Is Singapore Exchange's (SGX) list of ailing companies that have been suspended from trading for a year or longer sufficient to protect shareholders' interests ("SGX issues report on suspended firms"; May 13)?
Of the 20 firms that have been suspended from trading, more than half are China-based. This is very telling.
In its haste to build up the local bourse, did the SGX exercise adequate caution and due diligence to ensure that the firms applying for listing are financially sound, professionally managed and have viable business models?
What has the SGX done to ensure that suspended firms have measures in place to compensate shareholders in the event of delisting?
China Milk Products Group is a case in point.
Trading of its shares on the SGX was suspended on Feb 12, 2010, and provisional liquidators were appointed on July 22, 2011.
The company was supposed to submit a listing resumption proposal by July 9, 2012, but it did not. The SGX then requested that it make a cash exit offer to shareholders by the following month.
There was no update until May 12 this year, when the liquidators advised that the company was hopelessly insolvent and unable to make a cash exit offer.
It applied for delisting as well as a dispensation from summoning a general meeting to obtain shareholders' approval and making a cash exit offer.
The delisting application has been approved by the SGX.
After six long years, China Milk seems to have got off scot-free. Meanwhile, shareholders' investment in the company's shares were completely wiped out.
Merely listing the firms that are suspended from trading is insufficient. The SGX needs to do more to protect shareholders.
Lawrence Loh Kiah Muan