FOREIGN COMPANIES LISTED ON SINGAPORE EXCHANGE & FOOTBALL ASSOCIATION OF SINGAPORE council members
Tue, Apr 19, 2005

     4.  Mr Steve Chia Kiah Hong asked the Senior Minister if his Ministry will institute safeguards or a minimum listing requirement period for foreign companies listed here so as to protect minority shareholders from company owners who seek to de-list their stocks from the Singapore Exchange (SGX) at depressed prices way below their initial listing price.

     Mr Tharman Shanmugaratnam (for the Senior Minister):  Mr Speaker, Sir, the SGX does not impose a minimum listing period requirement. This is similar to exchanges in other jurisdictions like the United Kingdom or Hong Kong. The issue of whether to voluntarily delist is a commercial decision best left to the company's shareholders. However,  SGX has rules to safeguard the interests of minority shareholders in such an event.     

    SGX rules require a shareholders' meeting to be convened to vote on a delisting resolution.  To be successful, the resolution has to be (i) approved by a majority of shareholders representing at least 75% in value held by shareholders present and voting; and (ii) not voted against by more than 10% in value held by shareholders present and voting.

    SGX also requires that a reasonable exit offer, which should normally be in cash, be provided; and an independent financial adviser be appointed to advise shareholders on the exit offer. 

    Taken together, these rules provide sufficient safeguard against  minority shareholders being  oppressed or forced to exit at unreasonable prices.    

     Mr Steve Chia Kiah Hong:   Sir, does the Minister know that some businessmen are treating Singapore as the ATM of the East where if they need money, they will come over to draw funds through the listing of the IPO which they will peg it at a very high price and that would subsequently flop over the months?  Over time, they would probably acquire a majority of 90% and then demand for compulsory delisting.  This has happened recently in the case of a company that was listed.  So would the Minister explain this matter?

     Mr Tharman Shanmugaratnam:  The Takeover Code prevents minority shareholders from being abused, whether it is a local company or foreign company. And even if it is a foreign company that does not have takeover rules in its home country, by listing in Singapore, it has to amend its M&A to abide by Singapore's Takeover Code rules.  The takeover offer has to be at a price that ensures minority shareholders are not disadvantaged.  There are various rules, I think Mr Steve Chia must be familiar with them, ie, the price has to be higher than the last transacted price made by the offeror in the last three months, and so on and so forth.

     The rules that I had just mentioned on voluntary delistings ensure that minority shareholders are not disadvantaged.  The example he has given is where someone makes a takeover offer, the result of which is that less than 10% free float is available on the market and therefore a compulsory delisting is required.  The takeover offer is subject to the Takeover Code and the subsequent compulsory delisting is subject to rules, both in the Takeover Code and SGX

listing rules, which ensure that minority shareholders are not disadvantaged.  In any event, market discipline will operate.  If the takeover offer was not attractive in the first place, minority shareholders would not have accepted it, and the free float would not have gone below 10%.

     5.  Mr Steve Chia Kiah Hong asked the Minister for Community Development, Youth and Sports (a) what is the rationale for not allowing the Football Association of Singapore (FAS) to follow the Singapore Sports Council's code of governance in having its council members democratically and fairly elected by its members, instead of being appointed by the Government, so as to help the FAS run its affairs more efficiently and professionally; and (b) which other sports association currently receives substantial funding from the Government or Singapore Pools Pte Ltd and yet still has its council members appointed by the Government.

     The Minister for Community Development, Youth and Sports (Dr Vivian Balakrishnan):  The Code of Governance for National Sports Associations (NSAs) is meant to strengthen their governance and ensure the presence of a competent council or board that is able to provide sound direction and guidance to the NSA.  Hence, the Government's decision to continue appointing the members of the FAS Council is entirely in line with the objective of the Code.  The Government will ensure that competent and committed persons are appointed to the FAS Council to help the FAS carry out its work more efficiently and professionally.

     Every year, the FAS receives about $10 million, of which $8 million goes to the S-League, from football betting proceeds of Singapore Pools.  This is on top of an average of $2.6 million in operating grants which it receives from the Government.  The amount that FAS receives from Singapore Pools is much higher than the normal operating grants that other NSAs would get from the Government.  The appointment of the Council by the Government is meant to ensure that these funds are managed well and responsibly. 

     The Government will continue to appoint the members of the FAS Council, so long as the FAS continues to receive substantial funds from Singapore Pools annually.

     Apart from the FAS, no other National Sports Association receives such substantial funding from the Government or from Singapore Pools, and has its council or board members appointed by the Government.

     Mr Steve Chia Kiah Hong:  Sir, I hope not to hear the Minister wrongly.  Does it imply that those who are elected are not competent or not professional in the way they handle the job, that is why the Government needs to appoint competent and professional people to be in the Council?

     Dr Vivian Balakrishnan:  Not at all.  Nevertheless, because of the exceptional circumstances under which FAS receives such a large proportion of its money from the football betting proceeds from Singapore Pools, I feel it would be wise for the Government to continue appointing the members of the FAS Council.  This should not be misconstrued in any way as a reflection on the election processes in other NSAs.