What do Investors Expect from Asian Board of Directors ?

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What do Investors Expect from Asian Board of
Directors ?
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Responsibilities of the Board ?

• Be independent of any individual investor or
  group of investors.
• Protect the rights of all shareholders,
  particularly minority shareholders.
• Ensure that the managements policies are
  focused on increasing earnings and value for all
  shareholders.
• Oppose any actions which would result in the
  company becoming dangerously overleveraged.
• Select capable managers to operate the company.
• Ensure laws and regulations are enforced not
  only by their company but by the government.

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Samsung SDS
On February 1999, Directors of Samsung SDS issued
bonds with warrants (BWs) to the chairmans son
at a lower market price so that other SDS
shareholders were diluted The warrant exercise
price was U5.5 and market value at the time of
issuance was U42 on the Grey market where
unlisted shares are trading. The capital gain
for Mr. Lee was US116 million. People's
Solidarity for Participatory Democracy filed an
injunction to nullify the bond issue
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Samsung Group
The Chairmans son held four money-losing
companies e-Samsung (75), e-Samsung
International (60), Secui.com (45.5) and
Gachi.net (57.2). Directors of the various
Samsung Group of companies approved the purchase
of the shares in those companies. Cheil
Communications paid U15.4 million Samsung SDI
and Samsung Electro-Mechanics each bought U2.8
million worth. The rest of the shares were
disposed to Samsung SDS. Gachinet' shares were
bought by Samsung's financial companies such as
Samsung Card, Samsung Capital and Samsung
Securities while S1 bought Secui.com
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Pioneer Industries International
In November 1999, the directors of Hong Kong
listed, Pioneer Industries International sold its
key assets, shares in other listed companies and
US real estate, to an offshore company linked to
its two controlling families for less than a
third of the market value at about US68m. The
directors had also received a 200 raise in
performance-related pay despite the companys net
loss for the fiscal year ended March 1999.
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Hyundai Group
The founder of the Halla group happens to be the
younger brother of the head of the Hyundai.
After the Halla collapsed in 1997, Hyundais
minority investors were shocked to find that the
directors of Hyundai had provided Halla with at
least US1 billion in loans and debt gurantees.
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Hyundai Motors
The directors of Hyundai Motors approved the
purchase of 16 of e-HD.com, a money losing
dot.com company from the son of the chairman.
The purchase amount was app. US 1.5m
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Philippine National Bank
In 2000, a crony of President Estrada was allowed
to illegally accumulate PNB shares to a rumored
46 level and gain four board seats. He
purchased his shares in the names of nominee
accounts and shell companies, to circumvent
regulations prohibiting individual shareholding
more than 20 of a bank as well as requirements
to make a general offer to all minority
shareholders. The government authorities failed
to enforce regulations. The Ministry of Finance
and Central Bank aided and abetted the
process No shareholders meeting was ever held to
approve the changes in the board of directors
until the Annual General Meeting in May
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Sime Darby Pilipinas
Sime Darby Pilipinas(SDP) was 60 owned by Sime
Darby Far East, which in turn, a subsidiary of
Sime Darby Berhad. SDP had in 1996 accumulated
a significant amount of cash of approximately
US68 million from the sale of its tyre
production business. In May 1998, the directors
of SDP approved the acquisition of a money-losing
subsidiary of the parent company, LEC
Refrigeration in the United Kingdom, for US31m.
Sime Darby Far East was using the assets of SDP
to prop up the Sime Darby's losing operations.
Templeton filed suit and also for a restraining
order against the transfer of the assets to the
United Kingdom.
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Renong-UEM
In November 1997, the directors of United
Engineers Malaysia (UEM), announced that it had
borrowed money to purchase a 33 stake in its
parent company Renong from Renong's major
shareholder for US703 million. No Disclosure
was made when UEMs stake in Renong exceeded 5,
although it is required under Malaysia's
securities regulations No general offer was made
to other shareholders although the purchase also
triggered the takeover code. Waiver from having
to make a general offer was granted by the
Securities Commission to the company. The deal
saw UEM effectively bailing out Renong at the
expense of its own shareholders.
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SK Telecom
Despite strong objections from independent
shareholders , SK Telecom (SKT) keeps trying to
support cash-strapped ailing sister firms by
financing projects or selling a profit-making
businesses at ludicrously cheap prices. SKT paid
about U125m in 1998 to buy a new building built
by SK Construction, a non-listed company which is
owned by SK affiliates and Chairman Choi. SKT
now intends to build another new building to be
constructed on a site owned by SK Global, a
trading arm of the SK group, at an estimated cost
of 337m. It also sold information
technology-related assets to SK CC at book
value. It then awarded SK CC a US833 million
10-year contract.
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Bangkok Bank of Commerce
Two senior managers at the bank, lent about a
third of the banks total loan portfolio to
themselves. They also lent to senior politicians,
embezzled the banks funds and fabriacted its
accounts. Thailands central bank had to spend
large amounts of public money to try and bail it
out rather than let it collapse with around US3
billion in bad debt.
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My Question on Board Structure ?

• What is the legal ownership to secure a board
  seat?