Fighting the good fight for small investors
After 25 years of championing investor rights, the Securities Investors Association (Singapore) shows no signs of slowing down
IN ONE of its early battles, the Securities Investors Association (Singapore), or Sias, found itself in the middle of a heated dispute involving NatSteel, a company then listed on the Singapore stock exchange. The company had proposed making dividend payments conditional on shareholders approving a change to its memorandum and articles of association, an amendment that would allow dividends to be paid in the form of scripts instead of cash.
Sias, led by its president, David Gerald, saw this as a dangerous precedent that could undermine shareholder rights. Taking a stand, the association rallied minority shareholders to successfully reject the resolution.
This was just one of many defining moments for Sias, which is celebrating its 25th anniversary this year. Over the years, the association has grown from a modest set-up into a respected charity with Institution of a Public Character status and 20 staff members today. Significantly, it has emerged as a guiding force for Singaporean investors, helping them navigate everything from the Central Limit Order Book (Clob) saga to the collapse of Lehman Brothers’ minibonds, land investment scams, and bond defaults.
Reflecting on Sias’ journey, Gerald acknowledges the many hurdles it has faced. “Sias has been marked by constant struggles, such as funding, manpower and resources to run the association. Such limitations made it tough for outreach to the broader investment community. Having overcome some of these struggles, Sias today is well recognised as a credible voice and is well accepted by all stakeholders,” he says.
Sias’ story is one of standing up for the little guy, and its new book, Boardroom Knockout: How Singapore’s Investor Watchdog Fights for Minority Shareholders, tells that story in detail. The association was born out of the Clob crisis in 1998, when Malaysia imposed overnight capital controls and new rules on the clearing and settlement of Malaysian shares, which led to huge losses for investors in Singapore as they lost the ability to trade in their shares held on this over-the-counter market (see box below).
In the years since, Sias has been involved in numerous high-profile cases, such as the 2018 Hyflux crisis, where it provided critical support to more than 34,000 retail investors affected by the company’s financial troubles.
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“Not all of Sias’ efforts make headlines. We regularly engage with company management in the boardroom to address potential issues early, providing honest feedback to avoid public conflicts. Often, our most successful outcomes are the ones that never reach the front pages,” reveals Gerald.
A different approach to corporate governance
Indeed, the association prioritises resolving issues in the boardroom rather than the courtroom, working closely with companies, regulators, and investors to find solutions. “Initially this approach was met with scepticism and scorned by some activists who preferred a more direct and confrontational approach. However, over time, it has proven to be a successful strategy,” says Gerald.
Sias has also played a significant role in shaping the regulatory landscape in Singapore. In partnership with bodies such as the Singapore Exchange (SGX), the Monetary Authority of Singapore, and the Accounting and Corporate Regulatory Authority, the association has pushed for higher standards in corporate governance – from advocating better board diversity to urging companies to seriously assess the independence of long-serving directors.
Investor education has been another key aspect of Sias’ mission. Over the last 25 years, the association has worked tirelessly to equip retail investors with the knowledge they need to navigate the market, encouraging them to raise issues and hold companies accountable.
Sias will continue to explore new ways to empower investors, says Gerald, such as facilitating shareholders’ ability to propose resolutions at annual general meetings, a right that minority investors often struggle to access. He highlights a recent case involving insurer Great Eastern Singapore, where minority shareholders proposed resolutions that significantly improved engagement with the board.
Going forward, Gerald anticipates a surge in shareholder activism driven by greater access to information and advancements in technology such as artificial intelligence. “Shareholders are going to demand more from their boards and management, and companies that don’t meet these expectations might find capital shifting to better-managed firms or low-cost ETFs (exchange-traded funds),” he warns.
Strengthening Singapore’s capital markets
Sias is also working to address the declining level of retail investor participation in Singapore’s capital markets due to the damage to confidence over the last 20 years, inflicted by the collapse of China stocks and the penny stock crisis. The growing popularity of online trading has also resulted in younger investors trying their luck in overseas markets such as the United States.
To overcome this challenge, Sias has been working closely with SGX, listed companies and other financial market stakeholders to promote Singapore-listed companies by organising Corporate Connect events, investor days and dialogue sessions. However, the role of Sias in this area is limited to providing free investor education as it does not have an investment adviser’s licence.
To revitalise Singapore’s capital markets, Gerald advocates a comprehensive approach, including enhancing transparency and investor protection, as well as attracting high-quality, growth-oriented companies. Diversifying into sectors such as technology, healthcare, and sustainability could further help strengthen the market and offer investors more opportunities.
He welcomes the government’s recent initiative to establish a group to review Singapore’s stock market, but stresses the need to address fundamental investor concerns, and not just introduce high-level strategies. He also sees value in adopting practices from other markets, such as requiring companies to disclose measures to ensure their shares reflect their true value.
With its track record of advocacy, education, and effective engagement, Sias is well positioned to continue being a vital voice for Singapore’s investors for another 25 years even as market conditions change. Says Gerald: “Sias has pushed boundaries by publicly advocating for minority shareholders. Our mission has always been to ensure that minority shareholders are heard and protected in this evolving landscape.”
How it all began: The Clob saga and the birth of Sias
The story of the Securities Investors Association (Singapore), or Sias, begins with a financial crisis that shook the foundations of the Republic’s investment community – the Central Limit Order Book (Clob) saga. This event not only affected thousands of retail investors, but also led to the creation of an organisation that would go on to become the voice of minority shareholders in Singapore.
In the 1990s, Singapore’s Clob market allowed investors to trade Malaysian stocks. However, in 1998, following the Asian financial crisis, the Malaysian government imposed capital controls and suspended the trading of Malaysian shares on Clob. This move trapped the investments of over 172,000 investors in Singapore, who suddenly found their shares frozen and effectively worthless. The impact was particularly devastating for small investors who had put money in these stocks.
As the situation dragged on, investors felt increasingly frustrated and anxious. It was in this climate of uncertainty that a small group of concerned individuals, led by David Gerald, came together. They recognised the urgent need for a collective voice to represent the interests of these beleaguered investors.
In 1999, this group formally established Sias with the primary goal of advocating the rights of minority shareholders. Sias’ first major challenge was to address the Clob issue. The newly formed association quickly mobilised to negotiate with the Malaysian and Singaporean authorities, working to find a resolution that would allow investors to either recover their investments or trade their shares.
Thanks to Sias’ persistent efforts, a settlement was eventually reached. While not all investors were able to fully recover their losses, the resolution provided a much-needed pathway for many to reclaim some of their investments. The Clob saga highlighted the vulnerability of retail investors and demonstrated the importance of having a dedicated organisation to advocate on their behalf.
The successful resolution of the Clob crisis marked Sias’ first major victory and established the association as a critical player in Singapore’s financial landscape. From that moment on, Sias has continued to stand up for minority shareholders, ensuring that their voices are heard and their rights protected.
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