SIAS to matchmake boards with suitable independent directors

Singapore

THE Securities Investors Association of Singapore (SIAS) is expanding its role to include that of playing matchmaker for struggling boards that need suitable candidates to take up the role of independent directors (IDs).

David Gerald, the president and chief executive of the shareholder advocacy group, said: "SIAS would like to help minority shareholders by finding suitable ID candidates for boards - especially in companies that lack progress or are not providing sufficient shareholder value."

To do this, SIAS would naturally need the go-ahead from the company's board as well as the backing of a substantial proportion of minority shareholders, he added.

The activist group's efforts in this area are chiefly motivated by the truism that a united and harmonious board is vital for all-round stakeholder engagement and a company's progress.

Mr Gerald said SIAS has been approached by both investors and even potential candidates offering themselves up for board positions, given the association's standing in the corporate sphere as a body that works "with companies and not against them" on issues ranging from governance and transparency to shareholder communication.

"We suspect quite a few companies today that are listed on the SGX, especially the small- and mid-cap ones, are generally willing to let a third party nominate directors, if a substantial number of shareholders agree," he said.

First off the bat, SIAS hopes to help plug the gaps in the board of Catalist-listed SBI Offshore, once a debt-free, cash-rich company but now floundering under the weight of losses and a search for new business. That its stock has lost more than 30 per cent of its value in the past year is another reason that has irked its minority shareholders.

Mr Gerald said: "There is no light at the end of the tunnel. We are concerned over the lack of expertise in the board currently to help the company progress."

The timing of SIAS' move to nominate two candidates - understood to be a former banker and a corporate figure with financial experience - as IDs on the board is far from coincidental; it is a development that is much needed for a company that has just come through a bitter boardroom tussle and which was hit by questionable transactions two years ago.

At the company's annual general meeting a week ago, two board IDs - Ling Yew Kong and Mahtani Bhagwandas, who have held the post for two and six years respectively and were up for re-election - announced that they would not be going for another term; both said they were choosing to retire from the board, citing "work commitments".

As expected, the meeting was fiery, with shareholders lobbing questions at the board and asking for explanations of the company's underperformance.

Underscoring their chagrin, the shareholders voted down a resolution to approve payment of directors' fees for financial year 2017, and for the fees to be paid in arrears for FY2018.

The IDs' departures, one of many in SBI Offshore in recent years, has left behind a three-member board, comprising the last two IDs and executive non-independent chairman Mirzan Mahathir, son of Malaysia's former prime minister Mahathir Mohamad and majority 18.5 per cent owner of SBI Offshore.

The board is too small to form the audit and risk management and remuneration committees, as required by listing rules and corporate governance guidelines.

Mr Gerald said: "Shareholders want to see a fresh injection of ideas and talent into the board. SIAS has serious concerns about the continuity of SBI Offshore's board and its effectiveness, so we are coming forward to recommend these individuals."

He added that SIAS has the backing of a substantial portion of the company's shareholders for the ID nominations.

"SBI Offshore needs serious-minded directors who are committed to addressing the current woes. The current state of affairs at the company is not conducive to improving shareholder value. To allow the situation to continue is not in the interest of stakeholders."

Apart from SBI Offshore, SIAS is in talks with other firms in need of a more skilled bench. Much of the work is now being done behind the scenes before the recommendations are put forth to boards for consideration.