Why I reported my shareholdings Late

Why I reported my shareholdings LaBy

By Koon Yew Yin(Guest)

Posted on May 13, 2016

Since The Star and Nang Yang Siang Pao published, in 
the last few days, about my late reporting of my 
shareholdings in Latitude, VS and Focus Lumber, many
 people including 
news reporters wanted to hear my side of the story.

The reason why I reported late is because of the cumbersome system of reporting to 
the Bursa Malaysia. 

To fill up Form 29A & B requires details such as the number of shares and the date
 I bought or sold. 

Moreover, the buying or selling price frequently changes. To report the price I have
 to work out the average price I traded in the whole day. (To read about share investing in Chinese, please go to www.stock369.net to find out)

To complicate the whole issue, I have margin accounts with TA Securities, Maybank, Kenanga, CIMB, RHB, HLIB, Alliance and Affin. My total margin loan is about Rm 150 million, my average daily 
trading exceeds Rm one million and the number of shares I buy and sell every day is quite many.

As I have so many trading accounts and I am 83 years old, I do not key in my orders to buy or sell myself. I simply give instructions to my remisiers to buy or sell and at a certain price. I have to watch to see the number of buyers and sellers so that I can change my previous instruction in order to succeed in my buying or selling. For example, if I see there are a lot of buyers willing to take the sellers, I will offer a higher price if I want to buy or sell. If there are less buyers, I will have to reduce my price offer to buy or sell.

A few times I made the mistake of instructing one remisier to sell in the morning the same share that I instructed another remisier to buy in the afternoon. In fact, the authorities had reprimanded my remisers who were involved in these transactions that may seem to mislead investors. Those were honest mistakes.

As a result of the above difficulties, I waited until I have sold enough to own less than 5% of the total issued shares of the company. I just have to fill up one form to state that I have ceased to be a substantial shareholder without the requirement of stating the dates and the prices I sold.

I assure you that I have no intention to mislead people to lose money. I have never recommend readers to buy any share if I am selling.

As you know, I have written many articles about Latitude, VS and Lii Hen which have gone up a few hundred per cent in the last 2 years. If you have followed my recommendations, you would have made huge profit. Of course, if you are too greedy and did not sell, you cannot blame me.

Focus Lumber:

In fact, since The Star published with my big photo under the title “Koon discloses stake buy after 4 weeks” on 11^th May, 2 days ago, the price of Focus Lumber went up 7 sen and 17 sen respectively with unusually large volume transacted.

In this case, people who have bought earlier would have made some paper profit but those who sold their holdings earlier would regret that they are missing the chance of making more profit.

Human Nature:

After having given more than 300 scholarships to help poor students to complete their tertiary educations, less than 10 scholarship recipients have come to thank me. The rest of the students continue to complain that the amount I gave them is not sufficient. That is human nature!

Graduates do not need to pay back the money I spent on them. But before they accept my scholarship offers, they must promise me that they will help poor student when they are financially solvent. In this way, after I die, I hope many of my scholarship recipients will continue to do charity on my behalf.

I have pledged to donate Rm 50 million to the Penang Government to build student hostels. All the Architectural and Engineering plans are being approved and tenders will be called soon.

I have written in my WILL that all my remaining assets will be for charity to help poor people after I die.

Key officials delayed their announcements on dealings in securities

Key officials of other companies have also delayed their announcements on dealings in securities

HIGH profile investor Koon Yew Yin has been creating headlines for all the wrong reasons recently.

The 83-year-old, who has amassed a huge following among the investing fraternity, is in the hot seat for his late disclosures of the disposal of his shares in a number of companies namely V.S. Industry Bhd, Latitude Tree Bhd and most recently plywood firm Focus Lumber Bhd.

To be fair, Koon who is the founder of construction groups IJM Corp Bhd, Gamuda Bhd, and Mudajaya Group Bhd, is not the only one.

(To read about share investment opportunities in Chinese, please go to www.stock369.net to find out)

While the rules state that substantial shareholders must notify a company within seven days of the date of change in his or her shareholdings, there have been cases in which this has not happened.

Koon and his trades aside, one case in point is Chinese edible oil company XingHe Holdings Bhd.

Recent filings to Bursa Malaysia show that disclosures by the company’s controlling shareholders and directors were made way after the stipulated seven-day requirement.

Last month, XingHe said its director Ng Min Lin had disposed a total of 21.4 million warrants on April 1, 2015, but notice on this was given to the company on Apr 29 this year - a year after the selling was done.

The stock had shed over 30% over the one-year period.

Another two directors of the company, Ma Guoliang and Li Hui Jun, also traded in the firm’s warrants between the period of April 1, 2015 to June 8 2015, but only gave notice of the trades recently.

It remains to be seen what action will be taken.

It is understood that the Companies Commission of Malaysia (CCM) is the authority on this, given that the obligation of a substantial shareholder to notify the company of the changes in his shareholdings within seven days is set out under sections 69E, 69F and 69G of the Companies Act, 1965.

In terms of the rules, once a substantial shareholder informs the company of his shareholding changes, the company must make an immediate announcement to Bursa Malaysia pursuant to paragraph 9.19 (17) of the Listing Requirements.

If there is no compliance, the onus is on the CCM to take rightful action.

In 2011, Datuk Low Tuck Choy, a substantial shareholder of Ho Hup Construction Bhd was charged with failing to notify changes in his interest in the company within seven days as required under the Com­panies Act 1965.

Notably, the Securities Commission also monitors changes regarding interest in securities held by directors and CEOs of public listed companies.

Besides XingHe, a random search on Bursa Malaysia’s website also revealed another example of a company where its substantial shareholder did not comply with the disclosure ruling, namely timber and wood-based product company Priceworth International Bhd.

According to its most recent filings to Bursa Malaysia, it appears that its substantial shareholder, Lim Nyuk Foh, had missed announcing his latest acquisition within the necessary disclosure period, announcing the purchase of 4.5 million shares made last December, only earlier this month.

Lim, who had prior to this made announcements of his buying and selling of shares in the firm accordingly is the managing director and founder of Priceworth.

In April 2015, he emerged as a substantial shareholder in property company Bertam Alliance Bhd after he bought an estimated 12 million shares from the open market.

He has since become managing director at Bertam.

Coincidentally, filings to Bursa Malaysia show that Lim also missed announcing his latest purchase of shares in Bertam within the required time frame.

On Jan 7, he acquired 3 million shares in the firm but only disclosed the buying on March 15.

In Koon’s case, V.S. Industry had on May 4 announced to Bursa that he had ceased to be a substantial shareholder in the firm after having sold some 44.08 million shares between March 18 and April 11.

Prior to that announcement which was made only several weeks later after the stake sale, Koon was the third-largest shareholder of the electronics manufacturing services provider with an 8.8% interest.

As for furniture manufacturer Latitude Tree, Koon started accumulating its shares starting in October 2014 and finally emerged as a major shareholder with a 5.01% stake.

He ceased to be a substantial shareholder in the firm at end-November 2015 but only gave notice of his disposals two months later.

Finally, on Wednesday, Bursa filings showed that Koon had bought a 6.71% stake or some 6.93 million shares in Focus Lumber on April 11 with the company saying that it only received notification from Koon on May 9 regarding the purchase.

The Focus Lumber stock is up about 13% since the announcement of Koon’s emergence in the firm.

Shorter disclosure time frame

Areca Capital fund manager and CEO Danny Wong notes that timely disclosure is very important to ensure fairness and transparency across the market.

“It improves market efficiency for timely decisions and an inefficient market will discourage investors as it will only benefit insiders,” he says.

Wong also suggests that there should be a more robust system for disclosure here.

“It should be automated.”

Another observer who is well-versed with the local capital market concurs.

“In order to protect minority shareholders, substantial shareholders who are often the controlling shareholders should make the disclosure within 24 hours as opposed to the current seven market days so at least the minorities are aware that they (the substantial shareholders) have sold in the case of a disposal,” he says.

He points out that after seven days, a stock may have already lost a lot of value without the minorities being aware of what had actually happened.

In neighbouring Singapore for instance, the disclosure period requirement is much shorter, that is within two business days.

Fortress Capital Asset Management CEO Thomas Yong shares the same view as the rest.

“Trade actions of company insiders or even substantial shareholders are generally considered as material price sensitive information and as such require timely disclosures in the interests of protecting other minority shareholders and smaller-scale investors.”