More clarity needed
A REPORT on MyEG Services Bhd issued by a research house early this week has raised something interesting.
The report stated that MyEG’s major shareholder, Asia Internet Holdings Sdn Bhd (AIH), had pledged 50 million MyEG shares to a bank to raise funds to subscribe to an initial coin offering (ICO) issued by a developer.
AIH is owned by MyEG’s managing director, T.S. Wong, and group chairman Datuk Norraesah Mohamed.
The analyst report was seeking to explain the filing by AIH on Oct 26 that it had disposed the said 50 million shares “in pursuant to a financing arrangement”, which typically takes the form of margin financing.
So, the report was seeking to explain that this margin financing was for AIH to raise funds to subscribe to an ICO by a property developer to finish the construction of a shopping mall in the Klang Valley.
The coins can be used to rent space in the developer’s shopping mall when completed, according to the report.
It does seem that the report, which has maintained its “add” call on MyEG, is seeking to assuage concerns of shareholders who thought AIH was selling MyEG shares into the open market.
However, it does raise other questions.
ICOs are a novel fund-raising mechanism using the underlying blockchain technology. However, they remain a grey area of the law. The Securities Commission in Malaysia and the Securities and Exchange Commission (SEC) in the US have gone after ICOs which they feel have transgressed securities laws.
True, the investment was made by a private entity, namely AIH, and not by the listed MyEG.
Still, it would do good for AIH to explain more about its investment in the ICO. For example, it should clear the air if the ICO was done by a developer that had any links to MyEG, for example, if it was a developer that MyEG is a customer of. If so, then there’s the possibility of a related-party transaction disclosure that needs to happen. Also, it is still unclear if the developer mentioned in the report had gotten the green light from the authorities to conduct an ICO.