Redeemable co-operative shares did not qualify as capital under new insurance regulatory requirements and to support NTUC Income’s capital adequacy ratio, as they are not permanent capital. NTUC Enterprise subsequently converted all its shares to permanent shares when the Co-operative Societies Act (CSA) introduced a new class of irredeemable shares in 2018. The Edge Singapore explained why this was necessary here.
In an open letter to the Monetary Authority of Singapore (MAS) on Aug 2, Tan Suee Chieh, former NTUC Income (now Income Insurance) CEO and NTUC Enterprise CEO, had said that NTUC Enterprise injected $630 million into NTUC Income from 2015 to 2020 in return for shares at a par value of $10 per share. "The consequence of those capital injections was that NTUC minority shareholders at the time had their shares diluted. Indeed, as a result of those capital injections, NTUC Enterpise’s shareholding in NTUC Income increased very significantly from 30% in 2015 to 70% in 2020."
NTUC Enterprise clarifies in an Aug 4 response that co-operative shares are purchased and redeemed at their par value, and hence they are not equity shares. The value of the co-operative shares of NTUC Income (the co-operative that became Income Insurance after it was corporatised in 2022) were valued at par or $10 per share when its ordinary members injected capital between 1995 and 2004 and also when NTUC Enterprise made its capital injections totalling $630 million in NTUC Income between 2015 and 2020, without reference to prevailing net asset value.
