By Mak Yuen Teen

On December 30, 2019, Catalist-listed Advancer Global Limited announced the appointment of Lim Teck Chai, Danny as Independent Non-Executive Director and Chairman. In its announcement, the company disclosed that Mr Lim is currently an independent director of four other listed companies – Choo Chiang Holdings, Kimly Limited, Stamford Land Corporation and UG Healthcare Corporation. Mr Lim, a lawyer, is a partner at Rajah & Tann Singapore LLP.

On January 23, 2020, the company issued a replacement announcement which included Mr Lim’s directorship in a fifth company – Trans-Cab Holdings. The following day, SGX queried Advancer Global about the non-disclosure of this directorship in the earlier announcement, asking the company to explain the background for the exclusion.

The company’s explanation was that the “inadvertent exclusion” was due to a “miscommunication between him and the relevant personnel of Trans-Cab”. Mr Lim told Advancer Global that he is an independent director of Trans-Cab, which had lodged the preliminary offer document on SGX-ST’s Catalodge website for its proposed listing on the Catalist board. It said that the offer document is expected to be registered in February 2020 and that Mr Lim had expected that his effective date of appointment would be in February 2020 as well. He said he only became aware on January 23, 2020 that his appointment at Trans-Cab had been notified to ACRA as being effective on December 27, 2019, the date the preliminary offer document was lodged. The documentation for the anticipated registration of the offer document was said to be circulated to him only on January 23, 2020.

One would expect that Mr Lim would have given his consent to be appointed as a director of Trans-Cab before he was listed as a director of the company in the preliminary offer document. Shouldn’t Mr Lim who should be well-versed with listing requirements have confirmed the effective date of his appointment before Advancer Global made the announcement of his appointment on December 30, 2019?

According to his profile in Trans-Cab’s preliminary offer document, Mr Lim “joined Rajah & Tann Singapore LLP in 1998 and has since been practising and advising on all aspects of corporate legal advisory and transactional work, both locally and regionally. He has a wide range of experience in acquisitions, investments, takeovers, initial public offerings and restructurings, among others”.

Even if it was not effective yet, shouldn’t the appointment which was to become effective in February 2020 be disclosed as pending in the interest of full transparency, since there would be no further disclosure of his Trans-Cab appointment until Advancer Global releases its next annual report for his election at the next AGM?

Trans-Cab aborted its earlier planned IPO in 2014 following the receipt of a “poison pen” letter. For the initial planned IPO, Wong Partnership were the solicitors for the issue manager, bookrunner and underwriter, and the issuer manager  then was DBS Bank. Mr Lim was listed as the lead independent director for the company at that time. He resigned after the IPO was aborted.

For the current planned IPO, UOB Bank is the sponsor and issue manager, underwriter and placement agent. Mr Lim’s firm, Rajah & Tann Singapore LLP, are now the solicitors to the sponsor and issue manager, underwriter and placement agent. Should Mr Lim be considered independent? As the sponsor and issue manager, shouldn’t UOB Bank have advised the company to undertake a proper search for independent directors rather than appoint a partner from its own solicitors? In addition to questions about independence, Mr Lim will now be serving on the boards of six listed companies, including holding Chairman and lead independent director roles. Doesn’t the sponsor also have concerns about his ability to commit time, especially given his day job as a partner in a major law firm?

As solicitors to the sponsor and issue manager, does Rajah & Tann consider it good practice for one of its partners to be appointed as an independent director under such circumstances? Does Rajah & Tann have any policies regarding its partners and employees serving on external boards? If a partner serves on six listed boards as a director, does the firm not have any concerns about his capacity to practise law and undertake work for the firm?

Shouldn’t Mr Lim himself have turned down the appointment?

SGX Regco has been talking about raising the bar for sponsors and issue managers for IPOs. This is a good place to start.