Dennise Williams, Staff Reporter
Ryland Campbell, chairman of Capital and Credit Merchant Bank, addresses the company's annual general meeting at Knutsford Court Hotel in St. Andrew yesterday. - RUDOLPH BROWN/CHIEF PHOTOGRAPHER
THE PROPOSED resolution by the directors of Capital and Credit Merchant Bank (CCMB) to increase the authorised share capital of the bank from $300 million to $400 million was met with some resistance at yesterday's annual general meeting (AGM).
The controversy centred on the resolution to make a renounceable versus a non-renounceable rights issue to the shareholders from the additional shares created by the increase in the authorised share capital.
At the AGM the company proposed to make the rights issue renounceable, so that CCMB can "take advantage of the excitement in the initial public offer market this year," said chairman of CCMB, Ryland Campbell.
Economist and CCMB shareholder John Jackson, objected to the change from non-renounceable to renounceable rights taking place during the AGM.
"I have no fundamental issue with the renouncability of the share issue. Although I am not a lawyer, I think this change now is inappropriate because all shareholders have not been advised of this change. We should wait for the wider body to be informed of the change because the annual report does not speak to the issue that we are now looking at," argued Mr. Jackson.
LEGAL COUNSEL
"I have legal counsel here because I knew you were coming," Mr. Campbell told Mr. Jackson.
Attorney Janet Morgan (Dunn-Cox) then told the meeting, "The notice sent out to shareholders informing them of the resolution to discuss the rights issue is adequate. The renouncability or non-renouncability is something that can be determined on the floor at this meeting."
The renounceable feature allows shareholders the right to decline the offer, transferring their option to a third party. Conversely the non-renouncability option means that the offer -- when it is made -- can be taken up only by shareholders.
The material difference is whether the rights can be offered to another party.
"You will be increasing the benefits to the shareholders because they will have the opportunity to sell anyone and they will benefit from that," explained Mr. Campbell.
And, with those arguments supporting the directors in their decision, the resolution was passed at the financial conglomerate's second AGM.
Essentially, the increase in the bank's share capital will clear the way for a rights issue, which will raise capital and allow CCMB to expand its business through strategic alliances with players in the wider Caribbean. "The new resolution will be done in a way that anyone can buy shares to better give us an opportunity for success," reflected Mr. Campbell.
