To protect investors, boards should expose the divergent interests of controlling shareholders

THIS column recently called on the board of Singapore Airlines (SIA) to properly address the question of how it manages the interests of its equity holders versus those of its mandatory convertible bond (MCB) holders.

Temasek owns more than half of SIA’s shares and nearly all its MCBs. When the MCBs are mandatorily converted into new shares in 2030, minority shareholders could suffer significant dilution.

So, should SIA use its surging cash flows to redeem the MCBs over the next couple of years? Or, should it use its financial resources to aggressively pursue strategic growth objectives and allow the MCBs to convert into new shares in 2030?