Dear Editor,
With BANKS DIH proposing to limit any individual shareholder’s ownership and voting power to 15%, which is to be considered at its upcoming Annual General Meeting this month end, its Board faces serious questions about the implications of such a fundamental change.
The first question that immediately comes to mind is: why now? BANKS DIH has operated successfully without such a restriction. Has there been a specific threat? If so, what? Shouldn’t shareholders have a right to know?
Large institutional investors typically avoid companies where influence is artificially capped, regardless of share ownership. Has the Board considered whether this proposal could reduce demand for BANKS DIH shares, making them harder for ordinary shareholders to sell at fair market prices? BANKS’ Chairman, Clifford Reis, only recently voiced concern about the undervaluing of the company’s shares on the local stock market while this new proposal could potentially engineer a similar outcome.
By capping voting power at 15%, wouldn’t the Board be effectively preventing any entity from acquiring a controlling interest. In most markets, the possibility of a takeover contributes to a “takeover premium” in a company’s share price. Has the Board commissioned an independent valuation to assess how much this proposed restriction could reduce the value of shareholders’ holdings by eliminating that premium?
The company has sought to frame the proposal as “a commitment to shareholder democracy,” but isn’t this is actually a departure from a core principle: one share, one vote? Certainly minority protection is important but why for example, should a shareholder who assumes 20% of the financial risk of the company be denied 20% of the decision-making power? This disconnect between risk and influence undermines basic fairness and governance norms.
Additionally, if no shareholder or group of shareholders can exercise more than 15% of the vote, would it not become extraordinarily difficult to replace a Board that may be underperforming? Voting power is the primary mechanism through which owners hold directors accountable. How does the Board propose to maintain meaningful accountability if that mechanism is fundamentally weakened?
Further concerns arise around enforcement. The information circular detailing the proposal refers to the appointment of a “Special Registrar” to investigate potential breaches of the ownership cap. What specific criteria will be used to determine whether two or more shareholders are “acting in concert”? How will the company ensure that such investigations are not used selectively or unfairly against shareholders who simply disagree with the Board?
If approved, would the proposal not allow the company to force the sale of shares that exceed the 15% limit. At what price would these shares be then sold? Who determines that price? And how will the company prevent a forced sale from triggering a sudden drop in the market price, and thereby harming all other shareholders in the process?
These are not abstract or academic issues. They go to the heart of shareholder rights, market confidence and the long-term valuation of one of Guyana’s most important publicly traded companies. Before such a fundamental change is considered, shareholders deserve clear, transparent, and detailed answers.