Updated Investment Mandate
The company’s March 2014 Monthly Update included an item informing shareholders of the Board’s review and update of the 10 year old Management Agreement between Kingfish and Fisher Funds.
Item 4 on the agenda for the Annual Shareholders’ Meeting is a resolution relating to one of the changes that arose from that review and update of the Management Agreement. The resolution involves ratifying a widening of the company’s Investment Mandate.
When Kingfish was established in 2004, the Management Agreement limited the company’s Investment Mandate to ensure that the portfolio was invested primarily in the shares of companies that were not top 30 NZX companies. Over the 10 years since then, the Kingfish portfolio has undergone a transformation as many of its smaller company holdings have turned into large companies.
Today, the growth and success of some of Kingfish’s investments as well as changes to the composition of the market index have meant that the old Investment Mandate was too restrictive.
The widening of the Investment Mandate took effect on 27 March 2014 when the Management Agreement was updated. For good form, as noted in the March 2014 Monthly Update, the company will discuss the Kingfish mandate at the Annual Shareholders’ Meeting and seek shareholder approval by ordinary resolution to the continuation of the widened Investment Mandate.
The widened Investment Mandate now requires the Kingfish portfolio to be invested in the equity securities of New Zealand companies and other authorised investments, which include listed and unlisted New Zealand equities and bank deposits or money market securities. The widened mandate gives Kingfish the ability to invest across the New Zealand share market regardless of the market capitalisation of individual stocks.
If the resolution approving the widening of the Investment Mandate is not passed, the Board would need to consider and, if necessary, take steps to adjust the portfolio so that the maximum exposure to top 30 NZX companies was less than 50%.
The Board considers that this is not in the interests of shareholders, because the original mandate not only limits Kingfish’s scope to invest in a wider range of companies but would also limit its ability to retain well performing stocks that might need to be sold to remain within the original mandate.