Rare victory for minority shareholders at Vard

THE decision by the Singapore Exchange Regulation (SGX RegCo) was a rare and astonishing victory for minority shareholders of Vard Holdings - the target of Italy's Fincantieri Oil & Gas.

By ordering Vard to hold a new extraordinary general meeting (EGM) to seek approval for its delisting plans, the Singapore regulator has effectively put power back in the hands of minority shareholders. From a minority shareholders' perspective, this itself is a victory.

Minority shareholders, who complained that the company had bulldozed its way through the EGM on the delisting proposal, are now given a second chance to cast their votes. It is, therefore, imperative that they do not waste this opportunity. They must turn up at the second EGM, and make their votes count.

Overt and interventionist approach

For retail investors, it is certainly reassuring to see the regulator take a more overt and interventionist approach to handling errant companies or board, and see that minority shareholders' interests are actually being looked after - something which unfortunately is no so evident no matter how diligent the regulator is if work is done behind the scene.

Minority shareholders of Vard can also take a bow. They have shown that shareholder activism is alive and kicking in Singapore, and more importantly, they are being heard. As noted in a recent report by JPMorgan, a series of recently adopted corporate governance and stewardship codes, as well as listing rule amendments and others, are fuelling activism by encouraging investors to be more engaged, and companies to be more responsive and transparent.

Activism campaigns launched in Singapore peaked in 2016, with producer manufacturing and finance being the most targeted sectors so far.

Minority shareholders should, therefore, continue to take a more pro-active role in their investments and demand answers from companies and the board of directors.

Hopefully, SGX RegCo's latest move has given a powerful boost to investor confidence and help regain the lost trust from minority shareholders.

By asking for an updated independent financial adviser (IFA) opinion which must reflect the latest developments in the company, one can't help but wonder if the RegCo - armed with its own set of information - is signalling that the current exit offer may be far from satisfactory.

Afterall, as aggrieved retail investors have lamented, since the exit offer was made, Vard has clinched new contracts, including the 170 million euros (S$271 million) deal from Prysmian Group for the design and construction of one cable laying vessel.

Exit offer

As for Fincantieri, the Italian company may want to take this opportunity to revise its 25 Singapore cents a share exit offer. Not only will this repair its otherwise damaged reputation, but it will save the company the costs related to staying listed over the long run.

Whether Fincantieri will remake their exit offer entirely or offer improved terms, is purely speculative.

But the message to corporates is clear - they can no longer treat investors, especially minority shareholders, with disdain. Rather, they must fairly weigh the interests of all their owners when facing a merger and acquisition scenario.

READ MORE: SGX orders Vard to hold new EGM