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The
Kuala Lumpur Stock Exchange has
relented to requests from the
public listed shipping companies
by modifying two new rulings under
its Listing Requirements that were
seen as hindering the development
of shipping companies in the
country.
Responding
to complaints raised by the
shipping companies on Chapter 10
(that requires companies listed on
the Exchange for full disclosures
relating to acquisition of
assets), KLSE has agreed that the
transactions (involving
acquisitions of vessels) would be
treated as transactions entered in
the ordinary course of business of
the companies.
Such
transactions need not obtain
shareholders approval or are
required to make any announcement.
The
ruling under Chapter 10 (aimed at
protecting the interests of
minority shareholders) requires
that for any transaction that
exceeds 25 per cent of the
percentage ratio (normally
referring to the Net Tangible
Assets) the company is entering
into, it must secure shareholders
approval in general meetings and
that circulars sent to
shareholders before the general
meeting.
Such
requirement, though well intended,
was viewed as inconvenient to
shipping companies since when a
contract is entered into purchase
a vessel, the company would
normally sign a MOA with the
prospective seller (who are
usually foreigners).
The
MOA would generally stipulate
internationally adopted terms and
conditions before the transaction
is finalized and generally
accepted that only the board
approval (and not from the
shareholders) would be needed to
finalise the transaction.
Shipping
companies pointed out that the
ruling under Chapter 10 could
defeat the purpose since the due
diligence exercise involved in
obtaining shareholders approval
would normally take longer time
than expected to complete a
transaction.
This
could result in the company losing
the opportunity to acquire the
right vessel, at the right time
and the right price in the light
of the fluctuations in the S&P
market.
Another
major contentious issue (para15.05
(b) of the Listing Requirements)
that limited a director of listed
shipping company to 15
directorships in subsidiary
companies has also been removed.
Under
the relaxed provision directors of
listed shipping companies the
number of directorships in
subsidiary companies that total 15
will be treated as one. (The
relaxation will not apply to
directorships held in listed
subsidiary(ies).
Shipowners
generally adopt the “one
company, one ship” approach for
financial, legal and other
operational reasons. The approach
also limits the liability of each
vessel of the company’s fleet,
for instance in arrest of ship.
The
Malaysian Shipwowners Association
had pointed out to the Ministry of
Finance (and the Ministry of
International Trade and Industry)
earlier this year that the
approach was to ensure that each
ship of the company’s fleet is
legally separate but shares the
same board of directors.
The
association said it would not be
practical for shipping companies
to appoint nominee directors since
directors of shipping companies
shoulder heavy responsibilities
which cannot be simply
delegated.
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