Hwa Hong discloses potential board candidates’ links to directors, shareholders

PROPERTY player Hwa Hong Corporation on Monday (May 9) responded to the notice of compliance raised by watchdog Singapore Exchange Regulation (SGX RegCo) last Friday.

Among other things, SGX RegCo had requested the company to disclose by May 9 whether any of the potential independent director candidates were introduced, nominated by, or have any connections or relationships with any of the company’s directors or controlling shareholders.

All 5 of the potential candidates were introduced to the board by either Ong Eng Loke or David Ong, both of whom are directors and substantial shareholders of the company, the filing on Monday noted.

Following the annual general meeting (AGM) on Apr 18, the company’s board invited all directors to provide recommendations of any new potential candidates for independent directorship they may have for consideration, in addition to the ready pool of potential candidates maintained by the company.

Ong Eng Loke introduced 2 candidates to the board after the AGM. One of them was referred to him through the company’s secretary, with whom he has no connection, while the other is his former classmate who he has not contacted since 1984, but had done so in April for the independent director position owing to the candidate’s background in audit and real estate, the filing noted.

Of the other 3 candidates introduced by David Ong, one of them was through a cousin of his, whom he has no connections with personally. The other two candidates put forth by him have been shortlisted by the board for consideration, “taking into account the need to reconstitute the board (including the board committees) expeditiously”.

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One of the shortlisted candidates was a colleague of David Ong from 2012 to 2014. The relationship was noted to be “purely on a professional basis”, and he had no contact with the candidate until 2021 regarding the independent director position.

The other shortlisted candidate, introduced to the board in 2019, had been acquainted with David Ong through a mutual friend that same year. As the candidate was on the board of another real estate company, the candidate was not considered suitable by Hwa Hong’s nominating committee in February 2021. Now that the candidate is no longer a member of the real estate company, the consideration has been revived after the 2022 AGM.

The recent developments at the company began on May 4, when Hwa Hong announced the resignation of its former independent and non-executive director, Mak Lye Mun. It attributed the reason to a “disagreement with certain board members on the selection and appointment process of 2 new independent directors”.

The company responded to queries from SGX concerning the resignation on May 5, noting that selection of suitable candidates is conducted through contacts and network of the board and where necessary, external recruitment companies may be engaged at the company’s expense.

On May 6, SGX RegCo noted that Hwa Hong is also required to appoint independent professionals to undertake an independent review of the terms of reference of the nominating committee and the company’s internal controls, processes and practices relating to the board nomination process. This includes the selection and appointment of potential candidates, and to make recommendations on improvements.

In addition, the company must also consult the appointed independent reviewer on the proposed appointment of new directors, including any of the potential candidates, prior to the completion of the review and implementation of all recommendations, SGX added.

In its latest filing, the company informed shareholders of its intention to comply with the requests from SGX RegCo.

Shares of Hwa Hong closed 3.5 per cent or S$0.01 higher at S$0.30 on Monday, before the announcement.