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Lawsuits against minorities may impede meaningful discourse, warns SGX

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THE Singapore Exchange’s chief regulator urged companies to resist taking an “overly legalistic” approach in dealing with shareholders and warned that such actions could have a “chilling effect” on robust company-shareholder engagement.

THE Singapore Exchange’s chief regulator urged companies to resist taking an “overly legalistic” approach in dealing with shareholders and warned that such actions could have a “chilling effect” on robust company-shareholder engagement.

“Generally, we encourage a free and frank discussion between the board and shareholders at AGMs (annual general meetings). However, there is a line - a legal line and not a line in our listing rules - that cannot be crossed which applies to both sides. We encourage all parties to focus on the issues and not personalities,” said Tan Boon Gin, chief executive of SGX RegCo.

The SGX found itself compelled to weigh in on the matter of companies issuing legal threats against dissenting minority shareholders which - to some extent - dominated the questions from shareholders at SGX’s annual general meeting that lasted around three hours on Thursday.

This comes in the wake of Stamford Land Corporation’s recent defamation suit against shareholder Manohar P Sabnani over statements that he allegedly made during the group’s 2016 and 2018 AGMs. Mr Manohar, a veteran investor, was also present at the AGM.

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Shareholders present at SGX’s AGM pushed for the SGX to mediate or intervene in the event disputes arose between minority shareholders and boards at future shareholder meetings to avoid being dragged to court, which they worried was an “oppression” of their rights.

“Shareholders have a right to be concerned. I assure you that we will talk a little more on what we can do better on this issue moving forward,” said SGX Regco chairman Tan Cheng Han who was also present at the AGM.

“At the same time, let me assure you - where there is a clear case of oppression of shareholders, there are things that we, in RegCo can do. Where directors have not acted appropriately and there is evidence of this, RegCo will not hesitate to act,” Prof Tan added.

Earlier at the AGM, SGX chief executive Loh Boon Chye elaborated on the exchange’s three priorities moving forward - building up its multi-asset growth strategy, expanding its international footprints to “deepen the engagement with clients” and widen the pacts with other markets.

Just recently, the SGX led a US$53 million growth equity financing round in Trumid - a New York-based startup that runs an electronic corporate bond trading platform. Fixed income is an area that the SGX is keen to “scale up” as part of its multi-asset growth strategy and to do this, it will need to identify “inorganic” opportunities, said Mr Loh.