Why minority shareholders don't stand a chance

IN recent years, the lack of effective investor protection in our market has become rather evident. For S-chips and other foreign listings, regulatory enforcement has often been hampered by the inapplicability of laws, cross-border enforcement barriers or runaway miscreants.

However, the Datapulse Technology (DT) case shows that even for Singapore-incorporated and based companies, investor protection leaves much to be desired.

First, the case highlights the deficiencies in our listing rules in protecting minority investors, especially the Chapter 9 rules on "Interested Person Transactions" (IPTs) and the Chapter 10 rules on "Acquisitions and Realisations". DT was able to acquire a company from a vendor who had significant business and employment relationships with both the controlling shareholder and the CEO without being caught by the IPT rules - and it later emerged that the vendor and controlling shareholder had together discussed the acquisition of the controlling stake from the previous controlling shareholder.