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Posts Tagged ‘independent directors’

Independent directors can continue sleeping on the job

In Corporate governance on 14/08/2012 at 6:58 pm

Chief Justice Chan Sek Keong’s recent acquittal of two former board members of Airocean Group should make it harder to prosecute independent directors of Singapore-listed companies.

He made it clear that companies may not have to disclose information because it is trade (business not market, I assume) sensitive: the information has to be likely to significantly move the share price as well. And directors in most instances should not be expected to question professional advice that they receive with respect to how they discharge their duties.

Independent directors were scared after a district judge convicted former Airocean independent directors Peter Madhavan and Ong Seow Yong on charges related to disclosure lapses from 2005 relating to the corruption investigation of ex-Airocean chief executive Thomas Tay.

Another nail in the coffin of our regime of disclosure. If can suka-suka no need to dislose WTF! I prefer DJ’s reasoning. Hope AG “appeals”.

S-Chip after S-Chip shows that corporate governance didn’t work. Yet independent directors never ever were held accoutable except in one case: directors there were slapped lightly on the cheek by SGX. WTF!

Corporate governance: Better value elsewhere in region?

In Corporate governance, Economy on 23/04/2012 at 7:24 pm

Chart shows that the authorities are pricing S’pore out of fees to themselves, and to the accountants, lawyers etc based here by making S’pore more expensive than HK when it comes to charging cos fees to set-up and maintain here. HK is the leading Asian centre for registrating and maintaining offshore companies outside of the “Sunny places for shady people” to misquote Somerset Maugham.

And S’pore non-executive directors are well paid and do less work vis-a-vis our neighbours.

Non-executive directors (NEDs) in Singapore got the second-highest pay when compared with directors in Malaysia, Indonesia and Thailand, a report by Hay Group showed yesterday. Those in Indonesia were better than S’porean NEDs.

But boards in Singapore also meet the least often, and hold the least number of committee meetings compared with their regional peers.

The management consultancy analysed data collected from 200 large companies in the four countries from 2008 to 2010.

The results showed that at the median level, NEDs from large companies in Singapore were paid US$75,300 in 2010, second to those in Indonesia, who took home US$178,600.

By comparison, NEDs in Thailand and Malaysia received US$46,600 and US$46,300 respectively.

In Indonesia, NEDs take home a substantially higher pay because state-owned companies and some private companies stipulate their pay to NEDs as a percentage of the president-director’s compensation for both the salary and bonus portions. These which are supposedly linked to performance – already made up about four-fifths of NEDs’ pay.

Most of the remuneration for NEDs in Singapore, Thailand and Malaysia is made up of a flat fee, not performance-linked.

The salary of NEDs in the region have been heading higher over the past few years.

In Singapore, the increase was 9% in both 2009 and 2010, while in Malaysia, the NED pay rose 17% in 2009 and 3% in 2010.

In Indonesia, the increase was% 13% and 10% respectively in 2009 and 2010. In Thailand, the NED pay rose 14% in both years.

Thai companies held the most number of board meetings between 2008 and 2010, on a median level. In 2010, an average of nine board meetings were called by the 48 Thai companies reviewed.

Singapore fared the worst, with the 50 companies calling just five board meetings each in 2010. Malaysia’s top companies held six meetings, while those in Indonesia conducted seven.

Indonesian companies also had their audit committees meet more than 10 times a year between 2008 and 2010, which is significantly more often than in Singapore – at four times a year – and Malaysia, at five times a year.

As audit committees have a heavier responsibility than other committees, in Singapore, the chairman and members of the audit committee get higher annual retainers than those in other committees. Thai cos also do something similar

The median tenure of independent directors is the highest in Singapore, which stands at seven years. Malaysia follows with six years, Indonesia is at four-and-a-half years and Thailand has a median tenure of three years.

Proposed revisions to Singapore’s Code of Corporate Governance note that companies must explain the reasons that a director who has served more than nine years on the board is still deemed independent.

Hay Group’s review showed that 62% of the top companies in Singapore have at least one independent director who has served more than nine years on their board.

How can independent director of troubled S-Chip resign?

In China, Corporate governance on 28/03/2011 at 1:35 pm

Hongwei’s independent director Ji Yicheng has resigned saying,”personal reasons, heavy workload”.  If the director of a troubled listco can quit when the listco gets into trouble,  then what is corporate governance all abt? Such an action is making a mockery of the responsibilities of being an independent director

The SGX must do something to prevent an independent director of a troubled S-Chip, indeed any troubled listco, from resigning. Such a resignation must have the approval of SGX.

The directores at the time the company got into into trouble must sort out the mess.  They cannot be allowed to “move on”.

.

Directors: Don’t play play, be diligent

In Corporate governance on 17/05/2010 at 5:21 am
Directors cannot “abdicate their responsibilities under the pretext of delegation” to other directors with specialised knowledge. The law will hold them responsible even if an issue falls outside of their area of expertise.

This was the message the High Court gave last week when it doubled the one-year disqualification order imposed on Mr Ong Chow Hong for failing to use reasonable diligence in the discharge of his duties when he was a director of then-listed company Airocean Group in 2005.

The SGX had halted trading of Airocean shares and asked for clarification on a media report that said the CEO was being investigated by the Corrupt Practices Investigation Bureau.

A directors’ meeting was convened but Mr Ong missed it to attend a golf function. Airocean sent out a “misleading” public statement later that night, which led to three other directors being charged. Their cases are still before the courts.

Appeal Judge V K Rajah said Mr Ong, had “committed nothing short of a serious lapse in entirely abdicating his corporate responsibilities … One would think that any competent director would immediately comprehend the pressing urgency and significance of (the SGX’s) query and the critical need to respond accurately and promptly.”

“The gravamen of the charge here is that the appellant consciously abdicated from his responsibilities; he never asked to see the draft announcement before it was released to the public, and was quite content to delegate his responsibilities to another director.”

Justice Rajah said the public must be protected against all errant directors “by an uncompromising reaffirmation of the expected exemplary standards of corporate governance”, referring to the court’s discretion to impose disqualification orders that would be “sufficient to deter serious lapses in corporate behaviour”.

During the appeal hearing, Justice Rajah noted that the law “does not impose the obligation for directors to get it right all the time but it requires directors to exercise due diligence, that you must participate if called upon”.

Directors have to “bring to bear their own judgment” in evaluating advice received from professionals and not “seek shelter behind other specialised directors” even if they are not experts in that issue of concern.

Sino-E: More $ down the drain?

In China, Corporate governance on 12/04/2010 at 5:03 am

Can’t understand why Sino-Environment spends $ on advisers* in connection with the proposed restructuring of the Company’s 4% convertible bonds due 2013 issued in an aggregate principal amountof S$149 million (the “Bonds”) and its debt obligations.

When it terminated nTan Corporate Advisory in March as the independent financial adviser (IFA ) to the Company, the board said, “In line with the Company’s cost-cutting measures, the Company has terminated the appointment of the IFA with effect from 18 February 2010. The Company’s newlyappointed chief executive officer, Mr Sam Chong Keen, will undertake the task of negotiating and liaising with the Company’s bondholders.”

I think the board owes the shareholders an explanation for this change of mind. And I hope SIAS or SGX will ask the board for an explanation. Though something tells me that nothing will happen.  Poor shareholders, they might reasonably think that  directors are spending shareholders’ money to ensure that the board doesn’t get sued.

Or that the board thinks CEO is not up to job?

*Ernst & Young Solutions LLP (“E&Y”) is the financial adviser. “E&Y’s scope of work will include, among other things:

(a) advising and assisting the Group on suitable options for discussion with the holders of the Bonds (the “Bondholders”) and providing assistance on the development of a comprehensive debtrestructuring plan of the Company’s existing borrowings and liaising and negotiating with the Bondholders in connection with the debt restructuring exercise; and

(b) undertaking a business and financial analysis on certain related matters.”

“The Company has also appointed Stamford Law Corporation as its legal adviser to act for the Group in relation to matters arising from the debt restructuring.”

S-Chips: putting their cash into S’pore banks

In Accounting, China, Corporate governance on 02/03/2010 at 5:38 am

The ST suggested that S-Chips should deposit their cash in in DBS, OCBC or UOB and not Chinese banks.  This could reassure investors that the S-Chips’  cash were safe.  This would in turn help the shares to trade above their net cash per share.

Err might not be a gd idea. Forget about the practical reasons like

– the companies not having the cash they claim they have; or

– withdrawing the cash after depositing it for reporting purposes and deposting it again just before the next reporting date. To prevent this the banks would need clear mandates to report such actions, and manpower and systems to track such movements.

It could be that the investors are (or will be) concerned that the cash could be used up in unprofitable businesses. Chinese dot.com companies listed on Nasdaq were trading below their net cash positions after the dot.com bust. Investors rightly assumed that they would not see the cash.The cash would be used to fund internet ventures etc. Anything else except be returned to shareholders.

They were right.

Sino-E’s board are powerless/ SIAS needs to growl louder

In Accounting, China, Corporate governance on 25/02/2010 at 5:31 am

I’ve always wondered why SIAS had been quiet on the lack of news from Sino-E’s board on what was being done to protect the assets and business of the company. I had tot that maybe company had quietly assured SIAS that things were in motion but that publicity could cause problems.

So I was surprised to read in Wednesday’s papers that SIAS had gone public on Tuesday, saying it had asked asked questions since December, but had been ignored. ST also reported that Sino-E had responded in a sense. No wonder it didn’t earlier reply or inform shareholders, the news is not reassuring. Bugger-all has been done other than reconstituting the board and appointing a CEO. Production has ceased, and the cash has not been secured.

Though to be fair, the board is S’pore-based, while business, assets are in a faraway district in a faraway province from Beijing or Shanghai in China.  And the board could could argue that since the shares are still suspended, there was no need to upset shareholders with the bad news.

Let’s hope that SIAS has learnt that a nicely, nicely approach could be taken as a sign of weakness and impotence.  More and louder growls, pls. If nec, howls pls. Wolves are feared: lap dogs and toothless mutts are not.  As MM has said, S’poreans needed to be spurred.

Sino-Environment: Still waiting for reassurance or bad news

In China, Corporate governance on 21/02/2010 at 6:02 am

Just before CNY, Sino-Environment annced that one of the directors had become CEO.

Well and gd that co has a CEO.

But if I were a Sino-E investor, I still want to know the state of the businesses, whether the assets are still there, and  if the assets are being looked after properly. In short whether the new board is in control on the ground in China.

On this silence.

Sino-E: Waz up Doc? Again

In China, Corporate governance on 29/01/2010 at 5:45 am

Since http://atans1.wordpress.com/2010/01/10/sino-e-where-are-the-managers-doc/ there is no news on appointment of on-the-ground managers, or reassurance that the assets and business are being looked after properly by China-based managers.

Board, if you are helpless, say so leh? No shame telling shareholders that with you in S’pore and assets and business in a far away province in distant China. Even the Chinese emperors admitted that there were parts of China where they could do bugger-all.

Sino-E — Where are the managers, Doc?

In China, Corporate governance on 10/01/2010 at 11:01 am

If I were a small shareholder, I’d need some more information on what is happening.

Following last Sunday’s announcement that the three executive directors (EDs) had resigned, the independent directors (IDs), by then the only remaining directors, said mid-week they had made three new board appointments and re-appointed the former financial controller.  Two were IDs and one was a non-executive.

But till time of this post, nothing has been heard about who is managing the company in the absence of the CEO or any ED in China. And if no one is managing, who will manage it and when? Waz the point of all these directors based here? Everything of value is in China.

The IDs should be telling shareholders what they are doing to ensure that the assets of the company are not plundered or the business is not misrun in the absence of the EDs. If there are already gd managers on the ground, shareholders should be told. If there are none, why were there no plans for managers to replace the EDs? After all the IDs were seeking to remove the then  EDs.  And when will the new managers are expected to be in place? Shareholders need this information.

Surprised

  • SIAS not publicly commented on this;
  • SGX not publicly querying company; or
  • none of the usual corporate governance pundits are even raising this issue.

But who knows, maybe behind the scenes? Somehow I doubt it.

Is all this corporate governance activity by the two IDs and talk by others, Wayang or shadow puppetry in its most sophisticated form?

A small shareholder might very well think that. I couldn’t possibly comment

Sino-E: Even IDs are in the dark

In China, Corporate governance on 05/01/2010 at 6:20 am

After the Chinese police refused to proceed against the chairman as requested by the independent directors, the three executive directors  resigned, leaving no-one to run the company. This mass resignations seems to be taunting the IDs as they are resigning after a favourable police decision. They had refused to resign for months and the IDs had to get a court order to call for an EGM to remove the EDs.

Adding insult to injury, the company said IDs “will continue to keep shareholders updated of all material developments”.

Err … But when BT asked the IDs for comments, they said that they are seeking to clarify the situation before issuing any response. As at the time of this posting, no annc has been made by the IDs.

They must be confused and worried because with the EDs resignation, no-one is managing the company. And some workers are threatening to strike over the IDs actions. And they could be sued by the chairman and shareholders.

Great way to start 2010.

They have the responsibilities and powers of directors but are powerless in reality. The co’s assets are in a far away province of a far away China. Taz the reality.

Sini-E: The plot thickens

In China, Corporate governance on 03/01/2010 at 5:29 am

Recently I had pointed out that the independent directors, despite getting a court order, had done nothing to call the EGM to sack the executive directors. I speculated that maybe they had found out that the EDs had the votes   http://atans1.wordpress.com/2009/12/31/sino-enviro-waz-up-doc/ .

Well there is now an annc on company’s site saying that that the chairman had been cleared by the Chinese police of allegations made against him by the IDs.

Ouch! This is not good news for the IDs. It undermines the allegations that they are making against the EDs. As the Chinese docs are dated 25 Dec, maybe they knew about it and hence did not call EGM.

If I were an ID, I’d be concerned about the chairman suing, whether I have the appropriate insurance policy, and whether PwC can be sued. I”m sure PwC are consulting their lawyers and checking their insurance policies.

Wonder what SIAS will now say? They have been supportive of the IDs actions.

All goes to show: Taking an IDship in a company listed in one country, domiciled in another with assets in a third where there are problems with the rule of law is not to be taken lightly. It, like investing, in such a company can be the stuff of nightmares.

Sino-Enviro: Waz up Doc?

In China, Corporate governance on 31/12/2009 at 4:05 pm

When is the EGM to remove the executive directors going to be called?

On 17 December 2009, the independent directors announced, inter alia :”At the conclusion of the hearing on Thursday, 17 December 2009, Chong JC granted, amongst others, the following orders:

a. That pursuant to section 182 of the Companies Act (Chapter 50), an

Extra-Ordinary General Meeting of the members of the Company (the

“Meeting”) be called and conducted within 21 days from the date of

i. To remove the Executive Directors from the Company’s Board of Directors”.

It’s now 31 Dec, and there is no EGM annc.  Why not?

One wonders if the IDs have found out that the EDs have the votes to prevent them from being removed? http://atans1.wordpress.com/2009/12/26/spare-a-tot-or-more-on-sino-environment/

Juz speculating, Watson.

But having gone to court, this silence from the IDs is deafening, and should worry the punters (sorry investors) in this stock. But then it seems the retail shareholders of this company are extremely passive. It took the IDs to get an order of court to hold an EGM, while the efforts of some shareholders (I salute them) to organise an EGM came to nothing.

They should realise passivity has its price. Ask those investors in minibonds, and HN5, Jubilee and Pinnacle notes.

What happens if S-Chips can’t get IDs?

In Corporate governance, Investments on 11/12/2009 at 12:24 pm

I wonder if the SGX has thought thru its proposals on imposing more duties on independent directors of S-Chips (OK the proposals apply to all companies with major overseas units: but it seems reasonable to conclude that S-Chips were the intended targets of these measures.)

Will the S-Chips find IDs prepared to serve on their boards, if the proposals become the “law”? Already the chairman of the Singapore Institute of Directors has expressed concern that existing IDs may resign to avoid these additional duties? What happens if IDs resign and the S-Chips cannot find replacements?

What will SGX do? Suspend these companies, or delist them? And wouldn’t the losers be the retail gamblers , opps, investors?

If the S-Chips pay a lot of money, I’m sure they can get IDs. The issue is whether they got the cash to pat them. Many of them are SMEs; the bigger companies prefer HKSE.

Finally is there a problem? The president of SIAS was quoted recently as saying  that it would be unfair to view  “the 154 S-Chips” as being especially vulnerable to problems arising from weak corporate governance, only  a few were “problematic”.

He should know, shouldn’t he?

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