This article first appeared in The Edge Malaysia Weekly on October 24, 2022 - October 30, 2022

It is only right that institutional shareholders such as Permodalan Nasional Bhd (PNB) and the Employees Provident Fund (EPF) take the lead in shareholder activism. Such a task cannot be left to the minority shareholders.

But the noise coming from institutional shareholders needs to be louder if there is going to be any impact on improving shareholder activism and governance in corporations.

For instance, PNB’s plan to vote against a resolution allowing Hong Leong Bank to issue more shares in the financial institution’s upcoming annual general meeting (AGM) would have gone unnoticed had The Edge’s CEO Morning Brief not picked it up from the fund’s website.

There are a total of nine resolutions in Hong Leong Bank’s AGM on Oct 27 and PNB is only opposing the motion allowing the bank to issue more shares under the Companies Act. The reason given by PNB is that there is “insufficient disclosure on the purpose and utilisation of proceeds from the proposed share issuance”.

Generally, most companies seek a blanket approval from shareholders to issue up to 10% new shares during AGMs. The reason is because the company need not go back to shareholders for approval should it undertake a corporate exercise or employee incentive scheme that involves the issuance of new shares.

Nevertheless, PNB is right in not leaving anything to chance. In fact, it is not only at Hong Leong Bank that it is opposing a resolution to issue new shares. It has a track record of objecting to similar resolutions in other listed companies.

Another resolution that PNB tends to object to is the re-appointment of independent directors who have served more than nine years on the board. In line with good corporate governance, independent directors should only serve for nine years; anything more is viewed as being not so “independent”.

PNB’s move to object to some resolutions in AGMs is good. But for it to gain traction, it needs to make more noise so minorities can take note.

The company, taking cognisance of PNB’s stance, should perhaps be more proactive and provide more information on why it is seeking blanket approval to issue new shares.

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