THE government’s use of golden shares may have drawn its fair share of criticism but some market participants believe they are necessary, especially for sectors of national interest.
Khazanah managing director Datuk Shahril Ridza Ridzuan (pic) on Jan 14 urged Putrajaya to ease regulating government-linked companies (GLCs) through golden shares and instead rely on institutions to keep companies in check.
“You can actually regulate how the businesses run through regulation rather than through the golden share,” Shahril said at the Bank Rakyat Integrity Forum 2020 in Kuala Lumpur.
Prime Minister Tun Dr Mahathir Mohamad also said at the same forum that the government would consider scrapping golden shares but only after proper studies.
Acknowledging a robust regulatory framework, market participants, however, believe a total reliance on regulators may not be ideal, especially for listed companies that are of strategic importance such as naval shipbuilder Boustead Heavy Industries Bhd or airport operator Malaysia Airports Holdings Bhd.
Kenanga Investors Bhd chief executive officer Ismitz Matthew De Alwis says a “long view” needs to be taken since it involves national interest.
“I’d say a case by case basis works here. Look at Temasek and other sovereigns, for example. There is still a need for investments in strategic and national interest where golden shares might play an important role,” he tells FocusM.
Minority Shareholders Watch Group chief executive officer Devanesan Evanson believes the golden share empowers the government to circumvent corporate governance within a public listed company when such right is exercised.
This creates “an incongruency in that the board owes a fiduciary duty to shareholders under the Companies Act 2016 but certain positions in the board are decided by the golden shareholder and not the board – the board is accountable but not responsible to those CEO/board appointments,” he says.
But golden shares should be allowed for PLCs involved in national interest type of activities such as in defence or border security, Devanesan added.
According to the Ministry of Finance, as of Jan 14, the government has 32 golden shares in listed and unlisted entities.