My post on LinkedIn can be seen here.
The Monetary Authority of Singapore (MAS) has proposed a scheme to help retail investors seek civil recourse against issuers, directors, or officers who run a listed company aground. This initiative is commendable and timely, offering a potential safeguard for investors in Singapore’s capital markets.
However, to ensure the effectiveness and sustainability of the scheme, it must be implemented with clear boundaries and robust safeguards.
Limit Scope to Clear Breaches and Market Misconduct
The proposed scheme should be strictly limited to clear breaches of SGX disclosure rules or instances of market misconduct. It should not become a broad or open-ended tool that disgruntled shareholders can misuse to gain leverage in unrelated disputes with the board or management.
Without proper controls, the risk of opening the floodgates to frivolous lawsuits and abusive class actions is real—potentially harming the corporate and investment ecosystem in Singapore.
Preventing Abuse Through Independent Assessment
To prevent misuse, MAS should appoint an independent review body to conduct a preliminary assessment of each claim. This body should seek legal advice from experienced professionals to determine whether there are sufficient legal grounds to pursue a civil claim based on the alleged breach or misconduct.
This step will help filter out baseless or speculative claims, ensuring only meritorious cases proceed.
Mandatory Mediation Before Litigation
Before escalating disputes to the courts, claimants should be required to attempt resolution through established mediation platforms such as the Singapore Mediation Centre (SMC) or the Singapore International Mediation Centre (SIMC).
Mediation offers a faster, less costly, and less adversarial route to resolution. Litigation should be allowed only if all reasonable efforts to mediate have failed.
Requiring Claimants to Have Skin in the Game
To deter free-riding and ensure that only serious claims are pursued, retail investors seeking legal assistance through the scheme should be required to contribute to litigation costs if mediation fails. This “skin in the game” principle helps maintain accountability and discourages opportunistic lawsuits.
Protecting Public Funds and Taxpayer Interests
Not all civil lawsuits will be successful. In cases where the defendant prevails, the issue arises: who pays the legal costs awarded by the court?
Given that any MAS financial assistance will ultimately be funded by taxpayers, there must be strong safeguards to prevent abuse. The criteria for funding support—including any co-funding requirements—must be carefully designed to balance investor protection with fiscal responsibility.
Striking the Right Balance
MAS’ proposal to enhance investor protection is a step in the right direction. But to ensure long-term success, the scheme must:
- Focus on clear, material breaches
- Require independent legal assessments
- Mandate mediation before litigation
- Involve co-funding to ensure accountability
- Protect taxpayers from unnecessary financial exposure
With these guardrails in place, Singapore can promote greater market integrity and retail investor confidence—without fostering an overly litigious business environment.
I thank Jude Chan for publishing my views in the attached top story of the Singapore Business Times on 22 July 2025.
Original Article :- MAS to beef up civil recourse, legal action for investors amid shift to disclosure-based regime
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