BOARDS should “seriously and objectively consider” the objects and proposed resolutions of a general meeting requisitioned by shareholders, and conduct the meetings “expeditiously”, said Tan Boon Gin, chief executive of the Singapore Exchange Regulation (SGX RegCo).

In a column on Thursday (Apr 27), Tan said boards should consider reaching out to the requisitionists to discuss their concerns and find a common ground.

While the requisition may be unwelcomed, boards should consider the merits of the proposals from the perspective of the issuer and its shareholders as a whole, he said.

This is regardless of the route adopted by the requisitionists to hold the general meeting, he added.

Shareholders of an issuer on SGX may put resolutions – such as replacing board directors – before other shareholders, by requisitioning a general meeting under Sections 176 and 177 of the Companies Act.

Under Section 176, requisitionists should submit a valid requisition to the board, and be forthcoming in providing the board with any information that they may reasonably require to convene and table the resolutions at the meeting.

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The board is obliged to hold the meeting within two months after the date of receipt of the requisition. Otherwise, the requisitionists may convene the meeting within three months.

Under Section 177, shareholders themselves call the meeting and there is no specific provision for them to give any notice or timeline to the board.

The requisitionists have to adhere to all applicable procedural requirements – including the giving of proper notice of the meeting to all shareholders, where the assistance of the company to disseminate the meeting notice to each shareholder may be needed.

“Therefore, it is particularly pertinent for requisitionists to be able to rely on the co-operation of the board to facilitate these procedural requirements,” Tan said.

When the board receives a requisition, it should immediately inform all shareholders through the bourse, and provide a response. Shareholders should also be kept updated on subsequent material developments.

“It is imperative that shareholders have all facts available to them, including the board’s position, to consider the matters put forth by the requisitionists so that they can make decisions on an informed basis on the merits or demerits of the resolutions tabled by the requisitionists at the requisitioned meeting,” Tan said.

David Gerald, founder, president and chief executive of the Securities Investors Association (Singapore) (Sias), noted that recent problems largely concern a meeting requisitioned under Section 177 – where there are often complaints to Sias that the shareholders are unable to avail themselves of the shareholder list.

Last week, a court ruled that SGX watch-listed USP Group need not proceed with its extraordinary general meeting (EGM), which was due to be held on Apr 21.

Some shareholders of the company had requisitioned for an EGM to wrest control of USP’s board and steer it out of the financial watchlist.

The court declared the requisition notice for the EGM invalid, as the requisitioning shareholders were not deemed “members” of USP under the Companies Act. It said, however, that it was “unacceptable that USP is trying to disrupt the democratic processes of the company”.

Gerald said: “When shareholders requisition for an EGM, company boards must recognise that there is unhappiness amongst shareholders and must, therefore, do everything they can to meet with their shareholders in the boardroom and try their best to resolve the issues that are the cause of their unhappiness.”

But he also noted that shareholders have to ensure that they can properly requisition for and/or conduct EGMs on their own in compliance with the Companies Act and the constitution of the company.

SGX RegCo’s Tan said a public dispute does not serve the interests of the issuer or its shareholders as a whole.

A protracted delay in the completion of the meeting would also result in uncertainty to shareholders, and unnecessarily detract the company’s management and board from the conduct of its business, Tan said.