First published in Business Times on May 15, 2018

By Mak Yuen Teen

The last two months have been particularly disturbing for minority shareholders in Singapore, with companies such as Midas Holdings, Trek 2000 International and YuuZoo Corporation being investigated by the Commercial Affairs Department (CAD). We also have Noble Group trying to push through a restructuring plan in a rather oppressive manner, after years of questionable accounting practices, generous remuneration for key management and destruction of shareholder value. Then there are companies such as Datapulse Technology, DeClout Limited and Vard Holdings, where minority shareholders have revolted against so-called independent directors, disclosure lapses, ill-considered acquisitions, management entrenchment, contentious shareholder meetings, oppressive treatment of minority shareholders, or various other questionable corporate governance practices.

Last year was not a good year either as we saw new or continuing lapses at companies such as China Sports, DMX Technologies, Emerging Towns & Cities, Epicentre, Fujian Zhengyun, Shanghai Turbo, Universal Resource and Services and Yamada Green.

Having been a keen observer of corporate governance here over the last 20 years, and witnessed other periods where there appear to have been an upsurge of corporate scandals, I believe that we have a serious problem in our market which – if not addressed – will lead to a downward spiral in market confidence and attractiveness of our market for public investors.

ENFORCEMENT OF RULES

In my view, there are two major causes for this. First, it is well known that we have many foreign companies listed on the Singapore Exchange (SGX) for which we have limited ability to enforce our rules. At its peak in 2010/11, foreign listings made up more than 43 per cent of about 785 issuers listed on SGX. Today, they make up 36 per cent of about 745 issuers listed. A disproportionate number of foreign listings have run into problems and been suspended or delisted. Many operate in countries with a weak rule of law or are incorporated in offshore jurisdictions that are well known for helping companies remain non-transparent. Where certain rules do not apply or regulators are not able enforce them, the risk of misbehaviour increases.