ICAP's 6th Annual General Meeting (Part 2)

The shareholders continually stood out to inquire more questions during the agenda session. One of the shareholders asked what is the rational that the fund is holding so much of cash as reported by the annual report. TTB was not pleased that the shareholder was asking this question due to he not reading the annual report of which at page 3 has stated that “…your Fund sold all of them before 15 April 2010 as it wanted to raise its cash holdings It was extremely worried over a full-scale currency and trade war breaking out between the US and China. Such an outbreak would be extremely harmful to the global economy.” He asked the shareholder goes to read the page himself about the reason why the fund is holding cash.


Another shareholder further request TTB should reduce the cash holding at a high level at RM103million, and he wants the fund to utilise the cash efficiently rather sitting it in the fixed deposit account. TTB then said as the US unemployment is still high at around 9% and he is troubled by the US politicians might try to convince the US voters that the high unemployment rate is caused by the Chinese’s manipulation of the yuan currency and thus the threat of trade war due to the friction in between the US and China still exists, especially during the period that the US is going to have a state election at end of this year. Anyhow, TTB mentioned that if the threat of the trade war fades away, he will try to seek opportunities with good bargain prices and invest the excessive cash.


One of the interesting questions being raised by the shareholders was that why the Company hires Harun Bin Halim Rasip (“Harun”), who is the co-chief executive officer of Integrax Berhad (“Integrax”), as the independent non-executive director. As the shareholders are concerned about the conflict of interest in between Integrax and ICAP since ICAP has substantial investment at Integrax. The shareholder further pointed out that to have an Integrax’s CEO in the board of ICAP, it may cause a perception that ICAP could be using insider news of Integrax to trade. For my opinion, conflict of interest happens not only possible that ICAP to take advantage of Integrax by using insider news to trade, it could happen the other way that the related party to Integrax might also try to influence ICAP to invest more into Intregrax. Though TTB and Harun tried to explain that the fund manager’s investment decision would not be affected by the Board of ICAP and they further provided other reasons to justify the conflict of interest is minimal, I was not convinced by the justification. Anyway, it’s a norm that a person can be directors for multiple companies due to Bursa Listing Requirement of which allows him to do so. Hope Bursa can amend such requirement to curb the conflict of interest incident.


Before the agenda session was going to through the voting process, there were 3 more issues being raised by shareholders of which I was also quite interested to. The 3 issues were the update of the approval of the relevant authorities to ICAP’s proposal to invest overseas, the discount of market price to net asset value and the dividend policy.


(to be continue)