When, in line with good governance, it is the norm for a listed company to treat shareholders equally and fairly, small shareholders in Bank of Valletta who are not members of the Association of Small Shareholders are justified in feeling they are being discriminated against.
The issue arose after the association had a meeting with the bank’s chairman to discuss three controversial decisions taken by the bank. These are the award of a bridging loan of €101 million to a private consortium that is building a gas-fired power station; unsecured loans to Air Malta to cover a shortfall in fuel hedging; and a €260,000 early retirement pay-off to a parliamentary secretary, a matter that has raised quite a few eyebrows.
According to one report in this newspaper, which has so far not been denied, the meeting with the association was held at the request of the bank’s chairman. If this is correct, the rest of the small shareholders who are not members of the association have good reason to feel aggrieved.
The bank may not have broken any rules in letting only the association into its confidence, but does it think this is the right way to go about the situation?
One expert in the field has told this newspaper that as a listed company the bank is obliged to give shareholders not represented at the meeting the same information the chairman made available to the association. He argued that the bank’s chairman “is at liberty to meet whoever he deems fit.
“However, if the divulged information is not in the public domain, then he needs to explain. If there are other shareholders who were not present at the meeting but want to know what was said, the bank should make that information available to them”.
This sounds the fairest way to deal with shareholders and would, if it were to be followed, enhance the corporate image of the bank. Of course, shareholders have an opportunity to raise any concern they may have at the bank’s annual general meeting; but, if in the light of the long-running controversy over its decisions, the bank felt the need to meet the association, shouldn’t the rest of the small shareholders be treated equally?
The argument gains greater weight when it is considered that, according to what has been reported, bank officials and the chairman are meeting the association regularly.
Shareholders may have the right to make direct enquiries but, in the same way the bank felt it necessary to meet the association, it should also meet the rest of the shareholders or, better still, call a meeting for all small shareholders.
One lawyer quoted Article 5.22 of the listing rules:
“An issuer having equity shares authorised as admissible to listing shall ensure equality of treatment for all holders of such equity shares who are in the same position.”
The association’s president said the meeting with the chairman was very informative and served as a good basis for more internal talks with the association. He pointed out that the chairman’s replies were exhaustive.
No one would want to cast bad light on the bank, which has served the island well. On the other hand, it is important for it to ensure that it does not do anything that may harm the confidence and trust it has enjoyed.
At the core of the argument lies the importance of good governance, which requires equal treatment, transparency and clarity on the important issues.