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Delisting without exit offer

Noted in the one of the BT article on this matter is that they are stuck between balancing commerical interests and minority shareholders interests. Given they are a listed company, naturally they would like to have the good companies listed and the lousy ones off the rack. I believe that spending their money to check if the companies are really negative equity is even more far fetched.  Money like 12 million  was spend when it is  unsuccessful trying to swallow a exchange of a much larger country. (i would not comment much whether its directors is aware and approve such costly gamble.) It is more worth it as compared to feed people to monitor the dying companies and helping to secure liquidity and corporate governance for our investments.  Similiarly, when it  proposes new  rules and  wanted big companies to list on the mainboard, our local sme (majority of  cant meet the new rule)  will list  as a second class citizen in its own Singapore  exchange on  the second board. They are just being answerable to their shareholders. Should buy their shares instead.

I think the regulationary work should be done seperately by an independent party backed by the governement. At least, l hope, the decisions made will not be influence and driven by commerical interests. I also understand the government bodies like MAS  don mind  paying  more to employe many good and smart people  in regulating the finance industry.  Singapore is one of the leading financial hub, but I don think we do in the stock market area. Maybe many regulatory problems we see today can be reduced and hope we have a better stock market image, retail investors are fairly taken care of  and more trading acitivity, higher valuations,  when  a new team  runs the show in the future

 

Laulan      ( Date: 08-Jul-2011 16:33) Posted: Forcing a company to be delisted without an exit offer based on the reason of negative assets given by the directors might not be the correct manner to allow delisting because there may be values in asset not retaken or in some cases hidden assets available not obvious to the untrained eyes.   I hope SGX knows that in the world of commerce due diligence must be taken to ascertain truthfulness as to whether a company has assets in any form say, goodwill for a company in a particular industry for instance.  There must be an avenue for shareholders interested to buy the business, or reverse takeovers or pumping in capital. Talking about Firstlink, a year ago before the company was delisted, it has approx cash position of $2million.  After delisted it report some $200K cash.  This kind of things happens with many delisted companies.  Sometimes we find SGX knows very little about the inside of the companies but yet it acts in a very draconian manner against minority shareholders' interest.  Where a company has alot of cash and about to be delisted, there is no way of stopping the company from using up the cash indiscriminately. The only way is to introduce some form of protection by creating some solid rules.

 

Forcing a company to be delisted without an exit offer based on the reason of negative assets given by the directors might not be the correct manner to allow delisting because
there may be values in asset not retaken or in some cases hidden assets available not
obvious to the untrained eyes.  

I hope SGX knows that in the world of commerce due diligence must be taken to ascertain
truthfulness as to whether a company has assets in any form say, goodwill for a company in a particular industry for instance.  There must be an avenue for shareholders interested to
buy the business, or reverse takeovers or pumping in capital.

Talking about Firstlink, a year ago before the company was delisted, it has approx cash position of $2million.  After delisted it report some $200K cash.  This kind of things
happens with many delisted companies.  Sometimes we find SGX knows very little about
the inside of the companies but yet it acts in a very draconian manner against minority shareholders' interest.  Where a company has alot of cash and about to be delisted, there
is no way of stopping the company from using up the cash indiscriminately. The only way
is to introduce some form of protection by creating some solid rules.

 

i guess retail guys can only look to the authorities to take a judgement whether they want to step in and help us. If not, we are always at the losing end. Continue to dream that there is a level playing field. But we need to tell them we are watching them closely so that our other investments will not be affected again by similar inconsistency actions.

jamesng      ( Date: 06-Jul-2011 22:07) Posted: Do what you can as a retail investors???? Call to explore all options before delisting a firm Observers say SGX appears unable to enforce exit offer rule   By FELDA CHAY   WITH minority shareholders often handed the shorter end of the stick in mandatory delistings, Singapore Exchange (SGX) should give more thought and explore all possible options before taking away a firm's status as a public listing.   'In a mandatory delisting, the SGX has effectively taken away that right of shareholders to approve the delisting.' - Mak Yuen Teen, associate professor, NUS That is the view that some market watchers have after a statement from the regulator was interpreted by them to mean that it had the rule in place requiring an exit offer to be made for involuntary delistings, but appeared to be unable to enforce the regulation if a company chose not to buy out its smaller investors. SGX, in a letter to BT, said that 12 of the 15 mandatory delistings that occurred since January last year were allowed to happen, even though an exit offer was not made, because their board of directors said they were in negative equity positions. Two firms that were struck off put an offer on the table. Only one company, General Magnetics, was in a positive equity position. The company, however, 'did not make an exit offer despite repeated communications from SGX', the exchange said. Still, it was delisted on schedule. The exchange's letter was in response to commentaries in BT on how firms were removed from public listings even though they did not provide an exit offer to minority stakeholders. 'It may appear to be like a doctor who is slow to treat but ready to turn off the life support system,' said Mak Yuen Teen, an associate professor at the National University of Singapore who comments on corporate governance issues in a letter to BT. 'The SGX's willingness to enforce mandatory delistings without doing more to press companies to comply with other conditions for such delistings, coupled with its lack of monitoring and enforcement of its listing rules in other areas (such as the 'comply or explain' requirement for the code of corporate governance)', may lead to questions on what drives its actions, said Prof Mak. He added that the exchange, as a listed company with commercial and regulatory roles, 'must be especially consistent and transparent in its regulatory actions'. Under SGX rules, companies fall into the watch-list if they clock up pre-tax losses for the three preceding fiscal years and their market cap falls below $40 million over the last 120 trading days. They have two years to exit from the list or risk delisting. To be removed from the watch-list, a company needs to report a pre-tax profit for the most recently completed financial year and to have an average market cap of at least $40 million in the last 120 trading days. Noting that 12 of 15 companies were allowed to delist without an exit offer because their boards said they were incapable of making one, Prof Mak said: '. . . not doing anything more just because the company says it is unable to provide an exit offer is just not good enough, especially when the SGX rules promise more'. He suggested that SGX direct these troubled companies to appoint an independent party to give an opinion on the fair value of the company, and to advise minority shareholders on their options should an exit offer not be forthcoming. If the board refuses to comply with this direction, then the SGX should consider reprimanding the directors, he said. 'In a mandatory delisting, the SGX has effectively taken away that right of shareholders to approve the delisting. While I am not against the SGX using a mandatory delisting as a last resort, it is important for the SGX to enforce its rules.' In its letter, SGX also said that 'under the law, it is only creditors and shareholders who have the powers to liquidate or wind up companies, and distribute the assets to shareholders'. Yap Wai Ming, a partner at Stamford Law, noted that minority shareholders can try to wind up a company, but they are still unlikely to walk away with a payout. This is because a special resolution needs to be passed with 75 per cent of shareholders in favour of liquidating the firm - which has to be solvent. 'Minority shareholders won't get that 75 per cent that they need to get the resolution passed because the majority shareholders won't be in favour of this,' said Mr Yap, adding that these investors are 'at the mercy' of the larger shareholders. 'If the company is insolvent, there is no point winding up the firm at all because the minority shareholders won't get anything. The creditors will come first, and the minority shareholders are last in line.' Mano Sabnani, chief executive of business advisory Rafflesia Holdings and a minority shareholder of several firms, believes that the SGX should not be so quick to delist these troubled companies if the safeguards it has in place for minority shareholders cannot be put into practice. 'If that is the case, and I can understand why companies cannot give an offer, why rush to delist the companies? They can be suspended, and some of them may be able to afford to continue paying listing fees. 'Allowing them to stay listed a while longer means that there is a chance they can be revived. An RTO (reverse takeover) offer may come along the way, or a new investor may want to come in to take the company forward.' The SGX can also consider beefing up its current rules by getting a company on its watch-list to regularly remind shareholders that it may get delisted, said Drew & Napier's director of corporate & finance Marcus Chow. 'As many of the investors who are stranded may be 'mom and pop' investors who may not be too savvy, perhaps rules can be enhanced to ensure watch-list companies step up mailed, written communication to its shareholders on a regular basis, informing them of the company's status once the company is on a watch-list,' said Mr Chow. 'Such regular communication allows the retail shareholders to take calculated positions from time to time. Ample time and communication prior to a suspension of a counter will allow retail investors to trade out their shares, and I am assuming here there will be buyers,' said Mr Chow.

 

Observers say SGX appears unable to enforce exit offer rule

 

By FELDA CHAY

 

WITH minority shareholders often handed the shorter end of the stick in mandatory delistings, Singapore Exchange (SGX) should give more thought and explore all possible options before taking away a firm's status as a public listing.

 

'In a mandatory delisting, the SGX has effectively taken away that right of shareholders to approve the delisting.' - Mak Yuen Teen, associate professor, NUS

That is the view that some market watchers have after a statement from the regulator was interpreted by them to mean that it had the rule in place requiring an exit offer to be made for involuntary delistings, but appeared to be unable to enforce the regulation if a company chose not to buy out its smaller investors.

SGX, in a letter to BT, said that 12 of the 15 mandatory delistings that occurred since January last year were allowed to happen, even though an exit offer was not made, because their board of directors said they were in negative equity positions. Two firms that were struck off put an offer on the table.

Only one company, General Magnetics, was in a positive equity position. The company, however, 'did not make an exit offer despite repeated communications from SGX', the exchange said. Still, it was delisted on schedule.

The exchange's letter was in response to commentaries in BT on how firms were removed from public listings even though they did not provide an exit offer to minority stakeholders.

'It may appear to be like a doctor who is slow to treat but ready to turn off the life support system,' said Mak Yuen Teen, an associate professor at the National University of Singapore who comments on corporate governance issues in a letter to BT.

'The SGX's willingness to enforce mandatory delistings without doing more to press companies to comply with other conditions for such delistings, coupled with its lack of monitoring and enforcement of its listing rules in other areas (such as the 'comply or explain' requirement for the code of corporate governance)', may lead to questions on what drives its actions, said Prof Mak. He added that the exchange, as a listed company with commercial and regulatory roles, 'must be especially consistent and transparent in its regulatory actions'.

Under SGX rules, companies fall into the watch-list if they clock up pre-tax losses for the three preceding fiscal years and their market cap falls below $40 million over the last 120 trading days.

They have two years to exit from the list or risk delisting. To be removed from the watch-list, a company needs to report a pre-tax profit for the most recently completed financial year and to have an average market cap of at least $40 million in the last 120 trading days.

Noting that 12 of 15 companies were allowed to delist without an exit offer because their boards said they were incapable of making one, Prof Mak said: '. . . not doing anything more just because the company says it is unable to provide an exit offer is just not good enough, especially when the SGX rules promise more'.

He suggested that SGX direct these troubled companies to appoint an independent party to give an opinion on the fair value of the company, and to advise minority shareholders on their options should an exit offer not be forthcoming.

If the board refuses to comply with this direction, then the SGX should consider reprimanding the directors, he said.

'In a mandatory delisting, the SGX has effectively taken away that right of shareholders to approve the delisting. While I am not against the SGX using a mandatory delisting as a last resort, it is important for the SGX to enforce its rules.'

In its letter, SGX also said that 'under the law, it is only creditors and shareholders who have the powers to liquidate or wind up companies, and distribute the assets to shareholders'.

Yap Wai Ming, a partner at Stamford Law, noted that minority shareholders can try to wind up a company, but they are still unlikely to walk away with a payout. This is because a special resolution needs to be passed with 75 per cent of shareholders in favour of liquidating the firm - which has to be solvent.

'Minority shareholders won't get that 75 per cent that they need to get the resolution passed because the majority shareholders won't be in favour of this,' said Mr Yap, adding that these investors are 'at the mercy' of the larger shareholders.

'If the company is insolvent, there is no point winding up the firm at all because the minority shareholders won't get anything. The creditors will come first, and the minority shareholders are last in line.'

Mano Sabnani, chief executive of business advisory Rafflesia Holdings and a minority shareholder of several firms, believes that the SGX should not be so quick to delist these troubled companies if the safeguards it has in place for minority shareholders cannot be put into practice.

'If that is the case, and I can understand why companies cannot give an offer, why rush to delist the companies? They can be suspended, and some of them may be able to afford to continue paying listing fees.

'Allowing them to stay listed a while longer means that there is a chance they can be revived. An RTO (reverse takeover) offer may come along the way, or a new investor may want to come in to take the company forward.'

The SGX can also consider beefing up its current rules by getting a company on its watch-list to regularly remind shareholders that it may get delisted, said Drew & Napier's director of corporate & finance Marcus Chow.

'As many of the investors who are stranded may be 'mom and pop' investors who may not be too savvy, perhaps rules can be enhanced to ensure watch-list companies step up mailed, written communication to its shareholders on a regular basis, informing them of the company's status once the company is on a watch-list,' said Mr Chow.

'Such regular communication allows the retail shareholders to take calculated positions from time to time. Ample time and communication prior to a suspension of a counter will allow retail investors to trade out their shares, and I am assuming here there will be buyers,' said Mr Chow.

 

I saw the BT article that SGX told them that if the board said  they are negative equity, they need not do an exit offer. (Funny, cannot find this rule in the SGX rule book on their website. Any readers please tell me where to find this rule or it has been just inserted recently but not highlighted in the rulebook).

But  for those delisted company board of directors who said they are negative equity, has that been independently verified by professionals or has SGX satisfied itself that  the dire situation is naturally or artificially created? Anyone or people close to such company able to check  if they are being wind up due to insolvency ie negative capital.

For Firstlink investment, l noted the chairman only got less than 10%. How to find money to buy 90% of the remaining shares? Not shares suspended, the poor shareholders also cant sell.

Laulan      ( Date: 06-Jul-2011 16:46) Posted: What about Firstlink investment?  No exit offer.  Shareholders all see-liow.!!! Directors tummy big big and every can have good feasts. pharoah88      ( Date: 06-Jul-2011 16:33) Posted: wIll  thIs  hAppen tO SAIZEN  ? ? ? ?

 

I believe the voice for asking clear and truthful explanation of what happened and why went wrong  and what should be improved  is getting louder. Laulan,  we are not alone, just wanting the wrong things or wrong people  corrected so that history will not repeat itself.

See the following articles (titles only) today in BT.

LETTERS TO THE EDITOR

Mandatory delistings: SGX should consider the bigger picture

by Mak Yuen Teen

Observers say SGX appears unable to enforce exit offer rule

 

By FELDA CHAY

Laulan      ( Date: 06-Jul-2011 16:53) Posted: I am thinking what I should do to help shareholders of delisted companies to get back something from these companies.  I can help once I am organized with supportive shareholders for future cases if co-operation is given by involved shareholders. It is not difficult.  If SGX cannot forced the companies, then we can actually obtain a court order to freeze the assets and sell them off for distribution.  Is this a good idea?

 

I am thinking what I should do to help shareholders of delisted companies to get back something from these companies.  I can help once I am organized with supportive shareholders for future cases if co-operation is given by involved shareholders. It is not difficult.  If SGX cannot forced the companies, then we can actually obtain a court order to freeze the assets and sell them off for distribution.  Is this a good idea?

 

What about Firstlink investment?  No exit offer.  Shareholders all see-liow.!!! Directors tummy big big and every can have good feasts.

pharoah88      ( Date: 06-Jul-2011 16:33) Posted: wIll  thIs  hAppen tO SAIZEN  ? ? ? ?

 

wIll  thIs  hAppen tO

SAIZEN  ? ? ? ?

 

In  2010

analysts  were  recommending

JAPAN  PROPERTY  SHARES

as  gOOd  deAl

 

GOVERNANCE  NEGLECT  ? ? ? ?

WHICH  MINISTRY  is  ACCOUNTABLE  ? ? ? ?

bUt  electIOn  is  O V E  R  ? ? ? ?

---

wAIt  fOr  fOUr  yeArs  ? ? ? ?

---

WHERE  is  the  PEOPLE's  vOIce  In  ParLIEment  ? ? ? ?

Concerto      ( Date: 04-Jul-2011 11:40) Posted: BT has written another interesting article protecting the minority investors regarding. Please read the article today. SGX should solve the mystery of the missing exit offers Minority shareholders upset that companies seem to get away without making one By FELDA CHAY

 

I believe they tried already, but due not lack of transparency of  what is been done, l  not sure they did their best or not. Anyway, hope to hear from them on their explanations of inconsistencies, and see if they can do something to those controlling shareholders who had escaped the rules without do what is needed under the rules.

Laulan      ( Date: 04-Jul-2011 13:40) Posted: OMGosh.  Seeing and hearing such frequency of occurrences tells me that the listing rules are just rules and not enforceable on directors of delisted companies.  What is the point of setting up rules when they mean nothing?  Then flouting the rules will be to one's advantage without penalty.  If stealing is not an offence, everyone will become robbers in this world by the grace of rule makers..

 

OMGosh.  Seeing and hearing such frequency of occurrences tells me that the listing rules are just rules and not enforceable on directors of delisted companies.  What is the point of setting up rules when they mean nothing?  Then flouting the rules will be to one's advantage without penalty.  If stealing is not an offence, everyone will become robbers in this world by the grace of rule makers..

 

BT has written another interesting article protecting the minority investors regarding. Please read the article today.

SGX should solve the mystery of the missing exit offers

Minority shareholders upset that companies seem to get away without making one

By FELDA CHAY

 

 

Thx andrew  for your thoughts. I understand companies like general magnetics has assets, but no delisting offer was made and was forced to delist. (see BT on thursday) I sympathise the shareholders and company stuck in between because of such rules and not consistently applied.

For other markets, I believe they applied their delisting rules very consistently and clearly given that the trigger points are very objective.  i believe it  does not impose  controlling shareholders to make exit offer and plus must be reasonable somemore. Commerically, who would willing spend money and make an investment which is reasonable to minority shareholder and likely not reasonable to herself? I not sure if other more established markets have such jokes in their rules. If so, share this joke with me.

If the company has nothing to distribute and hence can go scot free, then should state in the rules that shareholders only can expect a exit offer if there is money left in the company. Rule not applicable if company is empty or insolvent.

They also never give good explanation for why they  allow the company to be delisted,  without an offer eg Japan Land and general magnetics. We are all guessing what happened. Even singapore govt explains the policies to the people and admit they are wrong publicly in certain policies and promised to improve. That should be the way to uphold the good reputation of singapore stock market, transparent and level playing field.

 

When SGX let a company delist without an offer means that the company has nothing left.  How to give you money when there is no money in the first ?

Actually, SGX is more lean when come to US and EURO market. Lean to everybody, including you.

 

In US, if the stock fell below the USD 1 mark for 90 consective days,  delist.  Did not submit 10K on time....delist.

The oni thing SGX don't have is that there is a pink slip OTC market.  Delisted company can trade in OTC market with a .PK added.

 

 

Concerto      ( Date: 30-Jun-2011 11:09) Posted: I am disappointed that the exit offer is not given to the shareholders and it is allowed to be delist. I did not sell my shares in this company thinking that such offer be given prior to be delisted. Wondering if SGX is enforcing on this rule strictly or enforce it only when the owners bother to be cooperative. Also saw the article about general magetics getting delisted without any exit offer. Anyone knows what is the reason that SGX introduces this rule but never ensure the compliance of such rules? And who ensures that that SGX properly implement such rules. I felt l lost my all my  investment in this company due to  the poor management of this company and SGX not ensuring such rules are complied.

 

Isn't it suspended \??

Hulumas      ( Date: 01-Jul-2011 12:16) Posted: Still no one selling leeeeeeeeeh! des_khor      ( Date: 01-Jul-2011 00:17) Posted: Keep buying China gaoxia

 

Still no one selling leeeeeeeeeh!

des_khor      ( Date: 01-Jul-2011 00:17) Posted: Keep buying China gaoxian Hulumas      ( Date: 30-Jun-2011 12:44) Posted: Is it S-chip

 

Concerto, U got mail..check u mailbox!

Concerto      ( Date: 30-Jun-2011 23:04) Posted: Thx bluesky, It is not easy to sell non traded shares and hope SGX can explain to retail investors why their rules under the delisting  can bend one? See today's BT article about General Magnetics and Japan Land. I know some counters go away scot free. Rather obvious  that MAS should not be responsible for the losses of investors in the market and the name Japan Land is a J - chip. Thx for contributing to forum. Many investors like me had lost all investment in counters that became watch list counters 2-3 years ago.  We all thought that the worst  case scenario is that there is an exit offer prior to the delisting (based on the delisting rules).  In view of illiquid trading of such  counter,  l believe  its better to hold on the shares, hope 1) a RTO deal  to come, 2) existing biz turn around or 3)  in the end an exit offer to come prior to delisting.  At least something left in the end.  The shock came when such companies are allowed to be  delisted  without ensuring that there is an exit offer. If I would have  know  that the rules  can be bend or applied inconsistently when it is being introduced, then l rather  cut losses  2 years ago than to  wait for the exit offer in the end. If MAS don step  in and review  this type of rule, then as an  investor, l  felt short changed.  If such rules is not realistic, l hope it will be scraped. Ie the delisting exit offer  should optional if the delisting is demanded by SGX.

 

Keep buying China gaoxian

Hulumas      ( Date: 30-Jun-2011 12:44) Posted: Is it S-chip? Concerto      ( Date: 30-Jun-2011 11:09) Posted: I am disappointed that the exit offer is not given to the shareholders and it is allowed to be delist. I did not sell my shares in this company thinking that such offer be given prior to be delisted. Wondering if SGX is enforcing on this rule strictly or enforce it only when the owners bother to be cooperative. Also saw the article about general magetics getting delisted without any exit offer. Anyone knows what is the reason that SGX introduces this rule but never ensure the compliance of such rules? And who ensures that that SGX properly implement such rules. I felt l lost my all my  investment in this company due to  the poor management of this company and SGX not ensuring such rules are complied.