SGX says bye to offshore AGMs, show of hands

PHOTO: SGX says bye to offshore AGMs, show of hands

SINGAPORE - Singapore Exchange-listed companies will have to hold their general meetings in Singapore soon and conduct poll voting in two years' time, according to new rules introduced by the market operator on Wednesday.

The move tackled two items at the top of many governance wish lists and was welcomed by observers. They wondered, nevertheless: what took them so long? "We have been asking for this for the longest time," said David Gerald, president of the Securities Investors Association (Singapore) (SIAS). "Well, better late than never."

Beginning Jan 1, 2014, all Singapore Exchange (SGX) primary-listed companies and trusts must hold their general meetings in Singapore.

Where there are legal constraints preventing them from holding their meetings in Singapore, companies are advised to provide "alternative modes of engagement" such as webcasts and information meetings to give public shareholders access to the board and senior management.

At the moment, only a handful of the listed companies in Singapore hold their general meetings offshore. Those companies include food and beverage group Thai Beverage Public Co, a Straits Times Index component stock, which holds its meetings in Bangkok; and gem processing specialist Sarin Technologies, which holds them in Israel.

Beginning Aug 1, 2015, listed companies and trusts will also have to conduct voting by poll, effectively phasing out the still-used show-of-hands system, for a proportionate shareholding model.

Some companies and trusts will have to seek shareholder approval to amend their articles of association to implement this change, SGX noted.

Companies will also have to make "prompt" disclosure of voting decisions and outcomes beginning Aug 1, 2015, in line with new guidelines in the revised Code of Corporate Governance, which was released in 2012.

Observers generally felt that the changes are a step in the right direction.

On locating general meetings in Singapore, Mr Gerald said it is an issue that SIAS, a minority shareholders' advocacy group, has been pushing for a while.

"SIAS has been wanting this for some time now," Mr Gerald said. "The problem is that if they don't hold their AGM here, they don't give shareholders the opportunity to seek accountability from the board."

Aberdeen Asset Management Asia MD Hugh Young also applauded the moves, but not without quipping that "it's taken forever".

"We had one company this year where we hold about 20 per cent and where we notified beforehand that we wanted a poll and where they ignored us," Mr Young said.

"We demanded and got one at the meeting itself. There's been a fair bit of resistance as, to be fair, there always is to any change. But change is inevitable, if slow."

Stephanie Yuen Thio, joint MD of law firm TSMP Law Corp, said show-of- hands was a legacy model that is no longer relevant today when transparency and shareholder activism are more prominent issues.

"Voting on a show of hands is a relic from our colonial past and does not reflect the realities of the corporate world today," she said.

"In poll voting, every share is counted - which means the vote will be a more accurate reflection of the desires of the stakeholders. This will mean more representative, and hence healthier, corporate governance."

Getting listed companies to hold their meetings in Singapore is also nothing short of essential, she said.

"We want to attract quality listed companies to our bourse - not listed shell companies with only offshore businesses and whose management are connected to the country by no more than the listing status," Ms Yuen Thio said.

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