By Mak Yuen Teen

This morning, I sent the questions below to Telechoice for the board to answer before or at its AGM to be held on 28 April. I hold 1,000 shares in the company.

Question 1:

I refer to Resolutions 6 and 7 that pertain to the re-election of Mr Adrian Chan Pengee and Ms Jennifer Duong Young. These two directors were appointed to the board on 24 April 2024, the same day that the company held its 2024 AGM. Their appointments were announced on 22 April 2024. Please explain why they were appointed last year without being re-elected at last year’s AGM. Why did the Nominating and Remuneration Committee (NRC) and Board not plan their appointments such that they could be elected at last year’s AGM? As a result, they served a full year without having being properly elected by shareholders at last year’s AGM.

I note that an independent director resigned on 31 December 2023 (after serving just one year) and a non-independent non-executive director retired at the 2024 AGM after serving 9 years. There do not appear to be any reasons why Mr Chan’s and Ms Young’s appointments could not have been planned such that they could have been elected at last year’s AGM.

Question 2:

I note that Mr Shailesh Anand Ganu was appointed to the board as an independent director on 7 July 2023 and re-elected at the 2024 AGM. Mr Ganu and Mr Chan are both current council members of the Singapore Institute of Directors (SID) with Mr Chan being a Vice Chairman of SID. Can the NRC and board disclose whether Mr Ganu recommended Mr Chan’s appointment to the board?

Further, Ms Young was recently appointed to the City Developments Ltd’s board under highly controversial circumstances without going through CDL’s Nominating Committee, together with Ms Wong Su Yen, who was the immediate past Chairman of SID. Can the NRC and board explain whether Mr Ganu recommended Ms Young’s appointment to the board?

Question 3:

Related to the above, can the NRC and board explain the search and nominating process for directors at the company, including how the requisite skills and experience for the board are identified, how directors are sourced, and the process for assessing their suitability, including due diligence that is done?

Question 4:

I note that the company has disclosed that Lee & Lee provides corporate secretarial and legal services to the group and Mr Chan is a Senior Partner of Lee & Lee. Notwithstanding the business relationship between Lee & Lee and the group,  the board has considered him as independent, and provided standard explanations used by many other companies.  Mr Chan also serves on 4 other listed boards and has several other principal commitments. Given the business relationship and his many commitments, did the NRC and board consider that there is no better candidate to appoint to the board given the large pool of candidates available in the market?

Question 5:

Mr Chan is the Chairman of the Audit Committee (AC). However, he is a lawyer by profession. The Singapore Code of Corporate Governance states that the AC should have a majority of directors, including the Chairman, with recent and relevant accounting or related financial management expertise or experience. The company has claimed compliance with the Code by stating: “Whilst the Chairman of our AC is a lawyer by training, he has significant accounting/financial management knowledge and experience taking into account, among other things: (a) his background as a corporate lawyer for 35 years, and as the Head of Corporate Department and Senior Partner at Lee & Lee; (b) that he has been a director on the boards of many listed companies and other entities over many years; and (c) that he has been a director  on the boards of many listed companies and had previously served as chairman on some of them, including as Chairman, Audit and Risk Management Committee of the Accounting and Corporate Regulatory Authority and Chairman, Audit and Risk Committee of Ascendas Funds Management (S)  Limited (as manager of Ascendas REIT).”

These are not the criteria for assessing recent and relevant accounting or related financial management expertise or experience under the Guidebook for Audit Committees in Singapore or under the Audit Committee Guide issued by SID, where Mr Chan is Vice Chairman. Can Mr Chan, the NRC and board confirm that Mr Chan has, as per the Audit Committee Guide, amongst other things, substantively the following qualities?

  1. The ability to understand and assess the general application of local and other generally accepted accounting principles
  2. The ability to ask pertinent questions about the company’s financial reporting process
  3. The ability to effectively challenge Management’s assertions on financials and Management’s responses when appropriate
  4. The ability to understand internal controls and risk factors relevant to the company’s operations, including those relation to information technology, treasury operations, industry, financial derivatives, etc.
  5. Experience gained through executive responsibility for a sizeable business including having or have had responsibility for the finance function, such as being or having been a CEO, CFO or other senior officer with financial oversight responsibilities
  6. Education or professional qualifications relating substantially to accounting or finance
  7. Experience of working within the areas of corporate finance, financial reporting or accounting

Question 6:

Related to Question 5, why did the board not consider appointing a director with more recent and relevant accounting or related financial management expertise or experience to lead a committee whose responsibilities are primarily relating to oversight of financial reporting, internal controls, risk management, internal audit and external audit? Can the board confirm that Mr Chan would be able to substantially answer questions relating to these matters at the AGM if asked by shareholders?

Question 7:

With effect from 5 December 2023, the company has been placed on the SGX Watch-list, having recorded three consecutive years of pre-tax losses and a market capitalisation below $40 million over the six months prior.

In light of the poor performance of the company, on what basis did the board make the decision that the Chairman of the board, Mr Ronald Seah, should be re-designated as a non-independent non-executive director after reaching the tenure limit of 9 years for an independent director? I note that he has served on the board since 3 May 2012 and as Chairman since 30 June 2020.

Question 8:

Relating to Question 7, can the board explain what steps it is considering to improve the financial performance of the company and to help the company exit the watchlist?