Tuesday, December 14, 2010

Who decides what is material to the investors?

Looks like GLP is in the news for all the wrong reasons. After posting an article about GLP here back in October, it seems that the GLP prospectus did not include some information which investors feel that is important.

The story? ProLogis could become a serious competitor to GLP’s China business after the expiry of the non-competition arrangement in February 2011. The problem? This was not highlighted in the prospectus. The debate? Investors say that this is material information while GLP says it is not.

What's the root problem? GLP uses legal terms to describe that there will be a risk of competitors targeting the same market, and at the same time, the Master Implementation Agreement (“MIA”) entered into with ProLogis in 2009 to effect the acquisitions of the various properties in China and Japan – the MIA was disclosed in the Prospectus as one of the material contracts which were available to the public for inspection. MIA was not included within the prospectus.

GLP says that the expiry of the agreement is not material enough to warrant a line in the prospectus, but yet the MIA is considered as a material contract. Sorry, I can't add it up. The MIA is a material contract but the contents within the contract is not material enough?

So who decides what is material to the investors? The company that is being listed?

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