EPF: Right to vote on merger critical to protect members’ interests

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KUALA LUMPUR (Sept 8): Being the major shareholder of both RHB Capital Bhd and CIMB Group Holdings Bhd, the Employees Provident Fund has the right to vote on the merger between the two banking group, said the provident fund’s CEO Datuk Shahril Ridza Ridzuan.

Shahril stressed that EPF only wished to remind the companies involved that the provident fund has 14 million members to protect.

"All we ask is for the companies to be mindful that EPF represents 14 million members and that our right to vote is critical to protect the financial interests of our members," Shahril .

"For us currently, it is premature (to comment further) because we are waiting for the companies to propose their schemes," he added.

Last Friday, the EPF had lambasted certain RHBCap board members for divulging confidential information on discussions over the vote on the merger between RHBCap and CIMB Group, saying it had called for an investigation to be conducted on the matter.

In a strongly worded statement issued by EPF’s Corporate Affairs Department, the provident fund deemed the actions of certain board members as a “gross misconduct” and a “clear breach of trust and professional duty.”

The fund also said the move to divulge confidential information was a pre-emptive attempt to prevent an impartial discussion on the legitimate voting rights of a shareholder.

Shahril said EPF had called on the RHBCap board to investigate the matter and take necessary action.

The Edge Financial Daily had reported last week that an email document had been circulated among directors at RHBCap, urging the banking group’s directors to object to the submission of an application to Bursa Malaysia for a waiver that would allow EPF to vote on the deal.

Among the reasons sighted in the email were that it was “inconceivable” that EPF had not been engaged in prior discussions relating to the proposed merger.

It had outlined that it was expected that key officials in EPF were consulted on the proposal before it was publicly announced, not only for the successful completion of the proposed merger but also prior to relevant parties spending time, effort and expense.  

The document also said that EPF should apply for the waiver itself, rather than RHBCap, and that the transaction should be administered under the major disposal rules in Chapter 10 of Bursa’s listing requirements.

This would entail a higher approval threshold of 75% votes at the extraordinary general meeting compared to the current proposed structure, which requires only 50% plus one share approval threshold.

The Edge Financial Daily had reported that one of the proposed merger plans being considered entailed CIMB Group relinquishing its banking business to RHBCap through the issuance of new shares, contrary to belief that CIMB Group would be the acquirer in the merger and would be the holding company.

The daily also learnt that RHB Islamic Bank would subsequently sell its entire business to CIMB Islamic Bank in exchange for shares.

The final step of the proposed merger will see EPF making a takeover offer to buyout Malaysia Building Society Bhd (MBSB), after which MBSB’s business will be injected into the Islamic bank.

EPF holds a 64.6% stake in MBSB and is the largest shareholder in RHBCap.

Middle Eastern company Aabar Investments PJSC holds 21.2% equity in RHBCap and is looking to clinch an offer price of RM12 per share for its stake in RHBCap, 31% higher than its current price of RM9.12.