EPF looking at ways to safeguard its shareholder rights

KUALA LUMPUR: The Employees Provident Fund's (EPF) last Friday said that it is looking at ways on how it can safeguard its interest as a shareholder in corporate exercises, a red flag which was raised in the now-failed merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd (MBSB).
"I think that is something that has not been resolved satisfactorily in our opinion, we feel that we are prejudiced by the fact of our size in the Malaysian market. It is something we are looking at, how we are going to address this going forward. We don't want to be in a position whereby we cannot protect the interest of our members if there is a consolidation proposal in the market and just because of our size and our position in these companies, we are not able to vote or take a decision in these things.
"That's something that we are looking at. I think in some senses we are quite thankful that the last transaction didn't go through because we would not have been able to vote if that had gone through," its CEO Datuk Shahril Ridza Ridzuan said at a briefing on its 2014 Annual Report.
The EPF's shareholdings in all three companies had Bursa Malaysia rule the retirement fund as a related party and therefore was not allowed to vote on the merger.
Shahril said the matter had raise the issue of EPF's rights as a shareholder, given the fact that it is a significant shareholder of potentially every single merger or consolidation target in the banking sector in Malaysia.
Total annual contributions to EPF amounted to RM57.17 billion last year, against a total annual amount withdrawn of RM33.78 billion, resulting in net inflows of RM23.39 billion.
Shahril said the robust performance was a direct consequence of its diversification policy, which saw it channeling more funds into international assets and across a wider range of asset classes.
"The past year was marked by uneven growth of the global economy, which had led to a challenging investment environment. Despite this, we performed better than the previous year as our total investment assets grew to RM636.53 billion year-end," he told reporters last Friday.
"The growth of our investment assets averages between 10% and 11% annually, outstripping the growth of the local capital market. Therefore, foreign investments remain a key strategy in terms of choice for diversification as well as the opportunity to capitalise on returns," he added.
EPF declared 6.75% dividend for 2014, the highest since 2000. The total dividend credited into members' accounts was an all-time high of RM36.66 billion, representing a 17.5% increase over the RM31.2 billion payout in 2013.
As at Dec 31, 2014, EPF's members increased to 14,192,832 of which 6,659,036 were active members while total employers contributing to the EPF increased to 530,166.
As for the potential conflict of interest in relation to Battersea Project Holding Co Ltd chairman Tan Sri Liew Kee Sin's decision to acquire projects in London, Shahril said there is nothing legally wrong with board members holding shares in other companies.
"It is just a matter of whether there is proper disclosure and transparency at their own board level when it comes to dealings as well."