By Mak Yuen Teen
On December 26, 2019, I wrote about the failure of Metech International to disclose that its then controlling shareholder, Chairman and CEO, Mr Simon Eng, had been reprimanded in October 2015 as a director at Advanced SCT (now Citicode), when he was proposed for re-election at Metech’s October 2019 AGM. Rule 720(5) of the Catalist Rulebook [Rule 720(6) of the Mainboard Rulebook] says: “When a candidate is proposed to be appointed for the first time or re-elected to the board at a general meeting, the issuer shall provide the information relating to the candidate as set out in Appendix 7F [Appendix 7.4.1] in the notice of meeting, annual report or relevant circular distributed to shareholders prior to the general meeting. The issuer must announce the outcome of the shareholder vote in accordance with Rule 704(15) [Rule 704(16)].
In Metech’s case, for item (f) in Appendix 7F, Metech had stated “Negative confirmation”. Item (f) states: “Whether he has been the subject of any current or past investigation or disciplinary proceedings, or has been reprimanded or issued any warning, by the Monetary Authority of Singapore or any other regulatory authority, exchange, professional body or government agency, whether in Singapore or elsewhere?” The answer should have been a clear “yes”.
SGX Regco acted swiftly in that case. On December 27, it issued a Notice of Compliance to Metech requiring it to re-convene an EGM for shareholders to vote again on the resolution to re-elect Mr Eng. It also said that it would investigate the circumstances resulting in the non-disclosure of the public reprimand, and the company and continuing sponsor’s (RHT Capital) compliance with the Catalist Rules and the discharge of their duties and obligations. Further, if any breaches of the Catalist Rules were found, SGX Regco would take appropriate regulatory action.
Unfortunately, that was not an isolated case as there are companies that continue to fail to comply with Rule 720(5) and Rule 720(6), together with Appendix 7F and Appendix 7.4.1, respectively of the Catalist and Mainboard Rulebooks. Since directors should be ensuring that disclosures relating to themselves are accurate, the directors concerned should bear primary responsibility for non-compliance [the board, company secretary and continuing sponsor (where applicable) should also bear some responsibility]. All directors have signed the undertaking in Appendix 7H and Appendix 7.7 respectively under the Catalist and Mainboard Rulebooks requiring them to use their best endeavours to comply with listing rules and to procure the issuer to comply.
On June 22, 2020, Sheng Siong will be holding its AGM. One of the directors up for re-election is Mr Goh Yeow Tin, who is the lead independent director. Pages 33 to 36 of Sheng Siong’s 2019 Annual Report disclose the information required under Rule 720(6) (as a Mainboard company) and Appendix 7.4.1 for the directors proposed for re-election. Under (j), the question is “Whether he has ever, to his knowledge, been concerned with the management or conduct, in Singapore or elsewhere, of the affairs of:- (i) any corporation on which has been investigated for a breach of any law or regulatory requirement governing corporations in Singapore or elsewhere”. For Mr Goh, the answer stated is “No”.
However, Singapore Post (SingPost), where Mr Goh was a director (and deputy chairman) from July 7, 2014 to June 26, 2016, was reprimanded by SGX on May 4, 2017 for breaches of listing rules (https://www.sgx.com/regulation/public-disciplinary-actions/sgx-reprimands-singapore-post-limited). The reprimand was for an incorrect disclosure made on July 18, 2014, and was clearly directed at the company for an event that happened while Mr Goh was a director. SGX also said that it had referred the matter to the relevant authorities.
Shouldn’t the answer to (j)(i) be “yes”? Just because Mr Goh had resigned before the reprimand was administered cannot be a reason for answering “No” as it was for a breach while he was a director.
On a related note, Sheng Siong only disclosed the principal commitments including directorships for three years (2017-9) for all its directors, even though Appendix 7.4.1 specifically requires five years for those up for re-election. This means that Mr Goh’s directorship at SingPost is not listed as he had resigned in 2016.
However, this is not the only case where the investigation and reprimand by SGX Regco for SingPost was not disclosed by companies where Mr Goh is a director and had gone up for re-election. Other companies where Mr Goh is currently a director are AsiaPhos Limited, KTMG Limited, TLV Holdings Limited and Vicom Limited. At AsiaPhos, where Mr Goh is the Chairman and was re-elected at the AGM on May 8, 2020, the same “No” answer is stated in the 2019 annual report. At KTMG, where Mr Goh is the lead independent director and the company is holding its AGM on June 26, 2020, the answer in its 2019 annual report is also “No”. At Vicom, where Mr Goh is also the lead independent director, the answer was also “No” in its 2018 annual report when Mr Goh was re-elected on April 24, 2019. Mr Goh, who is the chairman at TLV Holdings, has not gone up for re-election yet under the requirements of rule 720(5) and Appendix 7F for this company. But the answer has been a consistent no, no, no, no .
Mr Goh is not the only former SingPost director who seems to have forgotten about the SGX Regco’s reprimand at SingPost (SingPost shareholders are still constantly reminded of the debacle since the stock is still trading at about $1 below the $1.80 price before the saga started). When Professor Low Teck Seng was appointed as independent director at Chip Eng Seng on December 12, 2019, the answer to (j)(i) for the appointment template was also a “No”.
The fact that the reprimand at SingPost did not mention individual directors is not an excuse for the non-disclosure. (j)(i) very clearly refers to “any corporation” which has been investigated for a breach of any law or regulatory requirement. Did the directors think that breaches of SGX listing rules do not count?
Perhaps SGX Regco should name those who were directors at the time of the breaches when they reprimand an issuer. Better still, it should target its reprimands at directors rather than the issuer. As I have mentioned in previous articles, while the stock exchanges in Hong Kong and Malaysia have in recent years singled out individual directors, including independent directors, in their regulatory actions, SGX has not moved in the same direction, and public reprimands in general remain rare compared to those other exchanges.
These are just the latest examples of non-compliance with rules relating to disclosure of regulatory actions as I have pointed out numerous other cases in other articles. Directors and companies have not been taken to task and this has arguably contributed to continuing non-compliance.
Since directors seem to have a problem keeping track of reprimands, perhaps SGX Regco should issue a formal certificate to each director of a company when it administers a reprimand. As a suggestion, perhaps something like the one below would be helpful and directors can then hang it on the wall to remind themselves to make the correct disclosures. It can be called SGX Certificate of Reprimand – or SCORE in short – although it is an own goal.
