Minority shareholders cry foul over Overseas Realty dividend payment issue
View(s):Minority shareholders are protesting against a decision by the Overseas Realty (Ceylon) Plc not to pay a dividend to its shareholders. The protest has been conveyed by minority shareholder and prominent campaigner for minority rights K.C. Vignarajah in an August 31 letter to S.P. Tao, company chairman with copies to the Treasury Secretary and heads of the Securities and Exchange Commission and the Colombo Stock Exchange.
He referred to a letter published in the Business Times on August 23 by minority shareholder C.A.A. Gunaratne in which the latter stated that for the year ending December 31, 2019, the board of directors declared a dividend announcing the date of AGM, XD date and the date of payment.
“Then due to the sudden outbreak of the COVID-19 pandemic in early March 2020, the company postponed the date of the AGM, XD date and the date of payment of the dividend. Subsequently the board of directors at an online meeting with majority shareholders has cancelled the dividend declared and announced in two occasions,” the letter has stated. Mr. Vignarajah said he did not receive any notice of the meeting and thus could not participate at the purported AGM as well. The IMS (independent minority shareholders), are a most socially important and catalytic segment of investors/shareholders in building a broadbased equitable Enterprise Society (ES) which is critical at this juncture for development of the country.
“We regret to note that neither you nor your representative have addressed the serious concerns of the IMS that the company’s action is tantamount to market manipulation and insider dealing which deprived shareholders of approximately Rs. 5.25 loss per share value inclusive of earlier announced cash dividend of Rs. 1.25 per share,” the letter said.
To say the least, there is serious mismanagement. It is yours and the Board’s responsibility. You have stated that a “majority of shareholders voted against the Resolution for the …. dividend of Rs.1.25 per Ordinary Share …. as recommended by the directors”. What is more curious and shameful is that those four major shareholders who voted against were apparently nominees and/or Related Parties (RP) of the Controlling Interest (CI). The directors who took the decision and declared the dividend, turned turtle and voted against it at the purported AGM. It is against all ethics, morality and regulations of an Enterprise Society (ES),” Mr. Vignarajah’s letter said.
He said if there is an anticipated cash flow problem now the major shareholders who voted against the dividend need not take out the cash dividend, but convert the dividend amount due into a loan to the company. In this manner they would maintain the spirit of ensuring that the trusting IMS and the investing public continue to have faith in the spirit of a fair and equitable share market. This would be a commendable act in contrast to certain other wrongdoing companies which have defrauded shareholders, in many innovative ways, Mr. Vignarajah’s letter said.