By Mak Yuen Teen

A few days ago, I posted an article titled “Will Datapulse shareholders be haunted by the Seoul hotel” where I discussed resolutions 1, 2 and 7. This follows an earlier post “Datapulse Technology” Here we go again….” where I also gave my views on some of the other resolutions.

I would like to summarise my views on the 7 resolutions here.

Ordinary Resolution 1: This resolution is about the proposed expansion of the property business into hotels and hospitality assets. I will vote “no” because I believe shareholders are better off investing in other companies with long and successful track records in these areas. Shareholders are better served if cash is returned to them to do so.

Ordinary Resolution 2: This is the central resolution for the EGM. It follows from resolution 1 that I will also vote “no” for this resolution. In the earlier article about the purchase of  Hotel Aropa in Seoul, I raised three issues for which insufficient information has been provided for shareholders to make an informed decision, and considerable doubt exists about the viability of the hotel. These are: reasonableness of the purchase price, clarity of the terms and conditions, and rationale/substance of the proposed structure.

Ordinary Resolution 3: This resolution is to approve selling back Wayco Manufacturing at a loss. I am sure shareholders are unhappy with the loss, plus all the fees and expenses incurred for this acquisition. I will vote “for” this resolution but the board should give a proper account to shareholders on the fees and expenses that have been incurred.

Ordinary Resolution 4: This resolution is to approve changing the company’s name to “Capiti Property Partners Ltd”. Since I am against the company getting into the property business and into hotels and hospitality assets, I will vote “no”.

Special Resolution 5: This resolution is to align the new constitution with changes in the law. Although I would like to see Datapulse’s constitution incorporating stricter provisions in dealing with conflicts of interest, I will vote “for” this resolution.

Ordinary Resolution 6: Resolution 6 is about the proposed change of external auditors from KPMG to Ernst & Young (EY). The board had sought shareholders approval to re-appoint KPMG just four months ago, but has now changed its mind. It said that it has received feedback from shareholders – I recall one shareholder raising the issue of reviewing KPMG and its fees at the last AGM. I am sure shareholders would much prefer that the board listens to the masses of other shareholders calling for a larger dividend. That being said, I am ambivalent about retaining KPMG as I don’t think it was sufficiently communicative and open with shareholders at the last AGM and in private communications. I do have concerns about the prior work done by EY on Wayco and the fees that it has earned for that work. We have seen many instances of external auditors here and overseas being accused of or seen to have done poor quality work and therefore, it is unclear if any other firm would necessarily do better. The key for shareholders is to hold whoever is appointed as auditors accountable, by asking them questions about the conduct of the audit and the preparation of the auditors’ report at future AGMs. For this resolution, I will abstain.

Ordinary Resolution 7: This is to approve interested person transactions between Datapulse and ICP, in the event that ICP is selected to manage hospitality assets. This resolution is actually somewhat premature as there should be a proper process for selecting the firm for managing these assets, in the event that shareholders approve the company getting into the business in the first place and approving the purchase of Hotel Aropa in Seoul. For this resolution, the Datapulse chairman is not allowed to vote as he is considered an interested person. Other substantial shareholders such as Ng Siew Hong can vote, even though the relationship between her and the Datapulse chairman, if any, remains unclear. ICP has a short and so far, not yet successful, track record in managing hotels. This, coupled with the fact that I am against the company getting into this business and buying Hotel Aropa, means I will vote “no”.