Investors not properly protected in Jamaica

C&W should release to shareholders December 2017 results and 5 years forecast that was given to the valuators.

All concerned should be pleased that good sense has prevailed and the Elite IPO has been put off for now the IPO while they correct the errors in the prospectus, in keeping with this publication’s recommendation.
The matter brings to the fore once again, the inadequacy of capital market monitoring leaving investors’ with a false sense of security that they are being lead to believe.
What are some of the facts? The rules for takeover on paper is meant to protect minority shareholders, in fact they hardly do. Minority shareholders in many cases are not in a strong position to assess if they should or should not surrender their shares in a takeover bid. Worse the directors’ recommendations are fraught with problems. Most directors are not serious stock market investors and are not equipped to make a proper assessment of the company’s value, in order to make a proper recommendation to shareholders.
A good example of this, is the takeover attempts for all the shares of Berger Paints last year which was accompanied by directors’ report recommending acceptance of the offer and contained false information which was used to try and convince shareholders that they should surrender their shares. No one in authority seems to have called for proof of the information included in the circular to support their view or asked for correction of the error. Nor were the company required to provide shareholders with up to date financial information, which is not now a requirement but ought to be.

Berger Paints

Cable & Wireless directors are recommending the sale of the shares to the majority owner but have not provided shareholders with results to December, last year or forecast earnings. There is no rationale for this critical information to be provided to valuators but not to the persons who count – shareholders. So Why have the shareholders not be given such information?
The C&W offer is being made at a time when the company’s fortunes have improved considerably and could end with a profit or small loss in 2017. From IC assessment, the company is in a very good position to report a good level of profit in 2018 with interest cost set to fall by around $1 billion per year and revenues set to rise. Investor should get more information as to the 2017 results and forecast for two or so years to enable them to make an informed decision.
The market place has dealers who blatantly breach agreements with clients but no regulator in the sector does anything about. So while the Minister of Finance is proud of the success of the Junior Market, he is unaware of the tsunami that lies just below in the system that he is minster over and one day could explode.

About IC