By Peter Lee
While having lunch in Fine Dining Café, John Lee (Lee Sr’s eldest son and Co-Administrator) informed Connie (Lee Sr’s second wife and Co-Administrator) that his mother, Mrs Patricia Lee agreed to release the cash of $3 million from ZNA bank, Singapore which she had withdrawn from this joint account with her husband, Lee Sr for distribution to the family according to Intestacy Law. However, John explained to Connie that in exchange for this, his side of the family wanted to negotiate with her on how best to deal with her entitlement on the distribution of his father’s 70% of shares in three family companies which she and her three minor children who are not involved in the business. John said to Connie “Since you are not involved in our family business, can you consider taking cash instead of shares in three of our family companies. I think in this way, it will be a much cleaner and smoother distribution for you.”
Then Connie asked, “What’s wrong with me and my children taking our entitlement to these shares?” In reply, John said, “Oh! there is nothing wrong with that but don’t you think that cash is better than the shares?” to which Connie retorted, “How is that so?” John continued and said, “Well, if you and your children are the shareholders, then the benefits that comes to you is only through dividends distribution; if these companies make a profit. Furthermore, it also depends on the decision of the directors to declare the dividends.” Connie then said, “So, are you saying that if these companies are making profits, the directors can decide not to declare these dividends?” John responded by nodding his head, indicating yes. With an expression of frustration, Connie sighed and said, “Looks like my children and I are going to be pushed to a corner again to accept your offer.” John immediately said, “No. My offer merely asked you to sell your entitlement of these shares to my family members for a consideration. So, I don’t think you and your children are going to be deprived of anything.”
Connie asked further, “So, what’s the sale price?” to which John’s reply was that the value of these shares based on the latest audited accounts is RM20 million.
Connie continued to probe further on her cash entitlement for these shares. John explained, “Since father’s share is 70%, then the amount to be distributed to family members according to Intestacy law will be based on 70% of the RM20 million which comes to RM14 million. So, one-third of the RM14 million will be shared out equally by my mum and you. In other words, you are getting roughly RM2.33 million. Whereas the two-thirds entitlement for the 9 children will be calculated using two-thirds of RM14 million. That equals to RM9.3 million and we have to divide this by 9 which works out to be roughly RM1.04 million for each child. Therefore, your three children will receive a combined amount of RM 3.12 million.”
After hearing this, Connie was silent for a moment and then slowly sipped her
cup of coffee. As she inhaled deeply and stared at John as if she was gathering her thoughts, John then asked, “Are you okay with this calculation?” Connie’s reply was, “I am not good in this kind of calculation but what I understand is that my children and I are going to receive a combined RM5.45 million if we give up these shares. Is that right?” John nodded yes.
To be continued…