 2013 accounts, on page35, it is stated “Principal Activity Your Fund is a closed-end fund and is principally engaged in investing in a diversified portfolio of quoted securities. There has been no significant change in the nature of this activity during the financial year. Your Fund is managed by a fund manager, Capital Dynamics Asset Management Sdn. Bhd. (“the Fund Manager”), a company incorporated in Malaysia. The principal activity of the Fund Manager is the provision of fund management services.” So there is no mention that the company is contemplating either a foreign listing or for the Fund Manager to do a dual listed fund on behalf of the company.
In the 2012 to 2015 accounts there were various amounts of receivables owed by related parties, that are non-trade in nature, unsecured, interest free and repayable on demand. (footnote 6) which were listed in footnote 17 as CDAM, CDSB and key personnel of the Fund.
For 2016 to 2020 inclusive, the amounts were $1131427,$1207808, $1247858, $1264723 and $982807 respectively, and instead of receivables, they are now labeled as prepayments and in the 2016 accounts, CDAM and CDSB were specifically named as the related parties.
So now here we have the fund manager charging a 1.5% annual fee for managing an interest free loan (labeled as a prepayment) from the fund to themselves, instead of holding it as a valuable call option for the benefit of the fund, and surely the money would not be sitting idle, so it could be placed in FD or used to cover bank OD, thus receiving either an interest or savings in interest at banking rates all this while.

@fairplay Apparently there is such an accrual in the 2016 accounts as mentioned above. But there must be a balancing item for the accrual, but there is none, and the amount just disappeared afterwards, until probably resurfaced in the current financial year.

Prepayment for services not yet rendered is effectively an advance, a.k.a. a loan to a related party. Just depends on how you want to label it.

The company is in the habit of prepaying the manager for services, which is rather unusual, unless fees are payable in advance according to the service contract. But then, the AUM cannot be determined until the end of the period. On page 36 of the 2016 accounts, there is an amount of $6321817 accrued under other payables, with no further details (footnote 8). In the ordinary course of business of the company, transactions for such amounts can only be for purchase of investments, and settlement time is almost immediate, T+2, so unless there was purchase of a big block of shares just before month end, there should not be any unpaid share purchases. So the only transaction of this size that can be accrued is the dual listing fee, but the funny thing is that this amount disappeared from the following years' accounts, so one can assume that it has since been paid, but nothing mentioned in the accounts of such payment. Now you have something similar in size being paid in 2020, with only a one sentence footnote describing (not explaining) it as dual listing fees. Cannot blame shareholders for being taken by surprise and mystified.

@fairplay The quarterly results ending February was when the dual listing expenses first appeared in the accounts under other administrative expenses, without any explanation or footnote as to what it is. Coincidental timing for the resignation?

However, in court cases, even ex-directors can be subpoenaed to testify in court under oath as to the real reasons they resigned, as in the 1MDB trials.

@fairplay If a director resigns from one board for health reason but stay on others, it is usually over disagreement with management and health or other business commitments ares the convenient excuses without having to explain why.

@fairplay If there has been no shareholders' approval, what are you going to do about it? Very simple actually. 1.Just need to determine whether the exercise required shareholders' approval and if it did, was it obtained? 2. Is it a related party transaction? If yes, was it approved by shareholders in general meeting as required by the law and listing rules? 3. Are the BOD authorised to approve a related party transaction on their own? 4. Is this a disclosable/material transaction that requires immediate disclosure? 5. Can this material amount be buried in a one sentence footnote in the accounts without proper explanation by management?

Like what they say about our government, voters get what they voted for, same for shareholders, who voted for the directors.

Have proper due diligence been done on getting a foreign listing? Can forget about Singapore, where all the Big 4 bank controlled closed end funds have gone into members liqudation some time back without any new listing. For Hong Kong, the present fund size does not even qualify, and who would need to have spent more than $6 million in professional fees to find that it is a dead end?

cnman53 This is called transparency, or the absence of it. How many shareholders are aware that the company is going to be saddled with the bill all these years?

For anyting sensitive and for private consumption only, use the i3 Messenger app.

Just a word of caution for everyone, this is a public blog and TTB has been known to take critics to court for defamation and won. So watch your language, and don't post any thing defamatory that cannot be proven in court. Words like under-performing in particular. Must specify the periods referred to, or against what benchmark.

I have somehow figured out why some of my posts have mysteriously disappeared. It seems I cannot include direct links to outside web sites in the post, so I am trying to trick it by omitting the www prefix to the web page and just post it as "icapital.my/icapital-biz-berhad/" Type that in the search without the inverted commas, and Google will be smart enough to direct you to the web site. Look under "in the Media" and 11/07/2012 for the relevant announcement.

For prima facie evidence, take a look at the announcement by iCap on its website on the 7 Nov 2012, which is the announcement by TTB about Capital Dynamics receiving Sc's approval for the dual listed fund, and compare it with the corresponding Bursa announcements by the company during that period. There is no such announcement by iCapital as required by the listing rules, unless it can be deemed not price sensitive and hence inconsequential.
In the announcement, it was mentioned that "the fund will be listed in both Kuala Lumpur and another country. There are ambiguities here. If iCapital was the fund he has mentioned, then since it is already listed on Bursa, the proper statement should be the Company will also be listed in another country. As it stands, the reasonable interpretation is that this will be an entirely new fund, and has nothing to do with iCapital itself. This then also tied in with Capital Dynamics making the announcement, and not the company.
In addition, the dual listing proposal is conditional upon no change in the BOD at the 2012 AGM, since the AGM, there has not been a single announcement by the company through Bursa of any further progress of the dual listed fund proposal, except some large expenses of $8.755 million was booked in the Feb 2020 quarterly results under professional fees and other operating expenses under footnote B1. There was no explanation of why this sudden jump in expenses was incurred and what was it for, until the 2020 annual report under footnote 12, as reimbursement of expenses incurred by the fund manager by the company.

This reimbursement of expenses concerns corporate governance of the company and is more important than performance or portfolio allocation, which has been mandated to the fund manager and can be subjective and discretionary. Only need to determine whether it has been properly authorised, since payment is already made? As I have mentioned previously, COL better get someone to attend the AGM to properly look after their interests, if they have not asked questions already.

The right to inspect and make copies of the constitution by shareholders is provided under Section 48 of the Companies Act 2016 https://www.ssm.com.my/Pages/Legal_Framework/Document/Act%20777%20Reprint.pdf
The standard charges for a copy is $3 (at least that's the price last time when I bought a copy in 2012) Any excuse that the company's consent is needed before you can inspect or get a copy is just a delaying tactic by management and is strictly against the Act. One can just go to the Registrar's office and get a copy in person on the spot, and any refusal will then be on record.
From public documents available, SC approved the application for dual listed fund by Capital Dynamics, and not the company, and from explanation given by TTB, it appears to be for a new fund and not iCap, but he failed to clarify how this new fund is supposed to help narrow the price discount, other than allowing investments in foreign markets? There is no necessity for a foreign listing to attract foreign investors, as they can do so freely, except the fund manager is trying to make things difficult for them. From what I can gather from the M&A, all references to the activities and objectives of the company are premised on being listed on Bursa. Even though it allows investments in foreign securities, there is no mention of getting the company listed overseas.
Shareholders should question the history of the transaction from its initiation to payment, as it stretches over quite a number of years and shareholders have completely no idea that they are going to have to pay for it. Write to the BOD before the meeting, so that they can prepare the answers before hand and not have any excuses not to answer them at the meeting.

@cnman53 Me too, same experience of posts disappearing even after repeated attempts.

@cnman53 Check your messenger app re Boardroom Share Registrar. Thanks

@cnman53 A fiduciary is held to a higher standard than just adhering to the laws. It requires acting in the interests of the company and stakeholders at all times.That's where the fit and proper person rule is generally adopted for those needing a licence to operate in the capital markets, to cover things not specifically covered by the various laws.

@cnman53 Two common measurements of fund manager's performance are the Manager's alpha and Sharpe Ratio, which can be easily calculated and understood by most investors with some knowledge of portfolio management.

For a seller at the current price, he is only getting slightly more than the cash backing of the shares, the rest of the share portfolio is given away as freebie to the buyer. So even if they want to sell, they are trapped.

@observatory Using market price as the yardstick, a potential buyer (or the company itself) buying at $1.91 is looking at a potential upside of 48% if he can cash out at $2.83 in order to entice him to buy the stock. This is the cost of equity capital for shareholders. So is iCap a cheap or expensive stock? Depends on whether you are a buyer or seller.

dumbMoney @ cnman53 and observatory - All the comparisons above are based on NAV returns for iCap. Other than the brief period when the shares traded above NAV, what you see is not what you get if you want to sell the shares. Realistically, the only chance now you can realise NAV is when TTB calls it quits and liquidate the fund, pay a special dividend or do a share buy back.
TTB continues to justify holding all that cash by equating it as an almost free (FD rates - tax - management fee is around zero) call option with no risk of permanent capital loss. He is supposed to be managing a value fund, not a capital guaranteed fund. Shareholders don't expect him to be able to walk on water and make returns without risk. It is like the only sure way of not getting infected with the virus is to stay at home, but without being able to go out and work (WFH excepted), you have no income. The moment TTB exercise his call option and buy shares, he then runs the risk of permanent capital loss as per his argument. Risk is only the down side of volatility, the other side is gains. The name of the game is managing volatility, not avoiding it altogether, or as observatory would say, just park your money in FD, no need to pay tax and management fee then.

@cnman53 Please check your i3 messenger app for p.m.

@cnman53 The historical comparison of fund performance is always against the KLCI, which don't adjust for dividend yield of the component stocks. So it has to be against the total returns indices, but this is not generally available, even though Bursa has it somewhere in their database. I used the Dow Jones Malaysian total market total returns index, but it is no longer available now. The null hypothesis is manager's alpha, the ability to beat the benchmark after expenses.

@fong7 Seriously, should shareholders foot the dual listing expenses when they were not even aware that they are liable for it and gained absolutely zero from the exercise? The least they can do is to query BOD how and why this came about, and if the answer is not to their satisfaction, try to claw it back. There is such a thing as breach of fiduciary duty by directors. Like they say, if shareholders allow this to happen in silence, they only have themselves to blame. This applies to COL in particular, as their share of the bill is more than a million. Definitely worth their while to establish whether they have a cause of action against the directors. Under the current code of corporate governance for public company directors, they cannot afford to be just a rubber stamp anymore, as they can now be subject to public reprimand, fine and even jail term for offences under the Act even in a non-executive capacity. Better to resign than to be dragged in.

The dual listing was mooted by TTB back in 2012 during his defense of his position at the AGM. Why was it kept off the books until now? Was it the intention for the fund manager to bear the expenses at that time, then why only pass it on to the company now? If the two independent non-executive directors actually resigned over this, shareholders have a corporate governance problem on their hands.

@cnman53 I don't mean asking other professionals for advice on investment, but specifically on whether the dual listing expense has been properly authorised by the board and shareholders have been informed accordingly, and not something sprung as a surprise in the footnote in the annual report. It is stated as an reimbursement for expenses incurred by the fund manager, so the question is, was it properly authorised by the board of directors? This is where one may need to refer to the company's M&A/constitution, SC and Bursa listing rules, and things may not be that straight forward for those not professionally trained in corporate governance matters.

Because the cash call option has no expiry date, no fixed strike price, almost zero opportunity cost (FD rates minus tax minus management fee) and can guarantee against permanent capital loss, why not just keep everything in cash and wait for buying opportunities to come along?, Portfolio management cannot be simpler than this!

Compare what TTB said about cash as a call option https://www.youtube.com/watch?v=dAnqdhJiej0 with what the whole article actually said https://www.businessinsider.com/cash-as-a-call-option-2012-9

@cnman53 You can write directly to COL for their comments at this HQ address https://www.citlon.com/ or the nearer Singapore Office here https://www.citlon.com/contact-us.php

@cnman53 To be listed on a foreign exchange, the fund must comply with Part 3, Chapter 15.01 of the Prospectus guidelines for Collective Investment scheme by the SC https://www.sc.com.my/api/documentms/download.ashx?id=ce638a11-0cb1-4937-b9d2-639f980a5773 Check with a lawyer or company secretary on the implications if this is not done?

@cnman53 Even though this blog don't allow direct attachment of graphics and documents, unlike the i3 Messenger app, you can always store it on your online storage such as dropbox or google drive and then post the link here.

A professional money manager said these:

In the 9 Nov 2012 edition of the Star, TTB said “Despite the fact that the FBM KLCI pays dividend, its performance has lagged that of iCapital.biz, which is a non-dividend paying fund, as can be seen from its first annual report of 2006. If the KLCI pays no dividends, it underperformance would be even worse”

In an interview with Tee Lin Say of the Star published on 10/5/2014, this is what was reported: “For the record, iCapital.biz recorded a compounded return of 13.78% a year since its listing in 2005 versus 8.17% for the KLCI. If the cash portion of RM 240 million is removed, that return would be much higher”.

The only thing professional about the money manager is his license from the SC. Big deal, when I was holder of a dealer's license under the Act, I was exempt from the need of another license to give financial advice.

Shareholders unhappy with having to foot the bill can always lodge a complaint to Bursa and SC for them to have a look at the goings on in the company.

In addition, if the dual listing proposal is likely to affect the share price (if not, why bother?) then the company is obligated under listing rules to make a public announcement, which it didn't. This is a clear infringement of the listing rules and the directors and management are liable.

I have checked back on the company's announcements to the stock exchange during the relevant period of 2012 when TTB mooted the idea of seeking a secondary foreign listing. There was no such announcement. As far as shareholders are concerned, there was no official confirmation that it was the company's proposal for such a move and they should ask to see the record of the board of directors resolution for this to make it official and to pay for it. Without this, it will be questionable to be now settled with the expenses of this failed exercise years later.

For the dual listing expenses, get a copy of the company's M&A/constitution, which can be purchased for a nominal sum from the company secretary/registrar's office for a nominal sum, and check whether getting a foreign listing is part of the authorised business activities?

@observatory, please check your i3 Messenger app for p.m.

@observatory. Just to clarify, any member, regardless of his or her shareholdings, can nominate one or more persons, who need not be a member of the company, to stand for election as a director at the AGM as per the listing rules. In order for TTB not having to carry out his threat to quit if the proposed directors get elected, he will mount a PR campaign and proxy solicitation to block the vote, that's for sure. So the person so nominated will need to also submit a CV to show why and how he can contribute to the better corporate governance of the company. Even if the vote succeeds, TTB can still resign on paper, but be persuaded by the BOD to remain, so nothing will change unless the BOD also changes.