Shareholders with expertise are the ones who should approach the directors of public companies on the dividend issue

Dear Editor,

In my letter captioned ‘Could Mr Ram lead the DDL shareholders in taking the matter of dividend size further’ May 19) I said: “From the standpoint of religion, though, the matter may not really be as major as Mr Ram may seem to think.” Mr Ram in Sunday Stabroek of May 21 asserts: “I still hold my view about the distribution to shareholders attending DDL’s AGM of a bottle of rum during the Lenten season” and he goes on to explain and to suggest that we should follow India’s example regarding the giving of gifts to shareholders at AGMs. From the standpoint of religion and in the context of my understanding of and my involvement in the Guyana situation over several decades, I am not convinced. I still hold my view. With respect, let us agree to disagree.

As regards dividends paid by DDL, Mr Ram says: “Mr Cave suggests that I take up on behalf of shareholders the issue of dividends by DDL.” Mr Ram seems to misunderstand what I said. I said: “Now I do not know about such things as ‘modern financial analysis in which matters of cost of various forms of capital, internal rates of return, discounted cash flow analysis and gearing.’ Mr Ram does. Could I invite him to lead us, the shareholders, in taking this matter of dividend size further forward? There must be some forum and mechanism available to us, the shareholders, so that we are given as dividends a fairer share of the company’s profits after tax.” What I had in mind was that the experts would get together and work out the technical argumentation and then they and other interested shareholders would meet to agree on the final wording and all sign the document for presentation to the company.

Mr Ram said in his first letter, “At December 31, 2016, the company had $13,123 million as profits available for distribution (but) it sees shareholders’ funds as cheap money and pays them a pittance as dividends, which in respect of 2016 was 1/27th of the profits available for distribution.” Assuming that Mr Ram’s calculation of the figures in the DDL annual report for 2016 is reasonably accurate, I feel that shareholders are not getting a big enough share of the profits after taxation in 2016 and that something needs to be done in principle about 2017 and beyond. There is time available.

But Editor, I do not think that directors of public companies should be approached by me like Oliver Twist approaching Mr Bumble, the Beadle merely with an outstretched bowl and a plaintive cry of: “Please, Sir, I want some more!” I think that there needs to be reasoned, professional, and courteous but firm argumentation supported by statistical analyses and comparisons appropriate to the discipline.

Now that this matter has been aired in the press, it is my understanding that at least two shareholders with some of the necessary expertise are likely to come forward to help argue the case for a fairer share of the DDL after-tax profits for the year ending December 31, 2017 – and beyond. If I may borrow and freely adapt the wording in a decision of the Judicial Committee of the Privy Council in respect of another matter (handed down during the Hillary Term, 2017), I think the action taken should be bona fide arguable with sufficient merit to have a real and not a fanciful prospect of success, should be grounded in a legitimate and concrete concern of shareholders, and capable of being reasonably and effectively disposed of, and should not be frivolous and vexatious, or otherwise an abuse of company law.

But I must be cautious and not rely too heavily on help from DDL shareholders with the necessary expertise. Recent published comments on the performance of the Guyana Bar Association make me pause to wonder about the performance of other professional bodies.

With respect, Editor, I now withdraw from this matter and will let the chips fall where they will.

Yours faithfully, George N Cave Sun Mon Tues 04/06/17 05/06/17 06/06/17 2:00 2:30 3:00 14:00 hrs 14:30 hrs 14:30 hrs

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