Shareholders can query external auditors at general meetings

The issue if shareholders can ask questions to the external auditors was raised in the (rather heated, but very interesting from a corporate governance point of view) debate in Singapore regarding Noble Group.

Mak Yuen Teen wrote a clear answer to that matter in the Business Times (Singapore). Some snippets:


External auditors are appointed by shareholders, their report is addressed to shareholders, and they have a fiduciary relationship with them. It would be odd if shareholders appoint external auditors who report to them, but cannot ask questions about how they did the work.

.....  there is not much point in having external auditors present at general meetings - and companies being charged for it - just for them to issue boilerplate responses.

For example, shareholders at the Noble AGM could have asked questions about how the external auditors arrived at their audit opinion, the appropriateness of the accounting policies and assumptions used by the company, and how they audited the investments in associate companies such as Yancoal and biological assets.

As a matter of decorum, shareholders should direct their questions about the external audit or about other matters through the chairman of the meeting. The chairman should provide the opportunity for the external auditors, committee chairmen and others to answer these questions as appropriate.


To all readers who visit AGMs/EGMs and have questions regarding accounting matters, please feel free to follow the above advice. I assume the rules are the same in Malaysia.

On a side note: I hope to have time in the future to comment on Noble, which might also be worthwhile in the Malaysian context: although no company on Bursa has yet been targeted by a "shortseller", one day that surely will happen, better to be prepared for it, both for regulators and companies.

Maxwell's puzzling acquisition (2)

I wrote before about Maxwell's puzzling acquisition of Lim Ying Ying Ltd.

The story received a new twist today, the company announced that the SPA has been terminated.

And now the good news (at least, for the vendors), they not only get their company back, they can retain the sum of HKD11,700,000.00 previously paid by Maxwell (HK). A case of having your cake and eating it.

No reason is given which is strange, to say the least.

The company states that it "is not expected to have any material effect on the net assets and earnings per share and gearing of the Group for the financial year ending 31 December 2015."

That is possible, several inter-company balances are written off, so may be they all cancel each other out. But I am sure that Maxwell's shareholders would like to see some more detail there.

The share price has performed very badly since its listing.

Bursa limits information to 5 years ONLY?

I noticed the blog posting on Serious Investing:


"While checking out some information, I realised that I am able to search for information on a particular company only for the last 5 years (see below diagram). In the past I was able to obtain information for any particular company since 1999 if not mistaken as long as they were around since then.

Information for more than 5 years is definitely needed as one will need to look at trends or any changes that occurred, or even identify the progress of each of the company.

I am not so sure if this is due to Bursa limiting it temporarily due to some housekeeping reasons or is this permanent. If it is permanent, I will definitely need all readers to lobby to request for it to be reinstated to what was offered before. This is the period where information is more than important and critical for the sake of investor's knowledge. It is also when stock exchanges competes for clients - limiting information is many steps backward.

I thought Bursa was doing something great before."


I can't agree more with this, am absolutely shocked.

When I read the above I was sure that something had gone wrong, but it seems "Serious Investing" is indeed right. All information from before 2010 is gone.

These days hard disk space is almost for free while Bursa is making huge profits, having a monopoly, so money can not be the issue.

Especially in the light of the (terribly slow enforcement), where many cases take 7 years or more before they are even mentioned, how can anyone do serious research on Bursa counters, if one can not even find back what the enforcement was about? I have mentioned many cases in my blog dating back from before 2010, all those announcements are now not available anymore?

I hope all parties involved will pressure Bursa to restore the announcements website back to its old glory. This looks like a move completely in the wrong direction.

To Cliq or not to Cliq? (4)

Cliq Energy announced the result of the fairness opinion by the independent valuation expert, Deloitte.

First of all, "good old" DCF is used. As usual, a long list of assumptions, some of which are very important:

Secondly, the result of the valuation is presented:

While the outcome of a DCF calculation can hugely change according to which parameters one uses, the final range of 113M to 124M falls "exactly" around the purchase consideration of 117M. Too much of a coincidence?

As usual, no details of the DCF are given, so we can't check anything of the actual calculation.

As often described in this blog, I don't like DCF valuations based on a huge amount of assumptions, some of which (for instance the amount of reserves, the price of oil, political/regional conditions, etc.) would alter the result by a huge margin.

Just to detail one aspect, how can one calculate the uncertainty of investing in a country like Kazakhstan? I honestly have no idea how to incorporate country or regional risk in an objective way in a DCF calculation.

On a more positive note, a comparison with similar deals is presented, something that makes much more sense to me:

The average price per boe (barrel of oil equivalent) of the three deals is USD 6.41, while Cliq only pays USD 5.82, that looks good.

But the most recent deal done is by Sumatec Resources (relevant since the price of oil and market conditions were similar to Cliq's) was done at a price of only USD 4.21 per boe. The question is why does Cliq pay 38% more per boe than Sumatec?

Unfortunately, there are no other details regarding the three deals, and how they compare to the proposed deal of Cliq (for instance the existence of assets or liabilities other than the oil reserves in the target companies).

The evaluation of Deloitte is that the deal is "fair and reasonable", which is no surprise because it was more or less announced before by the CEO:

"We know that it will fall within the fair market value, but I'm not saying 100% it will. We have intelligently analysed that the acquisition value is going to be within the fair market value unless oil prices fall to US$ 20".