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Minority revolt at Kingboard Copper Foil

Leu Siew Ying Published on Mon, Jan 11, 2016 / 10:00 AM GMT+8

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SINGAPORE (Jan 11): James Morton relocated to Singapore from the UK to set up an asset management business in 2010, attracted by the city-state's modern financial infrastructure and reputation for integrity. Since then, he has been disappointed by the failure of regulators to stop a locally listed company from favouring its majority shareholders at the expense of its minority shareholders in the running of its business.

The company in question is Kingboard Copper Foil Holdings, which sells the bulk of its output to its parent group on terms that its minority investors say are unfair. Four years ago, the company's minority shareholders voted to withhold permission for the company to engage in interested person transactions (IPTs) with its parent group. But that only left them in an even worse position. Complaints to local regulators about breaches of corporate governance at the company by investors have achieved nothing. And, attempts by a minority shareholder to litigate the matter in Singapore failed.

The case was eventually taken to Bermuda, where Kingboard Copper Foil is incorporated. Two months ago, on Nov 10, the Bermuda courts found that the company and its majority shareholders had indeed flouted listing rules that protect minority shareholders. The Bermuda courts could now order that the company be wound up, or compel the company to buy back shares held by the minority shareholders seeking relief from the oppressive conduct of the majority shareholders. If that happens, the stock could rally strongly. As at Sept 30, Kingboard Copper Foil had a net cash position of 34 cents per share, which is 41.5% more than the current market price of its shares.