What do Investors Expect from Asian Board of Directors ?. Responsibilities of the Board ?. Be independent of any individual investor or group of investors. Protect the rights of all shareholders, particularly minority shareholders.
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What do Investors Expect from Asian Board of Directors ?
On February 1999, Directors of Samsung SDS issued bonds with warrants (BWs) to the chairman’s son at a lower market price so that other SDS shareholders were diluted
The warrant exercise price was U$5.5 and market value at the time of issuance was U$42 on the Grey market where unlisted shares are trading. The capital gain for Mr. Lee was US$116 million.
People's Solidarity for Participatory Democracy filed an injunction to nullify the bond issue
The Chairman’s son held four money-losing companies; e-Samsung (75%), e-Samsung International (60%), Secui.com (45.5%) and Gachi.net (57.2%).
Directors of the various Samsung Group of companies approved the purchase of the shares in those companies.
Cheil Communications paid U$15.4 million
Samsung SDI and Samsung Electro-Mechanics each bought U$2.8 million worth. The rest of the shares were disposed to Samsung SDS.
Gachinet' shares were bought by Samsung's financial companies such as Samsung Card, Samsung Capital and Samsung Securities while S1 bought Secui.com
In November 1999, the directors of Hong Kong listed, Pioneer Industries International sold its key assets, shares in other listed companies and US real estate, to an offshore company linked to its two controlling families for less than a third of the market value at about US$68m.
The directors had also received a 200% raise in performance-related pay despite the company’s net loss for the fiscal year ended March 1999.
The founder of the Halla group happens to be the younger brother of the head of the Hyundai. After the Halla collapsed in 1997, Hyundai’s minority investors were shocked to find that the directors of Hyundai had provided Halla with at least US$1 billion in loans and debt gurantees.
The directors of Hyundai Motors approved the purchase of 16% of e-HD.com, a money losing dot.com company from the son of the chairman. The purchase amount was app. US$ 1.5m
Philippine National Bank
In 2000, a crony of President Estrada was allowed to illegally accumulate PNB shares to a rumored 46% level and gain four board seats.
He purchased his shares in the names of nominee accounts and shell companies, to circumvent regulations prohibiting individual shareholding more than 20% of a bank as well as requirements to make a general offer to all minority shareholders. The government authorities failed to enforce regulations. The Ministry of Finance and Central Bank aided and abetted the process
No shareholders meeting was ever held to approve the changes in the board of directors until the Annual General Meeting in May
Sime Darby Pilipinas(SDP) was 60% owned by Sime Darby Far East, which in turn, a subsidiary of Sime Darby Berhad.
SDP had in 1996 accumulated a significant amount of cash of approximately US$68 million from the sale of its tyre production business.
In May 1998, the directors of SDP approved the acquisition of a money-losing subsidiary of the parent company, LEC Refrigeration in the United Kingdom, for US$31m.
Sime Darby Far East was using the assets of SDP to prop up the Sime Darby's losing operations.
Templeton filed suit and also for a restraining order against the transfer of the assets to the United Kingdom.
In November 1997, the directors of United Engineers Malaysia (UEM), announced that it had borrowed money to purchase a 33% stake in its parent company Renong from Renong's major shareholder for US$703 million.
No Disclosure was made when UEM’s stake in Renong exceeded 5%, although it is required under Malaysia's securities regulations
No general offer was made to other shareholders although the purchase also triggered the takeover code.
Waiver from having to make a general offer was granted by the Securities Commission to the company.
The deal saw UEM effectively bailing out Renong at the expense of its own shareholders.
Despite strong objections from independent shareholders , SK Telecom (SKT) keeps trying to support cash-strapped ailing sister firms by financing projects or selling a profit-making businesses at ludicrously cheap prices.
SKT paid about U$125m in 1998 to buy a new building built by SK Construction, a non-listed company which is owned by SK affiliates and Chairman Choi.
SKT now intends to build another new building to be constructed on a site owned by SK Global, a trading arm of the SK group, at an estimated cost of $337m. It also sold information technology-related assets to SK C&C at book value. It then awarded SK C&C a US$833 million 10-year contract.
Two senior managers at the bank, lent about a third of the bank’s total loan portfolio to themselves. They also lent to senior politicians, embezzled the bank’s funds and fabriacted its accounts.
Thailand’s central bank had to spend large amounts of public money to try and bail it out rather than let it collapse with around US$3 billion in bad debt.