Non-adoption of delisting resolution has no impact on business, commitment: AIA

The failure to adopt a resolution to take AIA Insurance Lanka PLC (AIA Sri Lanka) private at an Extraordinary General Meeting (EGM) this week will neither affect the insurer’s business in Sri Lanka nor its parent company’s commitment towards the market, a top company official said. 

“This (non-adoption of resolution) has no impact on our business. Also, I would not even link this development to AIA’s commitment to Sri Lanka. We see huge potential in Sri Lanka,” AIA Insurance Lanka PLC Chief Executive Pankaj Banerjee told Mirror Business.

“What we are trying to do is just change the legal structure of the company. It has no impact on the business,” he reiterated. 

The minority shareholders of AIA Sri Lanka this Monday shot down a voluntary offer made by the majority shareholder, AIA Company Limited, directed towards taking the company private in sync with AIA Group’s operating model.

Only 68 percent of the shareholders voted in favour of the resolution, preventing it being adopted, as according to the Listing Rules of the Colombo Stock Exchange, a delisting requires the approval of 75 percent of the shareholders present at an EGM.

The chain of events that culminated at the EGM triggered when the insurance regulator, Sri Lanka Insurance Regulatory Commission, in July, concluded that AIA Sri Lanka is exempted from being listed on the Colombo Stock Exchange as its parent remains a listed firm on the Hong Kong Stock Exchange. 

In this context, the AIA Sri Lanka director board made arrangements with the firm’s major shareholder, the Hong Kong-based AIA Company Limited, to purchase the ordinary voting shares of AIA Sri Lanka from the shareholders who may wish to divest them at a purchase price of Rs.1,000 per share and ultimately take the company private.   

“About 68 percent of the shareholders voted in favour. That means the majority of the shareholders did find that there was merit in the offer,” Banerjee said. 

“As a representative of the management, I believe the price offered is fair and reasonable. It is an 83 percent premium on the highest share price over the last 12 months—which was Rs.545,” he added. 
Meanwhile, he pointed out that AIA Lanka over the last five years has had a very good dividend history compared to a lot of other listed companies. “All our shareholders have made a very good return on their investment.”

AIA Sri Lanka’s parent, AIA Company Limited, owns little over 97 percent of the issued shares of the company. 

Some analysts Mirror Business talked to opined that if a party that owns over 97 percent of a listed firm can’t take it private, it is time that Sri Lanka rethink the ‘one share, one vote’ system, which has emerged as the so-called gold standard of corporate governance.  

When queried as to what AIA Sri Lanka’s next course of action would be, Banarjee stressed that all the future courses of actions would be within the applicable laws and regulatory requirements. 

“We will evaluate the next course of action that is available to us. We have the best consultants, auditors, etc. The next course of action, like everything else, will be within the applicable laws and regulatory requirements.”

AIA Group and subsidiaries comprise the largest independent publicly listed pan-Asian life 
insurance group. 

It has a presence in 18 markets in Asia-Pacific— wholly-owned branches and subsidiaries in Hong Kong, Thailand, Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau, Brunei, Cambodia— a 97.16 percent subsidiary in Sri Lanka, a 49 percent joint venture in India and a representative office in Myanmar.