TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
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By LYNETTE KHOO
25 July 2011
There are signs that the Singapore Exchange (SGX) is seeking greater assurance from new listings on their internal controls and cash management following the fresh wave of S-chips scandals this year.
While it has not officially added new listing requirements to its rule book, SGX may request companies to undertake additional measures to enhance corporate governance.
Chinese property developer Weiye Holdings, for one, has agreed to all three suggestions from SGX - to allow its independent directors unrestricted internet access to information on its banking transactions, appoint an independent internal auditor, and to have a compliance adviser for its initial two years of listing.
The compliance adviser has to be approved by SGX and appointed before trading of Weiye shares begin.
‘One of the things that SGX has highlighted is they do not want just a year-end balance. They want to ensure that any money that is supposed to be in the company stays within the company and nothing goes out during the month,’ said Weiye chief financial officer Guo Xinsheng. ‘That has been willingly accepted by Mr. Zhang Wei (group chairman).’
While issue managers note that they haven’t seen other companies where IDs are given internet access to banking transactions through security tokens or other means, this could well be due to the timing of Weiye’s listing.
Its backdoor listing via a reverse takeover by Kyodo-Allied Industries has come against a backdrop of accounting issues plaguing some Chinese companies listed here and in the US.
When approached by BT, SGX said it does not comment on its dealings with listed companies publicly.
‘We continue to keep our rules and regulatory framework under close review to keep abreast of market developments,’ its spokesman said. ‘If necessary and when appropriate, we implement targeted actions to address specific risks.’
Earlier in March, SGX had asked audit committees (ACs) of S-chips to engage professionals to determine whether their internal controls are sufficient and to ensure they have the power to remove rogue legal representatives at their Chinese subsidiaries.
Yap Wai Ming, partner at Stamford Law, agrees that requiring the appointment of independent internal auditors is important given that many Chinese companies do not have strong internal controls to begin with. Several S-chips already have the internal audit function outsourced to independent parties, he observed.
But he feels that it will be onerous for anyone who holds the token as questions would be raised if any suspicious cash transaction takes place undetected.
Since the fallout of accounting scandals surrounding Chinese firms, SGX has reminded IPO managers to be more rigorous in their due diligence and stressed the need for a more robust audit committee and control measures, said George Lee, head of OCBC’s group investment banking division.
Recently, SGX has also been scrutinising the appointment of independent directors and, in some cases, rejected certain appointments, according to Mr. Yap.
One local investment banker noted that while SGX puts up recommendations on internal audit and other controls on a voluntary basis, the decision on implementation ultimately rests with the audit committee and directors who should understand the needs of the company.
The SGX spokesman said the exchange maintains regular communication with boards of listed companies and professionals on matters including compliance with listing rules, corporate governance standards and responsibilities of directors.
‘As stewards of their companies, board directors are best placed to institute the appropriate controls and processes to safeguard shareholders’ interest.’
Monthly bank reconciliation will also be conducted on all bank accounts and reviewed by its CFO, while its internal auditors will randomly conduct encashment of cheques for selected bank accounts on a quarterly basis to verify the existence of the bank account and its balances.