By Mak Yuen Teen

On February 7, Datapulse Technology issued an announcement titled ” Update on Calling of EGM in Relation to Proposed Business Diversification and Proposed Change of Board”.

It says it is not likely that the Change of Board EGM (requisitioned by shareholders) can be held by February 26 because the company intends to wait for the strategic review by Ernst and Young Solutions LLP to be completed before convening its own Business Diversification EGM (and presumably in the Board’s mind, the Change of Board EGM will then follow). It also said that it has been corresponding with the requisitionists to seek certain information and/or clarifications in relation to the individuals being proposed for appointment to the board. Further, it said that the circular for its own Business Diversification EGM and the requisitionists’ Change of Board EGM have yet to be cleared by SGX.

Shareholders can requisition or call meetings, and propose resolutions, subject to the requirements of the Companies Act. Directors of a public company can be removed without cause. The Companies Act requirements for special notice  and giving directors a chance to be heard provide some protection for directors faced with resolutions for their removal. But shareholders do not need to give justification for removing directors. If I have enough shares, I could propose the removal of directors who dig their noses during AGMs. Of course, this has meant that some good independent directors have been removed by controlling shareholders who prefer their independent directors to be more like my ragdoll cat. But this is the law. Therefore, the Board should not be linking the EY review or their own EGM to the EGM being requisitioned by shareholders to remove them. There’s no such thing as ‘let’s do the EY review first, then our EGM, then yours’.

The current Board is chaired by a director who has failed to disclose the regulatory action against one of his companies when he was appointed to the boards of Datapulse and two other companies, Lian Beng and Fuji Offset Manufacturing (which incidentally have not yet issued “clarification announcements” for the incorrect announcements when he was appointed). The other two independent directors have no prior experience as directors of listed companies and are business acquaintances of the controlling shareholder. All three were appointed by three executive directors who have all since resigned, and who may not have been aware of the regulatory action relating to the Chairman when they agreed to his appointment (assuming they care about the suitability of directors). In other words, they were appointed through a broken nominating process and there are questions about their suitability as independent directors. The current directors are entitled to express their views about the suitability of the proposed directors but I don’t think they are the most appropriate people to question the suitability of others after all the questions about how they were appointed, their own suitability, and their actions thus far.

The current directors’ time would probably be better spent attending directors’ education programmes designed for first-time directors (which the new directors must surely attend soon as they promised they would when they were appointed, if they have not done so) and/or those programmes designed to help directors refresh their knowledge about compliance with listing rules and corporate governance matters (which may cover relevant topics such as the importance of filing accurate SGX announcements; shareholder rights to requisition or call meetings). At the Change of Board EGM, shareholders can question both the current directors and the proposed directors. I have previously written that shareholders should ask questions of directors who are proposed for appointment, in order to assess their suitability and not vote blindly for directors. Given the important role played by directors, no one should get a free pass to the board.

Finally, I should confess that, in a way, I am actually pleased that the Change of Board EGM will now be held after February 26 because there is now a good chance that I can attend – and especially given that there is a moratorium on further spending in Wayco Manufacturing and prior notification to SGX is now needed for any further acquisitions of companies related to Ang Kong Meng. I had bought a few hundred shares to attend the EGM but was concerned that I was going to miss it due to a long overseas trip when the EGM was expected to be in February. So for that, maybe I should thank the Board for giving me the chance to attend and ask them all the questions that they have not yet answered and those that I have not yet asked. Let’s settle on a date soon so that I can put it in my calendar – and please don’t make it before February 26!