When silence is not golden

A MONTH into 2018 - and already several cases of tardy and non-disclosures by companies listed on the Singapore Exchange (SGX) have dominated headlines.

First, there is Noble Group - the Hong Kong-based commodities group which is haemorrhaging and fighting for survival.

Debtwire reported on Jan 25 that Noble might be nearing a deal to restructure its US$3.5 billion debt, with a debt-to-equity swap.

Noble subsequently clarified that no agreement had been reached yet. But four days later, it confirmed that it had struck a deal with creditors, details of which had been reported by Debtwire.

Its US$3.5 billion debt will be restructured in exchange for 70 per cent of the company, with existing equity holders' combined stake diluted to only 10 per cent. If that is not material, one wonders what is.

Then, there is JEP Holdings, which suddenly jolted from a coma to surge 17 per cent from S$0.035 to S$0.041 in one day on Jan 9, with 29.5 million shares traded compared with a one-year average of four million shares traded daily.

The stock continued to rally, and is trading around S$0.073 - a whopping 111 per cent up since the start of the year.

On Jan 15, JEP revealed that its board had received information that an unrelated third party has been in talks with executive directors - Joe Lau and Zee Hoong Huay - on buying a controlling interest in the company.

The discussions were said to be at an exploratory stage. But two days later, JEP disclosed that UMS Holdings had on Jan 15 became a major shareholder, after it bought 157 million shares from Mr Lau and 110 million shares from Mr Huay through married deals. From nothing, UMS owns 29.5 per cent of JEP today.

Distant memory

For Ipco International, the trauma caused to investors by the 2013 penny stock saga seems a distant memory.

Its board recently clarified that it had chosen not make any public disclosure back in 2016 that Goh Hin Calm (Ipco's interim CEO) and Carlson Clark Smith (its chief financial officer and executive director) were being interviewed by Commercial Affairs Department (CAD) and that their passports were retained by the white-collar crime buster.

"The company's position was that no formal arrest or charges had been made of either of Mr Goh and Mr Smith at that time," Ipco said on why it believes that it was not in breach of the SGX Listing Rules.

Then we have Datapulse Technology and its series of missteps, including its newly formed board's rush to buy Wayco Manufacturing, a Malaysian haircare products firm in less than five days without any due diligence, save the one provided by the seller, Ang Kong Meng.

To make matters worse, its new controlling shareholder Ng Siew Hong has "certain past and current business relationships" with Mr Ang.

In an interview with BT, Ms Ng revealed she had worked in a firm set up by Mr Ang before venturing out on her own in 2000.

"I don't see what is wrong with my past business relationship with Ang. I sold the property we invested in 2011. It's a long time ago," she told BT.

Rather than a rules-based approach, regulators here have opted for a principles-based approach, where all material information has to be disclosed by a listed company in a timely manner, without disadvantaging any party, and to prevent the creation of a false market in its securities.

Yet, time and time again, listed firms have been tardy in volunteering any information - especially negative material - that may hurt their share prices.

This does not resonate well in Singapore's disclosure-based regime, where disclosure is a primary form of investor protection and fundamental to market efficiency.

Listed companies must realise that compliance in a principles-based environment is not voluntary in any material sense.

They must comply under listing rules. The fact that it is not legally required should not lead listed companies to conclude that they have a free choice.

The sad truth is that there will always be the recalcitrants who abuse the "comply or explain" regime that we have, but even sadder is that there is little recourse for minorities when listed companies breach their trust and send share prices tumbling.

Perhaps it is time for the regulators to ponder if more sanctions are needed.