Lien Holder's Caveat in A Nutshell

 

This is another form of security that can be taken over land. However, like a charge, it is

available only when the land in question has been issued with the document of title. A

lien is defined as a right to retain possession of an asset for a debt that is unpaid.

A lien-holder’s caveat is created when the proprietor of land surrenders possession of

his document of title to the bank. The security over land by way of a lien-holder’s caveat

is created when Form 19D prescribed under the National Land Code 1965 is lodged and

registered with the Registrar of the Land Office. The caveat therefore prevents another

party from dealing with the property without consent or notice to the caveat holder.

The mere deposit of the land title with the bank is insufficient to create the security.

Form 19D must also be lodged and registered.

Section 281 of the National Land Code 1965 specifically requires the proprietor

and only the proprietor to deposit his issued document of title with the bank before a

lien-holder’s caveat can be created. There is no provision for any “third-party” lienholder’s

caveat. Any attempt to create a “third-party” lien-holder’s caveat is void.

The advantages of a lien-holder’s caveat are:

 

• Fewer formalities as compared to a charge; and

• No stamp duty payable.

 

The practical disadvantage of a lien-holder’s caveat lies with its enforcement. Under

the provisions of Section 281(2) of the National Land Code 1965, a judgment of the court

must first be obtained against the borrower before the property secured under the lienholder’s

caveat can be formally foreclosed. In other words, a lien-holder’s caveat does not

confer the power of sale to the holder.

The litigation process in securing the judgment may be protracted, and there is no

certainty that the bank can successfully secure a judgment against the borrower.

Even if a judgment is obtained against the borrower, the bank is now required to

commence formal foreclosure proceedings in the High Court. It is only after the order

for sale is granted that the property can be sold by public auction. Further delay is thus

inevitable.

In respect of a charge, there is no requirement for any prior judgment to be obtained

against the borrower. Upon any default under the charge, the bank can proceed immediately

with foreclosure.

A lien-holder’s caveat is normally created for a short-term and small amount of

advances. However, and most importantly, it is created as a temporary measure to secure

a loan, pending the registration of a charge.

The most important difference between a private caveat and a lien-holder’s caveat is

that the former is not recognised as a security. A private caveat does not give any rights or

powers of sale to the caveator.

The private caveat will expire automatically after six years, whereas there is no time

limit for the expiry of a lien-holder’s caveat. It is to be noted that there are no provisions

for a lien-holder’s caveat in either the Sabah Land Ordinance or the Sarawak Land Code.

Preference shares – Debt or Equity?

 

With our deteriorating business environment and increasing insolvencies, businesses are looking to obtain the cheapest finance possible. One very common type of financing that is used is the issue of preference shares. The problem that always raises its head with these is how does one classify preference shares? Is it debt or equity, or both and if so how should the allocation be determined?

One always evaluates the classification of a financial instrument on initial recognition, taking into account the substance (not just the legal form) thereof. The substance of the terms and conditions determines the classification based on the definition of a financial liability and an equity instrument in accordance with the International Accounting Standard 32 Financial Instruments: Presentation (“IAS 32”). If there are elements of the instrument that meet the definition of a financial liability and other elements that meet the definition of an equity instrument, the instrument is considered a compound financial instrument with these components or elements accounted for and classified separately.

A financial liability is basically defined in paragraph 11 of IAS 32 as a contractual obligation to deliver cash or another financial asset. To illustrate, where preference shares require mandatory* redemption by the issuer, this means that the issuer has to repay the capital or “principal” moneys borrowed on the issue of the preference share. There is clearly a requirement to deliver cash and the instrument would definitely have a liability component.  Where the preference shares require dividends or “coupons” to be paid every year (whether accumulated or not) there is also a requirement to deliver cash and, again, the instrument would have a liability component.

An equity instrument is defined in that same paragraph as “any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities.” So, in contrast to the illustrations above, if the instrument does not require mandatory redemption, dividends or coupon payments and it is up to the directors whether or not they redeem the instrument or pay a dividend (usually termed “discretionary”), there is no obligation to deliver cash and there would be no liability component, the whole instrument would then be classified as an equity instrument.

What is important to note is that one must always first calculate the liability component of a preference share and, as per its definition, allocate any remaining portion of its initial fair value, to equity where there is an equity component.

The liability component is calculated as the fair value of a similar liability that does not have an associated equity component.  The fair value of the liability component is determined as the present value of the mandatory dividend and capital payments, discounted to present value at a market-related interest rate. 

Know Your Electricity Usage

 

Peringkat Solat

Nilaikan di mana tahap solat kita. Dalam era membaiki diri ini, kita semak solat kita, nanti akan terjawab kenapa kita tidak dibantu dan ini juga gambaran secara keseluruhannya, mengapa umat islam terbiar dan tiada pembela dan umat islam kini tidak lagi menjadi umat yang agung seperti dulu.

Golongan 1
Kita boleh lihat hari ini sudah ramai umat islam yang tak sembahyang, bahkan ramai juga yang tak tahu nak sembahyang, mereka telah jatuh kafir. Imam Malik kata jatuh kafir kalau tak sembahyang tanpa sebab. Imam Syafie kata jatuh fasik (pun masuk neraka juga) kalau ia masih yakin sembahyang itu fardhu.

Golongan 2
Orang yang mengerjakan sembahyang secara zahir sahaja, bacaan pun masih tak
betul, taklid buta, main ikut-ikut orang saja. Belajar sembahyang maupun
secara resmi atau tak resmi tak ada. Ilmu tentang sembahyang tiada.
Golongan ini tertolak bahkan berdosa besar dan hidup dalam keadaaan derhaka
kepada Allah Taala.

Golongan 3
Orang yang mengerjakan sembahyang, bahkan tahu ilmu mengenai sembahyang,
tetapi tak boleh lawan nafsu terhadap tarikan dunia yang kuat. Jadi mereka
ini sekejap sembahyang, sekejap tidak. Kalau ada masa dan mood baik ia
sembahyang, kalau sibuk dan terkocoh kacah, ada program kenduri, pesta ria,
berziarah, bermusafir, letih dan penat, maka ia tak sembahyang.Orang ini
jatuh fasik.

Golongan 4
Orang yang sembahyang, kalaupun ilmunya tepat, fasih bacaannya,tetapi tak
khusyuk kalau diperiksa satu persatu bacaannya, lafasnya banyak yang dia
tak faham,fikirannya tak terpusat atau tak tertumpu sepenuhnya pada
sembahyang yang dilaksanakannya itu disebabkan tak faham apa yang dia
baca.Cuma main hafal saja. Jadi fikirannya terus tertumpu pada dunia dan
alam sekelilingnya.Fikirannya mengembara dalam sembahyang,orang ini lalai
dalam sembahyang. Neraka wail bagi orang ni.

Golongan 5

Golongan yang mengerjakan sembahyang cukup lima waktu, tepat
ilmunya, faham setiap bacaan sembahyang, fatihahnya, doa iftitahnya,
tahiyyatnya,tapi tak dihayati dalam sembahyang itu. Fikirannya masih
melayang mengingatkan perkara dunia, dek kerana
faham saja tetapi tidak dihayati. Golongan ini dikategorikan sebagai
sembahyang awamul muslimin.

Golongan 6
Golongan ini baik sedikit dari golongan yang ke lima tadi, tetapi main
tarik tali didalam sembahyangnya, sekali sekala khusyuk,sekali sekala lalai
pula. Bila teringat sesuatu didalam sembahyangnya, teruslah terbawa bawa,
berkhayal dan seterusnya. Bila teringat Allah secara tiba tiba maka insaf
dan sedarlah semula, cuba dibawa hatinya serta fikirannya untuk menghayati
setiap kalimat dan bacaan didalam sembahyangnya. Begitulah sehingga selesai
sembahyangnya. Ia merintih dan tak mahu jadi begitu, tapi terjadi jua.
Golongan ini adalah golongan yang lemah jiwa. Nafsunya bertahap mulhamah
(ertinya menyesal akan kelalaiannya dan cuba baiki semula, tapi masih tak
perdaya kerana tiada kekuatan jiwa). Golongan ini terserah kepada
Allah.Yang sedar dan khusyuk itu mudah mudahan diterima oleh Allah, mana
yang lalai itu moga moga Allah ampunkan dosanya, namun tiada pahala nilai
sembahyang itu. Ertinya sembahyangnya tiada memberi kesan apa apa.Allah
belum lagi cinta orang ini.

Golongan 7
Golongan yang mengerjakan sembahyang yang tepat ilmunya, faham secara
langsung bacaan dan setiap lafaz didalam sembahyangnya. Hati dan fikirannya
tidak terbawa-bawa dengan keadaan sekelilingnya sehingga pekerjaan atau apa
pun yang dilakukan atau yang difikirkan diluar sembahyang itu tidak
mempengaruhi sembahyangnya. Walaupun ia memiliki harta dunia,menjalankan
kewajiban dan tugas keduniaan seperti perniagaan dan sebagainya namun tidak
mempengaruhi sembahyangnya. Hatinya masih dapat memuja Allah didalam
sembahyangnya. Golongan ini disebut orang-orang soleh / golongan abrar /
ashabul yamin.

Golongan 8
Golongan ini seperti juga golongan tujuh tetapi ia mempunyai kelebihan
sedikit iaitu bukan saja faham, dan tak mengingati dunia di  dalam
sembahyangnya,malahan dia dapt menghayati setiap makna bacaan sembahyangnya
itu, pada setiap kalimah bacaan fatihahnya, doa iftitahnya, tahiyyatnya,
tasbihnya pada setiap sujudnya dan setiap gerak gerinya dirasai dan
dihayati sepenuhnya. Tak teringat langsung dengan dunia walaupun sedikit .
Tapi namun ia masih tersedar dengan alam sekelilingnya. Pemujaan terhadap
Allah dapat dirasai pada gerak dalam sembahyangnya. Inilah golongan yg
dinamakan golongan mukkarrabin (Yang hampir dengan Allah)

Golongan 9
Golongan ini adalah golongan yang tertinggi dari seluruh golongan tadi.
Iaitu bukan saja ibadah sembahyang itu dijiwai didalam sembahyang malahan
ia dapat mempengaruhi di luar sembahyang.Kalau ia bermasalah langsung ia
sembahyang, kerana ia yakin sembahyang punca penyelesai segala masalah. Ia
telah fana dengan sembahyang. Sembahyang telah menjadi penyejuk hatinya.
Ini dapat dibuktikan didalam sejarah, seperti sembahyang Saidina Ali ketika
panah terpacak dibetisnya. Untuk mencabutnya, ia lakukan sembahyang dulu,
maka didalam sembahyang itulah panah itu dicabut. Mereka telah mabuk dengan
sembahyang. Makin banyak sembahyang makin lazat,sembahyanglah cara ia nak
lepaskan kerinduan dengan tuhannya. Dalam sembahyanglah cara ia nak
mengadu-ngadu dengan Tuhannya. Alam sekelilingnya langsung ia tidak
hiraukan. Apa yang nak jadi disekelilingnya langsung tak diambil peduli.
Hatinya hanya pada Tuhannya. Golongan inilah yang disebut golongan
Siddiqin. Golongan yang benar dan haq.

Setelah kita nilai keseluruhan 9 peringkat sembahyang itu tadi, maka dapatlah kita nilai sembahyang kita di tahap yang mana. Maka ibadah sembahyang yang boleh membangunkan jiwa, membangunkan iman, menjauhkan dari
yang buruk boleh mengungkai mazmumah, menanamkan mahmudah,melahirkan disiplin hidup, melahirkan akhlak yang agung ialah golongan 7, 8 dan 9 sahaja.Sembahyangnya ada kualiti, manakala golongan yang lain jatuh pada
kufur fasik dan zalim.

Jadi dimanakah tahap sembahyang kita ? Perbaikilah diri kita mulai dari sekarang. Jangan tangguh lagi.Pertama-tama soalan yang akan ditujukan kepada kita di akhirat nanti ialah solat / sembahyang kita. Marilah bersama membaiki solat kita agar segera dapat bantuan dari Allah, agar terhapuslah kezaliman, semoga tertegak kembali daulah Islam.

More Writebacks Likely

 

Source: The Star, 5 October 2021

MADU, KURMA DAN KISMIS

N

        1)       KURMA

Nabi Muhammad SAW bersabda: "Rumah yang tidak ada kurma di dalamnya, akan menyebabkan penghuninya kurang sihat". 

Nabi Muhammad SAW bersabda: "Berilah makanan kurma pada wanita yang hamil sebelum dia melahirkan, sebab yang demikian itu akan menyebabkan anaknya menjadi seorang yang tabah dan bertakwa (bersih  hatinya)".
       

Abu Abdillah a.s. bersabda: "Buah kurma adalah salah satu buah yang berasal dari syurga dan dapat mensirnakan pengaruh sihir".
       Abu Abdillah a.s. bersabda: "Orang yang memakan 7 buah kurma yang baik sebelum sarapan, maka pada hari itu dia tidak akan tertimpa racun, sihir dan tidak diganggu setan".
       Imam Ja'far Ash-Shadiq a.s.  bersabda: "Barangsiapa memakan 7 buah kurma yang baik, maka cacing-cacing yang ada di perutnya akan mati".



       2)       KISMIS

  Nabi Muhammad SAW bersabda: "Barangsiapa memakan kismis merah sebanyak 21 biji setiap hari sebelum sarapan pagi, maka dia tidak akan tertimpa penyakit kecuali kematian".

       

Nabi Muhammad SAW bersabda: "Biasakanlah memakan kismis karena kismis dapat menghilangkan kepahitan (empedu/cairan kuning),  menghilangkan lendir, menyehatkan badan, membaguskan rupa, menguatkan saraf dan menghilangkan letih".

 Imam Ali a.s. bersabda: "Barangsiapa memakan 21 biji kismis merah, maka dia tidak akan  melihat pada jasadnya suatu yang tidak disenangi".

Imam Ali a.s. bersabda:  "Kismis dapat menguatkan jantung, menghilangkan penyakit, menghilangkan  panas dan memulihkan kesehatan jiwa".

Pada riwayat lain dari Abi Ja'far At-thusi disebutkan bahwa kismis dapat menghilangkan lendir dan menyihatkan jiwa".



       3)       MADU

Nabi Muhammad SAW bersabda: "Barangsiapa minum madu setiap bulan dengan niat melakukan nasihat Al-Qur'an, maka Allah SWT akan menyembuhkannya dari 77 penyakit".

      

 Nabi Muhammad SAW bersabda:  "Barangsiapa ingin memiliki hafalan yang kuat hendaklah dia meminum madu".

Nabi Muhammad SAW bersabda: "Sebaik-baik minuman ialah madu kerana dia dapat mengkonsentrasikan hati dan menghilangkan dingin yang ada di dalam dada".
       

Nabi Muhammad SAW bersabda: "Allah SWt telah meletakan berkah di dalam madu dan menjadikannya sebagai ubat dari rasa ngeri, dan madu telah didoakan oleh 70 Nabi".

Dari Imam Ali a.s. beliau bersabda: "Madu adalah ubat dari segala penyakit,tiada penyakit di dalamnya, ia dapat menghilangkan lendir dan membersihkan hati".

Dari Imam Ja'far Ash-Shadiq a.s., beliau bersabda: "Rasul saw sangat menyenangi madu".

Dari Imam Ja'far Ash-Shadiq a.s., beliau bersabda: "Biasakanlah dirimu memperoleh dua ubat iaitu meminum madu dan membaca Al-Quran".

What is Cyber Extortion?

 

Cyber Extortion is a crime involving an attack or threat of attack coupled with a demand for money to avert or stop the attack. Simple understanding, it is similar to the concept of blackmailing in which victims are forced to pay to avoid its effect. Cyber Extortion can take many forms. The most common is denial of service (DoS) attacks against corporate websites. The attacker might initiate a ping storm and telephone the president of the company, demanding that money be wired to a bank account in a foreign country in exchange for stopping the attack. However in recent years, cybercriminals have developed new variant of ransomware which encrypts the victim's data. The extortionist's victim typically receives an email that offers the private decryption key in exchange for a monetary payment in Bitcoins or other digital currency. Cyber Extortion can be lucrative, netting attackers millions of dollars annually. Unfortunately, as with other types of extortion, payment does not guarantee that further cyber-attacks will not be launched.

 

 Common Threats Involving of Cyber Extortion

Basically, it is any type of malicious program or IT code whose objective is to infiltrate networks and computers to cause damage, spy, and steal information. The most dangerous types of malware are:

 

RANSOMWARE It blocks the PC, removing all user control, encrypts files and demands a financial ransom to return them.	EXPLOIT It takes advantage of a security fault or vulnerability in the communication protocols to enter your computer.
SPYWARE It collects names, access details, passwords, and any type of information about your company	PHISHING It creates a false URL to obtain your data and steal your identity, with the aim of stealing from your bank accounts.
TROJAN It installs various applications so that hackers can control the computer. They control your files and steal your confidential information.	APT (ADVANCED PERSISTENT THREAT) It’s a computer process that penetrates your security to control and monitor it, being able to continually extract information for business or political means.
SCAM It tricks you with false promotions such as holidays or lotteries, then asks you for money to access the “prize”.	BACKDOOR It opens a “back door” to take control of your system.
KEYLOGGER It collects and sends all keystrokes completed by the user.	BOT It is a program that remotely controls your PC
WORM It infects all of your computers, slowing down the network and even blocking access to communications.

  Cyber Extortion Victim

Technical Services strongly advice users, do not give in to the cybercriminals’ blackmail because there is no guarantee that this will solve the problem. In fact, in many cases, the victim of the blackmailing has given over the amount demanded but without receiving the decryption key (or even a corrupted key). None of these outcomes can help get the kidnapped information back. It is also recommended to completely wipe all traces of malware from the computers by using the assigned antivirus. Moreover, as to prevent from becoming the victims, it is also recommended that you make backup copies of critical files every so often, just in case we can help to restore if your files are not recoverable due to ransomware attack.

How to Nurture Your Liver and Keep it Healthy

 

1.Lungs & Large Intestines share the system. If one or the other is infected or sick, the other will also be sick.

2.When the Liver is in pain, there is not much signs or symptoms to be detected. Before many cancers happen, usually the Liver will be the first to get sick.

3.Liver filters out the poisons and it attacks all other viruses in the body.

4.99% Chinese have weak livers as they eat a lot of meat, and high fat foods.

5.The Liver's repair time is effective from 11pm – 3am. Therefore, sleeping late after 11pm & having late night supper 2 hours before sleep especially high cholesterol and high fat foods weakens the Liver as it does not have sufficient time to rest and regenerate. Even when one sleeps in later in the morning to replace loss sleep will not help.

6.If U get very hungry just before bedtime, eat some fruits & vegetables which is easy to digest. Meat takes about 4 hours to digest before it goes into the intestines. Meat cooked in oil takes about 12 hours before going into the intestines. This will provoke the Liver & the digestive tract to overwork in filtering the toxins thus u will tend to feel very tired when u wake up in the morning.

7.Oil is the main culprit that will weaken the functions of the Liver and damage it. Medication cannot cure Liver problem and it will damage it even further.

8.Cold-pressed olive oil, carrot, cucumber, raw chili, garlic, onion, little bamboo salt/ sea-salt, radish, pumpkin and small fish are good for the body. Sesame oil is ok.

9.Food-preservatives, Food colourings, Bee Hoon is processed with Aluminium (causes Dementia), Bleach, syrup, Pesticides are bad for Liver health. Wrong medication can shrink and damage the Liver badly. Radiation from microwave oven destroys all nutrients in the food.

10.Western medication is bad for the Liver. Chinese medication is bad for Kidney. White radish will disable the effects of the Chinese medication.

11.Sleeping late for children is unhealthy as it weakens memory and intelligence.

12.Best Healthy times to sleep is 9pm especially so for people who is sick or recovering from it and do not sleep later than 11pm. Lots of rest is good for the Liver to recover. When using eye-cover during bed-time , use only pure-cotton and do not use Rubber, latex material.

13.A Detoxification Diet helps the Liver & Intestines to recover fast. Natural fresh foods are best for the Liver and overall well being. Do not rely on packed, bottled or canned health foods/ vitamins as they lack a lot of natural and essential vitamins which can only be derived from pure, unprocessed natural foods.

14.A balance of mental/ emotional state of mind is very important to the total well-being. Too much Stress of all kinds, loud noises/music, anger, irritation suppressed for too long, Pessimism, depressive moods, no goals in life, feeling life has no value or blaming the World & Everyone else for his life will further weaken the body system. When the Liver is unhealthy, the Person usually has a bad temper and gets easily angered or irritated.

15.Giving out gas, perspiration and urine are ways of purging out the toxins from the body. Do not use too much of air-conditioners as they suppress the body from perspiration. This natural way of purging helps to reduce the load of the Liver. Open the windows for fresh air.

16.Give warm to any part of the body that is in pain will help ease it or soaking in a bathtub of warm water up to waist level will also help. Be careful if u have heart problems, do not soak up to heart level or else u might feel uncomfortable as your heart might get too stimulated.

17.Brown rice, wheat, oats, potatoes, sweet potatoes, yam and maize but we must be careful when buying these foods as they contain great amount of Pesticides. Maize and Brown rice contains B complex vitamin but be careful as Maize these days, has a lot of Pesticides in them too. Organic foods are better alternatives but they are more costly.

18.Blood A type has higher chances of Cancer diseases.

19.Blood O type has higher chances of Liver diseases.

20.Women Lives Longer because they are more even-tempered due to their menstruation cycle expels the anger suppressed inside. It is better not to talk when a person is feeling very angry at that point of time. Breathe very slowly for 7 times and just smile.

21.Fat or overweight people usually have problems with their liver, heart and digestive system as they eat too much meat, high cholesterol and high fat foods which will damage their Liver and thus affect their heart and blood pressure.

22.Gastric problem is also associated with ingesting too much meat and high fat foods.

23.Heart & Uterus are linked together. Drinking 3000cc – 4000cc of good filtered water with a healthy detoxifcation diet will help keep them healthy too.

24.There is no need to go for unnecessary check up. X-rays, CT scans ( radiation is 5x-6x higher) are bad for the body as it kills thousands of cells and thus weakens the body further. Cancers & diseases are sometimes quite hard to detect in your Yearly Health checkups or blood tests. By the time they are detected, that particular part of the body has already been quite damaged. Always get a second opinion from another doctor before proceeding with the recommended surgery. If it is Liver disease, medication will destroy it further. Go on a proper detoxification diet and sleep by 9pm daily will help the Liver to recover much faster.

25.Vegetable and Fruits are high in Vitamin Cs which will help detoxify the poisons in the body, thus helping the organs to recover during the detoxification. Drinking lots of water 2000cc – 3000cc will help the Liver as Urine is one way of detoxification.

26.Morning hours between 5am – 7am is the best time for Bowel movement otherwise the intestines might absorb the poisons from the digested matter to be distributed to the rest of the body and thus slow poisoning of the body will occur. This will result in the body getting sick.

27.Using Kelp Powder mix in water can help to stop itchy scalp.

28.Stones in gall-bladder, liver, brain, etc. are usually poisons accumulated from animal protein and oily foods.

29.Minerals – calcium, iron strengthen the kidney/bladder.

30.A Person having Mild Liver or Kidney problems can eat Fish & Beans only after 4 months of detoxification diet.

31.If the whites of the eyes are Yellow means you might have Liver & Gall Bladder problem.

32.Red vegetables or fruits are good for the Brain and the Heart.

33.Yellow vegetable or fruits are good for Digestion. Careful when choosing. Cabbage and Banana are good but they may have lots of pesticides.

34. Low Blood pressure is ok as long as the individual feels fine and healthy.

35.Having Pimples may mean that the toxins in the blood cannot be purged out.

36.Exercise is preferably done in the mornings as there are lots of oxygen from the trees, and plants. Night time is not advisable as there are lots of carbon dioxide coming from the trees and plants. Afternoon is too hot. After 40 years old, try to do light exercises like long distance walking and not to do heavy exercises.

37.Having h

eadaches may mean weak pump of blood/energy from the Heart shows lack of oxygen.

38.Black under eyes means Liver & Kidney are weak.

39.For Arthritis problem, eat High vitamin C, kelp and detoxification diet.

40.People with Breast or Uterine cancer must not eat sea-cucumber or salty foods.

41.High-water content fruits are easier to digest.

42.Exercise is good for the heart.

43.Use as few electrical appliances and household items in your homes. In the long term, they can cause radiation exposure and ruin your health especially your Television set, radio, huge sound system. Don't place them in your bedroom otherwise, you might find difficulty in sleeping thus feeling very tired in the morning. Also, try not to watch too much TV or surf the computer for a long time especially children otherwise in the long run, the radiation from the TV & computer might cause loss of memory and intelligence. Do not switch on the lights in your home or else too much of light exposure overhead might also be damaging to your body especially if you have not been very fit or healthy in your lifestyle.

44.My personal advise: If you want to take a bigger step to a truly healthier lifestyle, please use only stainless, ceramic (without lead), glass for your cooking, eating utensils. In the long run, Aluminium will give you dementia. Also get rid of your non-stick pans and cooking utensils as the coating will eventually fade into your food which cause poisoning. Use water to cook your food lightly. Overcooking your food will cause it to lose most if not all of its nutrients.

Due Diligence Defined

 

What Exactly Is Artificial Intelligence, Anyway?

 

https://www.wsj.com/articles/what-exactly-is-artificial-intelligence-anyway-1525053960?emailToken=fa869a664fbf7a487f3aebfc522d3c7efz2TF4EajgFCs9832egWiH%2FXW3PpnjZ0nAf8DFB3%2B%2FH4qO05Hbx5Pxq76MuQ0cIR%2FJmBvlyWSIp%2FmYFzl8sg7qaj%2F7YK3OLTAqCnjOLiY3U%3D

Identifying Red Flags

 

Few people seem to spot the early signs of a company in distress. Remember WorldCom and Enron? Not long ago, these companies were worth hundreds of billions of dollars. 

Today, they no longer exist. Their collapses came as a surprise to most of the world, including their investors. Even large shareholders, many of them with an inside track, were caught off guard.

This does not mean it's impossible to see a corporate train wreck before it happens. Sure, it involves some work, but by digging into a company's activities and financial statements, even the average investor can identify potential problems. Here are some general guidelines for spotting companies that may be headed for trouble.

Cashflows
Keeping a close eye on cashflow which is a company's life line, can guard against holding a worthless share certificate. When a company's cash payments exceed its cash receipts, the company's cashflow is negative. If this occurs over a sustained period, it is a sign that cash in the bank may become dangerously low. Without fresh injections of capital from shareholders or financiers, a company in this situation can quickly find itself insolvent.

Bear in mind that even profitable companies can have negative cash flows and find themselves in trouble. This can happen, for example, when a rapidly growing business with strong sales makes large investments in stock, staff and manufacturing plants. At best, there will be a delay between when the company forks out cash for these business costs and when it collects cash from resulting sales. But this delay can severely stretch cash flow. 

At worst, the sales growth is not be sustained, and large quantities of stock (and staff) end up idly sitting in warehouses, causing a devastating impact on cash flow. Either way, you should steer clear of companies that report both profits and negative operating cash flows period after period.

Examine the company's cash burn rate (The rate at which a new company uses up its venture capital to finance overhead before generating positive cash flow from operations. In other words, it's a measure of negative cash flow). If a company burns cash too fast, it runs the risk of going out of business. Enron's cash flow fell from negative $90 million in Q1 2000 to a very troubling negative $457 million a year later.)

Debt Levels
Interest repayments place pressure on cash flow, and this pressure is likely to be exacerbated for distressed companies. Because they a higher risk of default to banks, struggling companies must pay a higher interest rate. Debt therefore tends to shrink  returns.

Total debt to equity (D/E) ratio is a useful measure of bankruptcy risk. It compares a company's combined long- and short-term debt to shareholders’ equity or book value. High-debt companies have higher D/E ratios than companies with low debt. According to debt specialists, companies with D/E ratios below 0.5 carry low debt. And that means that conservative investors will give companies with D/E ratios of 0.5 and above a closer look.

Consider Enron's debt-to-equity levels before it declared bankruptcy in Dec 2001. At year end Dec 2000, its D/E ratio stood at 0.9.  At June 2001, it grew to 1.1. Finally, its Sept 2001 quarterly report showed a D/E ratio of 1.4. Enron would have qualified as a risky debt prospect each time. At the same time, the D/E ratio does not always say much. It should be accompanied by an analysis of the debt interest coverage ratio. For example, say a company had a D/E ratio of 0.75, which signals a low bankruptcy risk, but it had an interest coverage ratio of 0.5.  An interest coverage ratio below 1 means that the company is not able to meet all of its debt obligations with the period's operating income, indicating that a company is having difficulty meeting its debt obligations.

Share Price Decline
The savvy investor should also watch out for unusual share price declines. Almost all corporate collapses are preceded by a sustained share price decline. Enron's share price started falling two years before it went bust. The same holds true for WorldCom.

A substantial share price decline might signal trouble ahead, but it may also indicate a valuable opportunity to buy an out of favor business with solid fundamentals. Knowing the difference between a company on the verge of collapse and one that is undervalued is not always straightforward. The other factors discuss below can help tell them apart.

Profit Warnings
Investors should take profit warnings (When a company advises its earnings won't meet analyst expectations) very seriously. While market reaction to a profit warning may appear swift and brutal, there is growing academic evidence to suggest the market systematically under reacts to bad news. As a result, a profit warning is often followed by a gradual share price decline.

Insider Trading
Companies are required to report, by way of company announcement, purchases and sales of shares by substantial shareholders and directors. Executives and directors have the most up-to-date information on the company's prospects, so heavy selling by one or both groups can be a sign of trouble ahead. While recommending that investors buy his company's stock, Enron's Chairman Kenneth Lay sold $123 million in shares in 2000. That was nearly three times his gains in 1999, and nearly 10 times what he made in 1998. Admittedly, insiders don't always sell simply because they think their shares are about to sink in value, but insider selling should give investors pause.

Resignations
The sudden departure of key executives or directors can also signal bad news. While the resignations may be completely innocent, they demand closer investigation. Warning bells should ring the loudest when the individual concerned has a reputation as a successful manager or a strong, independent director.

You should also be wary of the resignation or replacement of auditors. Naturally, auditors tend to jump ship at the first sign of corporate distress or impropriety. Auditor replacement can also mean a deteriorating relationship between the auditor and the client company, and perhaps more fundamental difficulties within the client's business.

Investigations
Formal investigations by the Securities and Exchange Commission (SEC) normally precede corporate collapses. That's not surprising since, many companies guilty of breaking SEC and accounting rules do so because they are facing financial difficulties. 

Unfortunately for most Enron and WorldCom investors, the SEC did not spot problems in these companies before it was too late. However, the SEC has a pretty good nose for detecting corporate and financial misdeeds. While many SEC investigations turn out to be unfounded, they still give investors good reason to pay closer attention to the financial situations of companies that are targeted by the SEC.

Conclusion
Just as a seriously ill person can make a full recovery and go on to lead a fulfilling life while a seemingly healthy person can drop dead without warning, some very sick companies can make miraculous recoveries while apparently thriving ones can collapse overnight. But the probability of this is very low. Typically, when a company is struggling, the warning signs are there. The best line of defense as an investor is to be informed - ask questions, do research, be alert to unusual activities. Make it your business to know a company's business and you will minimize your chances of getting caught in a corporate bust.

Credit Risk For Banking Transactions

 

Loss = D x X x (1-R)

 DEFAULT RISK

 ·       Quantitative measure : default probability

·       Proxies of Default :

§  Ratings/Historical statistics on defaults

§  Estimate of default probability based on some corporation’s characteristic.

 

Historical Frequencies of Default

·      Ratings & default frequencies post significant correlation.

·       Internal rating scale + agencies rating scale = internal ratings and historical default frequencies.

 §  Rating Agencies provides :

¨      frequencies of defaults

¨      volatility across time of yearly frequencies - changes gen. economic conditions.

¨      transition matrices between rating classes

 §  Best risk qualities - default rate close to zero

§  Relationship between ratings  and default rates is far from proportional.

§  Default rate increase, ratings decline - exponential shape.

§  Improve rating class - improve overall solvency of the bank (theoretically).

 

Default Rates Volatility

 §  Default rates unstable through time.

§  Volatility of yearly historical default rates is measured by standard deviation.

§  Volatility increase, default rates increase, rating diminish.

§  High default rates - significant SD.

§  Basis to measure the unexpected loss for loan portfolios.

§  Proportional to unexpected loss

§  Expected Loss is proportionate to Average Default Rate.

 

Historical Default Rates and Horizon

§  Cumulated default rates increase with the horizon though the growth is not proportional.

§  High ratings, growth is more proportional

§  Transition matrices.

 

EXPOSURE RISK

1. The amount of risk in the event of default without considering recoveries.
2. Considers only future amount of risk (default occurs at unknown future date).

  ·       The Balance Sheet

§  Time profile of exposure - there is a contractual repayment schedule.

§  Committed LOC (not yet 100% utilised) are given contingencies recorded off balance sheet.

·       Contingencies Given

 §  Risks appear conditionally upon the initiative of counterparty.

§  Given Contingencies are options exercised by the customer.

§  Received Contingencies are options exercised at the initiative of the bank.

§  Risk generated off balance sheet are conditional risks, not certain risks.

§  use a 50% weight to value potential risk generated by Off Balance Sheet transaction.

 

·       The Time Profile of Expected Exposure

§  Amortising Loan, Bullet Loan/Committed LOC, Project Finance

§  Shapes - Stairs, box, hill

§  y = exposure, x = time

 

RECOVERY RISK

 ·       Guarantee & Covenants diminish risk - they reduce loss in the event of default.

·       All guarantees subject to legal risk.

·       Collateral can be seized and sold - reduce/cancel the loss - thus original credit risk is turned to recovery risk plus asset value risk.

·       depends on nature, location, integrity and legal environment of assets.

·       Risk of liquidation = zero if cash.

·       Real Estates, Machines, vehicles less easy-need judgement based on the characteristics of assets.

·       Third Party guarantee - Legal Risk & Default Risk

·       Covenants allow preventive action - more proactive than guarantee (like insurance).

  

CREDIT RISK & POTENTIAL LOSSSES

 ·       Loan Given Default (LGD) = default probability, exposure & recoveries.

 

Expected Loss

 §  LDG x default probability

§  Exposure x ( 1-recovery rate%) x default probability(%).

  

Unexpected Loss & Risk Based Capital

 §  Dispersion around the average of observed default rates is measured by the historical volatility of observed default rates.

§  Derived from deviations of default rates.

  

DEFAULT PROBABILITIES OVER VARYING HORIZONS

 ·    The probability of default over various time periods can be used to assess the credit risk of a loan up to maturity.

·       Default Probability changes over time - risk changes over time-transition across rating.

·       nPd = n x 1Pd