Diamond Trust (DTB) held their AGM at KICC on Friday May 30. It was quite routine and the Chairman rapidly breezed through the vote items – annual accounts, re-election of directors, auditors’ yada, yada.
Extraordinary items were:
Expansion into East Africa: shareholders voted for the company to take up rights in DTB Uganda (probably cross 51% and making that a subsidiary) and to set-up in Burundi. Questions were asked on if more capital would be called upon from Kenyan shareholders and the difficulty of expanding into an unstable, war-torn, francophone country. The Chairman answered that the funds from the last rights issued (2007) were being utilized for the expansion and they have researched and visited the country which is now stable part of the East African community. He added that new CEO identified for Burundi is multi-lingual as are some Kenyan staff that may join the burning office.
The hot button issue of the day was the various amendments to the companies’ act that would enable the company to sell shares of dormant investors. The motions targeted shareholders who have ceased to be active; i.e. forwarding address, no dividends banked or bonuses taken up, mail returned etc. for over six (6) consecutive years. The company loses a lot of money in a bid to ‘serve’ these shareholders and was making moves to clean up their share register.
Steps followed would be to:
- Identify the shareholders dormant for six years
- Publish their names in the east African media, calling on these individual/their relatives to step forward
- For those who have not responded the company will then apply for permission to sell these shares at market rates
- Proceeds of sale will be held in trust for another three years
- After this (nine dormant years) such funds not claimed will revert back to the company’s shareholders funds.
The directors stressed that they were reluctantly making these moves in a bid to be on par with other companies (including yet to list Safaricom) and it would also keep them a step ahead of the government who have already made into law that dividends unclaimed seven years will revert to the Government (CMA investor compensation fund)
Several shareholders expressed their concerns and objections, saying this was a dangerous precedent, and citing (among other reasons);
- shareholders who were out of the county directors said they should just forward their correct address to the registrars
- shareholders who had died their dependants should contact the company
- shareholders whose shares had been lost to ‘rogue’ brokers that was a matter for the regulators
- shareholders who had not disclosed holdings to their families, and perhaps died
- company should only focus on unclaimed dividends, not selling shares
- shareholders with no bank accounts
They also came up with suggestions including DTB to
- provide a beneficiary form for investors to fill out beforehand (directors’ answered that it was a company’s act matter)
- DTB to buy more shares with unclaimed dividend for dormant shareholders (an investment decision that was every risky to the company)
- DTB not to sell the shares which may bring lawsuits in future, but instead ring-fencing the dormant shareholders and treating them differently (the laws of Kenya require all shareholder to be served equally (Mobitelea, anyone??)
DTB’s legal adviser, lawyer George Oraro explained that shareholders had ample time (nine years) to sort out any dormant share matters and that DTB would even exceptionally consider cases where investors with were not able to sort out their affairs in time. He added that in future the CDSC (not company registrars) would be the custodians of all share accounts
The motion was eventually passed
Goodies: Tote bag (with DTB cap, spiral notebook) lunch box (juice, water, apple, samosa, drumstick, chicken pie)
Hat tip: Coldtusker was in the house and asked some pertinent questions.