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 issu...
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Conrad Raj
23 October 2014
It has been nearly three long years since trading in the shares of China Sky Chemical Fibres was suspended. But the company’s shareholders continue to suffer from their inability to deal in its stock despite pleas by the company to restore trading. The action against China Sky followed non-compliance of a Singapore Exchange directive to the China-based manufacturer of nylon products to appoint a special auditor to look into certain transgressions, including certain undisclosed interested party transactions and a land purchase. The exchange had also raised queries over the extraordinarily high cost for maintenance and upgrading of its factory.
The company asked for suspension of trading in November 2011. The following month, SGX issued a reprimand to its entire board for their failure to appoint the special auditor. All three independent directors then resigned when out-voted by the four China-based directors who were opposed to appointing the special auditor. The company’s chief executive and largest single shareholder, Huang Zhong Xuan, together with his chief financial officer Sunny Hui, also resigned from their posts, leaving the company almost crippled.
The Commercial Affairs Department (CAD) were then brought in to investigate possible breaches of the Securities and Futures Act.
In September 2012, a reconstituted board and a new CEO, Ling Yew Kong, with former independent director Er Kwong Wah and the intervention of the Securities Investors Association Singapore (SIAS), took immediate steps to appoint not only a special auditor but also an external auditor, an internal auditor and a financial controller. China Sky also appointed CNP Compliance as its compliance adviser.
By June the following year, the special auditors from Stone Forest Corporate Advisory had completed their audit. And while they found the company guilty of not making mandatory disclosures, no evidence of fraud regarding the land transaction was uncovered. In April of this year, AGMs to approve accounts for 2011, 2012 and 2013 were held. Shareholders approved all the resolutions tabled and the company subsequently asked for trading to be restored which to date the exchange has not done.
Now that China Sky has complied with nearly all that the exchange has asked for, why is it then continuing to punish the company’s nearly 3,000 shareholders, most of whom are innocent investors guilty of no wrongdoing? If it wants to punish main shareholder Mr Huang for any breaches, it can take specific action against him, including preventing his holdings from being traded. Or is SGX not satisfied with the findings of Stone Forest or the actions taken by the company to assuage the authorities? The Monetary Authority of Singapore has already gotten the courts to freeze some S$3.4 million that Mr Huang had deposited with a bank here.
For sure, the CAD has yet to complete its investigations. In response to a letter by China Sky shareholder Mano Sabnani, it said: “The time taken for investigations depends on several factors, including the cooperativeness of the relevant parties, especially when there is a foreign dimension.”
Well, the authorities should look into measures to deal with foreign companies listed in Singapore. They owe it to investors that there are proper regulations to enforce compliance of market rules here. These could include bank guarantees and measures like those imposed on the media. After all, if you are getting people to invest in foreign companies here, you have an obligation to ensure investors are accorded some protection.
In any case, most of China Sky’s affairs have now been laid bare for all to see, so caveat emptor (buyer beware) should prevail. Anyone who wants to trade in the company’s shares will be fully aware of the risks and consequences involved. But long suffering shareholders must have an exit avenue to recover at least part of their investment.
Even SIAS president David Gerald, who has played a major part in getting China Sky to comply with the SGX’s directives, is getting a little peeved. “I get approached and called by shareholders asking why are the shares still suspended following the compliance measures. What more must the company do?”