SINGAPORE (Dec 3): In 2015, the Securities Investors Association (Singapore) helped commodities trader Noble Group organise two shareholder meetings: one was a pre-annual general meeting session; the other was for the purposes of “shareholder communication”, according to SIAS. “Noble didn’t have problems at that time,” says SIAS founder, president and CEO David Gerald. Noble paid for the event, including venue, marketing and administration costs.
Early this year, as a controversial restructuring was being organised, Gerald met with Noble’s chairman Paul Brough. In a Feb 4 statement, Gerald noted that SIAS “has been assured” that Brough and Noble’s management were “fully committed” to the restructuring that “puts Noble on a firmer financial footing and provides a platform for restoring the Group’s fortunes in the longer term”. The statement also noted that Brough assured SIAS of Noble’s commitment to an open and ongoing dialogue with shareholders, and that it would hold a town hall meeting once the restructuring is underway, to be hosted by SIAS.
By August, with Noble having lost 98% of its market value in three years, some of its minority shareholders were publicly saying they felt “cheated”. Noble is now being jointly investigated by the Accounting and Corporate Regulatory Authority, the Monetary Authority of Singapore and the Commercial Affairs Department.
Gerald tells The Edge Singapore in the following pages that SIAS exists to educate investors and facilitate dialogue between companies and shareholders. The association also claims to protect investors’ rights and resolve disputes, and advance corporate governance and transparency. In addition, he disapproves of the confrontational way in which some shareholders have represented themselves at meetings recently. “There is no point in going to an AGM and shouting at the chairman,” he says. “You [should] engage them intelligently, and ask them about the annual report, be it governance, business strategy or performance.”
But can an advocate for minority shareholders be truly effective if it adopts a collaborative approach? Gerald insists that SIAS is proving exactly that. Yet, appearing less than confrontational with dealing with a company that subsequently collapses, such as Noble, is not easily forgotten by investors. And, bestowing awards on companies such as Midas Holdings that subsequently become mired in scandal is even worse.
For five years in a row up to 2016, the supplier of aluminium parts to China’s booming railway industry was recipient of the “Most Transparent Company” award handed out by SIAS. It has been alleged that, in 2016, Midas chairman Chen Wei Ping was secretly taking out loans in the name of the company’s subsidiaries. Early this year, its auditor cited undisclosed liabilities and lawsuits, and disavowed the reliability of its reports from 2012 to 2016. The company’s stock has since been suspended from trading.
Gerald says SIAS has since provided Midas shareholders with legal advice. But he suggests investors ought to have heeded SIAS’ advice in the first place. “Our advice has always been if the operations are in China, the money in China, the board in China, then don’t put your money in that company.”
Whatever the case, simply because Singapore has relied on cooperative tripartism in the organisation of its economy and labour market does not mean it will be equally successful using the same principle in managing its capital market. Workers in Singapore in the 1970s had nowhere else to go. Capital in the 21st century, even that owned by mom-and-pop investors, is much more mobile.
This story appears in The Edge Singapore (Issue 859, week of Dec 3) which is on sale now. Subscribe here
