SGX rap not open to judicial review: counsel
A former China Sky director has chosen the wrong process in bringing his case against the Singapore Exchange (SGX) to court, the lawyer representing SGX argued yesterday.
Remisier kings
The cousins who have taken over Peter Lim’s throne View PDF
Comments
Lynette Khoo
20 April 2012
A former China Sky director has chosen the wrong process in bringing his case against the Singapore Exchange (SGX) to court, the lawyer representing SGX argued yesterday.
Senior Counsel Davinder Singh, chief executive of Drew & Napier, told the court the decision by SGX to reprimand China Sky and its directors is not susceptible to judicial review.
Yeap Wai Kong, former independent director of China Sky, is seeking a quashing order under judicial review to overturn a public reprimand issued to him last Dec 16 by SGX, after China Sky failed to comply with SGX’s directive to appoint a special auditor.
As the hearing before Justice Philip Pillai in the High Court entered its second day, Mr. Singh said “the whole premise of the application by Mr. Yeap was wrong” as it assumes that SGX’s power to reprimand is grounded on statute; the Exchange’s power to reprimand is not contained in any statute or subsidiary legislation, he said.
This is unlike in Hong Kong, where the stock exchange has statutory powers to impose sanctions for breaches of its listing rules; or Malaysia, where listing rules are given statutory force under the Capital Markets and Services Act.
SGX is not a public body with statutory powers, Mr. Singh stressed. And in reprimanding China Sky and its directors on Dec 16, it was not exercising a public law function. Only decisions by a body whose source of power is public (source test) and which is exercising a public law function (nature test) may be subject to judicial review, Mr. Singh argued.
The Exchange’s power to enforce its listing rules stems from a “consensual submission” from companies and their directors, Mr. Singh argued. “If it is a contractual power to reprimand, then judicial review is not available.”
He said the more appropriate avenue to seek remedy in this case could have been an action under private law by a writ or originating summons. Remedies available under private law include declarations, injunctions and damages.
But Senior Counsel Tan Cheng Han, a consultant from TSMP Law Corporation who is representing Mr. Yeap, argued that SGX listing rules have “statutory underpinnings”. “That power (to reprimand) flows from statute and not contract,” he said. “The power to make and amend listing rules is provided for under Section 16 of the Securities and Futures Act (SFA).”
An approved exchange has certain obligations under Section 16 of the SFA, including enforcing compliance with its business rules and, where appropriate, its listing rules.
Prof Tan also took issue with how the relationship between SGX and directors of listed companies was characterised as a contract. “If the Exchange has power to sanction a director, then that power must come from a statutory underpinning,” he added.
Justice Pillai highlighted in court yesterday that the question of what constitutes public law function has been made more intricate with the “new reality” arising from increased privatisation of public law functions around the world.
“We have gone a long way from governmental functions handled by governmental agencies into a realm of self-regulation and government oversight, and I believe this is an universal phenomenon,” he said. “So the lines between strictly public law function entities and contractual (ones) have become functionally blurred.
“In light of what has happened, how do we decide on the question whether the Exchange itself, insofar as it exercises power with a public law nature, would or would not be susceptible to judicial review?” he asked the lawyers.
The hearing on Mr. Yeap’s application for judicial review continues today.