UNDER section 806 of the Singapore Exchange's Listing Manual, shareholders can grant a general mandate to their managements to raise capital via shares or convertibles provided the number of shares eventually handed out does not exceed 50 per cent of issued shares excluding treasury shares.

Whenever this fund-raising avenue is tapped, there is a consequent dilution of existing shareholdings, so the assumption has to be that it was done with the company's best interests in mind. This is a fair assumption since the intent of this section is clearly to allow managements the flexibility to raise money quickly to capitalise on promising business opportunities that might suddenly present themselves. This is also to avoid the time-consuming route of calling for a full-fledged rights issue since this requires shareholder approval at a general meeting.

Of course, not all business ventures that appear attractive at the start actually turn out to be that way. But it would be reasonable to expect managements that have been given a general mandate by their shareholders to provide clear details of the use of funds when that mandate is actually employed - after all, if shareholders are going to have their holdings diluted, they should at least be told why.