Saturday, August 28, 2010

The Investment Dar - Al-Musallam Denies Problems

This Thursday (26 August) TID held its 2008 shareholders' annual meeting (delayed because of the delay in finalizing its financials).   Both AlQabas and AlWatan have accounts of that meeting.  Some 73.11% of shareholders' interests were represented.  As per the KSE, the only disclosed major shareholders of TID are the Kuwaiti General Organization for Social Insurance (7.7%) and Efad Real Estate Company and associated companies (18.21%).  So there appears to have been broad shareholder participation.

AlQabas notes that the meeting was held in an atmosphere of "impressive calmness".   All items on the agenda were approved, including agreement with the Board's recommendation that no dividend be declared for 2008. (TID reported a net loss of  KD80.3 million for 2008 of which KD78.6 million is attributable to TID shareholders.  From 2007 to 2008 TID's total shareholders' equity declined from KD349.6 millionn to KD168.5 million due to KD52.9 million of 2007 dividends, KD 37.4 million of losses recorded directly in equity and net purchases of treasury shares of some KD12.2 million.)

The tenor and results of the meeting no doubt a clear reflection of shareholders' confidence in Mr. Al-Musallam's stewardship and performance.

Mr. Al-Musallam also took the opportunity to "set the record straight" on several points, including most of the assertions in a recent AlQabas article:
  1. As he has on several earlier occasions, he noted that statements that TID was going to be liquidated were not true pointing out the strength of TID's assets.
  2. The CCC is not discussing resigning.
  3. In that connection he commented that TID is happy to have the Central Bank of Kuwait's supervisor, Dr. Abid AlThafiri, stay on, but that decision is solely the CBK's.
  4. There are no differences with the CBK.  The CBK poses questions and TID answers them.
  5. More than 83% of the creditors have agreed to participate in the rescheduling.  The remaining 17% represent only KD110 million.
  6. He expects to achieve success with Commercial Bank of Kuwait and Cham Islamic Bank (Syria)  and then will have 89% agreement.
  7. He's optimistic about obtaining the Central Bank of Kuwait's approval for TID to enter under the protection of the FSL.  
  8. He noted that many of the creditors who have indicated they intend to pursue legal claims (the 17% soon to be 11%) were waiting to see the results of the current stage (presumably whether TID gets under the FSL) before proceeding.  The unspoken point here being that if TID enters the FSL, then perhaps some or all of these holdouts may join the rescheduling.  Not an unreasonable assumption.
  9. Contrary to rumors, there is no raise for any senior member of TID's management.  Apparently, not even an "unrealized" one! 
  10. TID is not late with its prior year's zakat.  Though the wording used here seems to imply that perhaps the committee has not yet distributed it - which would qualify as being "late" for a simple minded guy like me.  وأكد المسلم أنه لا يوجد تأخير في دفع الزكاة عن الشركة، مستشهداً برأي لجنة الفتوى والتشريع التي أكدت على ان الشركة لم تتأخر ولكن هذه الزكاة تعود الى السنوات الماضية، منوهاً الى ان اللجنة تقوم باخراج الزكاة من وقت الى آخر حسب الحالات التي تقوم بدراستها من وقت الى أخرى
  11. Perhaps, the answer is that "class is not yet over" and the studies continue?  Anyone who can confirm or amend my translation, please jump in with a post.
  12. He did take the time to point out that the 2008 loss (largely due to provisions of KD89.5 million) was not realized.  
  13. Asked about 2009's financials and the CBK's requirements for additional provisions, he declined to answer, commenting that the Company respected its regulator's (the CBK's) views, would have the auditors review them. But in the final analysis will do what the CBK requires.
  14. One other important "bit" he stated that the Company had appointed new auditors (dual case used).  In 2008 TID used the local incarnations of Deloitte and Touche and KPMG.  
  15. The Ministry of Commerce and Industry raised comments during the meeting that the Board did not meet during 2008 (I take this to mean regarding 2008 financial performance not that there were no board meetings that year) and that TID failed to properly register its shares in Bahrain Islamic Bank,.  These shares (8.7% of BIsB) were acquired by TID in satisfaction of a financing receivable and are discussed in Note #8 to its 2008 financials. Mr. Al-Musallam said that the Board did not meet because the financials were not approved (presumably he's referring to the auditors and CBK).  The BIsB shares are in the process of being registered.
A new Board was elected as follows:
  1. Adnan Abdul Qadir Mohammed Al Musallam, Chairman and MD
  2. Rajam Al Roumi
  3. Ghanem Al Ghanem
  4. Adel Behbehani
  5. Adnan Nisif
  6. Musa'id AlMukhaytar
  7. Nabil Abdul Rahim
And "reserve" directors (in case of need for a replacement of a sitting director):  Nabil Amin, and Abdul Muhsin Al Kandari.

Hopefully, this impressive performance (there's that word again) will silence the unfounded criticism of TID in the market, leaving only the founded sort.


Anonymous said...

"The sun never sets on AlDar", ....!!!!!!

Anonymous said...

Refering to the Arabic text: He is saying that TID is not obliged to pay the Zakat for the 2008, which is very obvious since it did not make any money. However what is interesting is his admission that TID did not pay (or distribute) the Zakat for the previous years before 2008. He said that the Shariaa Committee still studying (دراسه) the cases presented to it so to distribute the Zakat. This is an admission that TID did not pay the Zakat on time. It seems in the past two years no cases were worthy of Zakat, not even TID’s shareholders or creditors. Knowing how some of the Shariaa Committees work, binding rules and elasticity becomes name of the game, ……..Islamic Financing or Visine... or perhaps…some other thing ..many people know, but you and I have to wait.. in the lovely q8!!!!!! ..

Abu 'Arqala said...


Thanks yours.

I missed where he said there was no zakat for 2008.

My understanding is the 1% zakat on net income prescribed by Law 46 of 2006 is to be paid to Ministry of Awqaf etc. And that only government entities were exempted.

Taking Brother Adnan's comments at face value, it would seem there is a special exemption from Law 46 of 2006 for "Islamic" firms that allows them to make the distributions directly to the ultimate recipients themselves. Is that right???

Anonymous said...

المسلم: أنه لا يوجد تأخير في دفع الزكاة عن الشركة، مستشهداً برأي لجنة الفتوى والتشريع التي أكدت على ان الشركة لم تتأخر ولكن هذه الزكاة تعود الى السنوات الماضية، منوهاً الى ان اللجنة تقوم باخراج الزكاة من وقت الى آخر حسب الحالات التي تقوم بدراستها من وقت الى أخرى"
It’s in the Arabic text. The mandatory 1% Zakat must be paid to the Ministry of Finance, Its uses and distribution is controlled by the ministry. The paying companies provide their program (Education, health, etc programs) preferences, This is different than 2.5% Shariaa Zakat, the so called Islamic , or Shariaa compliance companies pay as a Shariaa compliance requirement.
See the note about Zakat in the annual reports of TID:
“Based on the recommendation of the Sharia’a Supervisory Board, the Group started to calculate Zakat based on Wea’a Al-Zakat which consists of assets and liabilities that are subject to Zakat. Zakat is deducted from the voluntary reserve. “note 2.19 annual report 2007.
The the Shariaa Committee of TID did not need to study the cases, Bayet Al Zakat can take care of that. it collects and distribute the Zakat for so many Kuwaiti Philanthropist and elderly. (Wea’a Al-Zakat=Pot of Alzakat)
Hope this is clear.

Abu 'Arqala said...


Many thanks.

Since this topic may be of interest to a larger audience who may not read the comments, I'm going to move our discussion to the "main board".

Hope you'll continue to add your comments there.