Source of article: Business Times

Writing credits: Raphael Lim

The Singapore market has in recent years witnessed a number of battles for Board control. In most cases, the fight for Board control is launched via requisitions to remove incumbent directors and to appoint new directors by the requisitioning shareholders.

The battle for the Board could at times be rather long and protracted when the requisitioning shareholders do not have a clear shareholding majority, and the incumbent Board members (who could be the appointees of, or who are backed by a number of substantial shareholders) do an “Empire Strike Back” by going all out to stave off the challenge.

The uncertainty of Board control and management continuity could be rather long and dreary, especially if the Board fight is escalated to an arduous courtroom battle.

This could invariably lead to a suspension of trading of the company’s shares, inter alia, due to the uncertainties created by the Boardroom and Courtroom battles.

Shareholders suffer when their investments in the company’s shares become illiquid due to the trading suspension. The long term value of their investments faces uncertainty when existing senior management and Board members are spending most of their time fighting for Board control – especially if the battle progresses to the courtroom – rather than concentrating on the core business(es) of the company.

What can be done to resolve such Board fights expeditiously to prevent the value of the company from spiraling down the abyss? Should there be a governing regulator who can step in as the “referee” to ensure that a challenge for Board control must abide by clear prescriptive rules akin to the Takeover Code regulated by the Securities Industry Council?

I gave my views to Raphael Lim of the Singapore Business Times who wrote the attached Saturday Brunch story that is published on 21 January 2023. Some food for thought for all and sundry as they partake their Chinese Reunion Dinner on the Eve of the Lunar New Year of the Rabbit 🤔.

Battle for the board

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