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Resolving issues in the boardroom, not courtroom

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"What SIAS does is to help shareholders by engaging the companies to provide an opportunity for shareholders to clarify their doubts and fears and get a better feel of what the company is doing before they make an informed decision." – David Gerald, founder, president and CEO of SIAS

THE Securities Investors Association (Singapore) as a shareholder activist group does not "kick doors, bang tables, or carry placards shouting slogans" like Western activists. Instead, it opts for more amicable ways of resolving conflicts such as by sitting down with company boards, regulators and investors to talk issues out.

In its last financial year ended June 2018, SIAS also conducted 26 dialogue sessions and investor rights activities with shareholders and bondholders of companies ranging from troubled oil-and-gas players the likes of Ezion Holdings to Datapulse Technology, Hyflux, Pan-United Corporation, YuuZoo Corporation and ESR-Reit. Close to 3,800 investors attended.

David Gerald, founder, president and CEO of SIAS, says: "What SIAS does is to help shareholders by engaging the companies to provide an opportunity for shareholders to clarify their doubts and fears and get a better feel of what the company is doing before they make an informed decision – whether it is to vote in favour of restructuring or privatisation or a merger and acquisition."

But shareholder engagements are not limited to just these investor meetings. "The companies can come up with a question-and-answer, or do a website write-up or commentary in the newspapers. There are many avenues that they can use." Just as importantly, he feels that shareholders also have a responsibility to ask good, probing questions, instead of just "browbeating" the management with abusive comments. Criticism has to be constructive, he says.

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The same goes for questions targeted at management at annual general meetings. To this end, SIAS has started poring over the annual reports of about 500 companies, up from 350 last year, to put up three questions per company on governance, business strategy, and business performance, for shareholders to ask at these meetings.

A year ago, Mr Gerald had voiced his hope to better represent disgruntled shareholders in court by way of class action, but that seems to have taken a back seat with the association reaching its 20th anniversary next year. He now feels that court action "is something that we will not want to jump into". This is because discussions and negotiations are often more effective. In contrast, pursuing class action will "create a new culture and send the wrong signal".

An example he cited was Chinese state-owned jet fuel importer China Aviation Oil, which made increasingly risky gambles in trading oil derivatives to avoid reporting losses on earlier trades, which ultimately led to losses of US$550 million in 2004.

In response to shareholders' demands to sue the board, Mr Gerald's answer to them then was: "Do you sue a dead horse?" SIAS chose rather to engage with Chinese government officials to pursue a corporate restructuring, efforts which worked in resurrecting the company and bringing it back into the black.

It believes that its strategy of seeking "collaboration, not contention" is why the association is today on the SGX Listings Advisory Committee and the Corporate Governance Council which proposed the latest revisions to the Code of Corporate Governance, as well as investor education initiatives with MoneySense, the national financial education programme.

Mr Gerald says what SIAS has been doing has also caught the attention of foreign regulators, such as the Securities and Exchange Commission (SEC) Thailand, which is seeking its help to promote corporate governance and investor rights in Thailand. SIAS partnered SEC Thailand and the Stock Exchange of Thailand to organise the inaugural Corporate Governance conference in Bangkok on Sept 19, and is looking to continue to export Singapore's brand of shareholder activism to more markets abroad.


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