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SGX assures it will act in clear cases of minority oppression

Call for exchange to help mediate disputes between companies and shareholders

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The Singapore Exchange's annual general meeting on Thursday that lasted a good three hours was long by any account; yet few could have predicted that the dominant issue would be that of a listed company's board suing a minority.

Singapore

THE Singapore Exchange's annual general meeting on Thursday that lasted a good three hours was long by any account; yet few could have predicted that the dominant issue would be that of a listed company's board suing a minority.

SGX watchers were in fact expecting questions to be asked on the collapse of Noble Group, executive pay or for updates on the dispute with India's stock exchange over the Nifty 50 futures products that had weighed on SGX's stock price, among others.

Instead, there was palpable anxiety among many shareholders - some 800 people attended the shareholder meeting - over how they would need to conduct themselves at shareholder meetings or risk being sued.

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Stamford Land Corporation recently filed a defamation suit against shareholder Manohar P Sabnani over statements that he allegedly made concerning the group's 2016 and 2018 AGMs. Mr Manohar, a veteran investor, was also present at the SGX AGM.

"Sometimes, we are so passionate when we ask the company tough questions and we may not know if we crossed a line," said one shareholder who called for SGX RegCo, the regulatory unit of the exchange, to set up a dispute resolution process to help resolve such disagreements between companies and shareholders.

Addressing the concerns, Tan Boon Gin, chief executive of SGX RegCo, said: "As a market regulator, we encourage parties not to take an overly legalistic approach because if they do, I fear it will have a chilling effect on robust conversations. Generally, we encourage a free and frank discussion between the board and shareholders at AGMs. 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."

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

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

"As for mediation, if both parties are willing and consent to mediation by us, of course we will be willing to do so," said Mr Tan Boon Gin.

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, 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.

On the status of the end-to-end trading link between SGX and Bursa Malaysia which was put on hold by Malaysia a month after the new government led by Dr Mahathir Mohamad came into power, SGX chairman Kwa Chong Seng told shareholders: "Frankly, we do not control that. (But)It will come back if you ask me as it's logical and makes sense."

The SGX-Bursa link was unveiled in February to offer investors a "superior trading experience" and catalyse further tie-ups with other Asean stock exchanges. But since June, its fate turned uncertain after the Malaysian government said the plan would need to be studied further.