SGX grilled by concerned shareholders at AGM

At the Singapore Exchange annual general meeting yesterday, newly appointed chief executive Loh Boon Chye stressed that the lack of new listings is a global issue, and that the SGX will focus on attracting firms in sectors such as healthcare and the
At the Singapore Exchange annual general meeting yesterday, newly appointed chief executive Loh Boon Chye stressed that the lack of new listings is a global issue, and that the SGX will focus on attracting firms in sectors such as healthcare and the emerging digital tech sectors.ST FILE PHOTO

Issues include rule on minimum trading price, rising staff costs, director fees

Investors grilled Singapore Exchange (SGX) bosses on a range of issues yesterday amid some concerns over the bourse's business performance.

The 600 or so shareholders clearly had plenty to get off their chests at the annual general meeting.

One of the most contentious issues concerned the upcoming minimum trading price (MTP) requirement but there were also questions about the sluggish securities business, rising staff costs and director fees.

One of the more vocal attendees was activist investor Mano Sabnani, who asked the SGX to be more active in guiding the stock market to meet the 20-cent minimum trading price requirement, set to fully kick in in March next year.

The scrambling for share consolidations by affected firms has led to share value disruption and illiquidity, Mr Sabnani said, adding that the bourse should intervene to ensure greater order and consistency in such corporate actions.

SGX chairman Chew Choon Seng responded by reiterating the need for the new rule to improve the quality of mainboard listings, of which around 30 per cent are still trading below the 20-cent level and are vulnerable to manipulation.

"Having said that, we avoided being overly prescriptive. We should let issuers themselves decide whether they should stay on the mainboard and comply with the requirement, or to migrate to the Catalist board which has no MTP," Mr Chew said.

He added that companies have a three-year grace period, until 2019, to make the necessary adjustments.

Investors were also vocal about the lack of new listings, reflected by an 8 per cent year-on-year drop in SGX's securities revenue in the past financial year.

Mr Sabnani asked: "I'm sure you're trying, but what more can we do to attract listings? What we've been reading is that companies are actually delisting from the stock exchange here."

Newly appointed chief executive Loh Boon Chye acknowledged the challenge but stressed that it is a global issue. "In the past three months, we have seen companies delay their public listings as a result of the ongoing market volatility not only in Singapore but globally.

"The presence of more sources of capital, including venture capital and private equity which have been active investors in start-ups and growth companies, has drawn away potential IPOs."

Mr Loh told investors that the SGX will focus on attracting firms in core sectors such as real estate investment trusts, healthcare and the emerging digital tech sectors.

On the derivatives side, which now contributes 38 per cent of SGX's total revenue, ahead of 27 per cent generated by securities, the bourse is working on diversifying contract types to limit the impact from the commodity crash amid China's slowdown, Mr Loh added.

Investors also questioned chief regulatory officer Tan Boon Gin on the slow progress of the investigation into suspected market manipulation that potentially led to the penny stock crash three years ago.

They said the lack of closure will keep affecting market sentiment.

Mr Tan, the former director of Commercial Affairs Department (CAD) before joining the SGX in June, said the CAD fully appreciated the urgency of the matter and is sparing no resources in its probe.

Shareholders were also critical of SGX staff costs, which rose $23 million in the past financial year.

The chairman's fee of $750,000 - including for a car and driver - for Mr Chew drew the ire of shareholder Tan Keng Sooi, who demanded that Mr Chew give up his transport benefits and "give the money back to the poor".

Lead independent director Kwa Chong Seng said the chairman's fee has not been raised since 2009, adding that Mr Chew is paid the amount because he is not allowed to take up any position on another board.

Despite the at-times intense questioning, all 13 resolutions were passed with over 95 per cent of votes in favour, including for the director and chairman fees.

The recommended final dividend of 16 cents per share was also approved, pushing the year's total dividend to 28 cents per share, unchanged from last year.

A version of this article appeared in the print edition of The Straits Times on September 24, 2015, with the headline 'SGX grilled by concerned shareholders at AGM'. Print Edition | Subscribe