Protecting minority interests
Source: Financial Gleaner, October 13, 2000
I am writing to express my concern with the proposed change to the shareholdings in NCB
Bank after the reorganisation plan submitted to shareholders at the informal meeting on
Monday 25th September.
The proposed allocation to NCB Bank Ltd of 75 per cent plus 1 share causes great concern,
as it transfers to the purchaser of these shares too great a control of the company, which
could be to the severe disadvantage of the minority shareholders. The powers arising from
such control, if my understanding of the company law is correct, means that at a future
date the new owners could.
1) Amend or change the Memorandum and Article of Association in any manner they desire, at that point the minority shareholders would need to resort to the courts to stop them. The minority shareholders should not have to resort to such strategies to protect themselves. Seventy five per c ent plus one share represent a clear and present danger to the minority and should not be allowed.
2) The Financial advisors HSBC we were told in the meeting felt it was necessary for such a share structure in order to interest an investor, who I assume will be non Jamaican. All the more reason to signal caution, as they may have an agenda quite inimical to the minority shareholder interest when in control or in times of crisis whether in Jamaica or within their own company.
My suggestion to address this problem is to require the purchaser of the 75% plus 1 shareholding to make the same offer to all minority shareholders (i.e.) 24.99%, giving those minority shareholders the opportunity to sell at the same price and time as Finsac. While those wishing to retain their shares can do so.
I believe this represents a fair preposition to existing shareholders without restraining or shackling Finsac in their objective to restructure NCB Bank. By copy to this letter I am passing on my suggestion to the other material parties involved in this matter.