SINGAPORE (THE BUSINESS TIMES) - The Securities Investors Association (Singapore) has voiced concerns over recent developments at the Ong family-controlled property player Hwa Hong Corporation.
Sias, the investors' watchdog, called for incoming independent directors to "step aside" until the company's mandated independent review is completed.
Earlier this month, Mr Ong Choo Eng and his son Ong Eng Yaw, together with other investors and private equity funds, launched a takeover bid for the company. This pits the senior Ong, 78, and his son against the families of his five brothers who co-founded the company.
Hwa Hong's board is now majority-controlled by certain family members and substantial shareholders. Add to this the recent resignation of the company's independent chairman following "disagreement with certain board members" on the selection and appointment process of 2 new independent directors, who have yet to be named.
Hwa Hong has since been issued a notice of compliance (NOC) by the Singapore Exchange Regulation (SGX RegCo) to appoint an independent reviewer to look into the company's board nomination process, among other requirements.
Sias president and chief executive David Gerald wrote in a letter on Wednesday (May 25): "Sias is of the view that the incoming IDs should step aside until this independent review is completed."
The company's substantial shareholders have further made a voluntary conditional cash offer of S$0.37 per share to take the company private. In this regard, Hwa Hong said it intends to appoint an independent financial adviser (IFA) to advise the company's IDs on the subject of takeovers and mergers.
Mr Gerald asked: "Given the current situation, who is in a good position to appoint the IFA to advise the IDs and provide the opinion for the offer? Given that a privatisation offer for Hwa Hong has been made, Sias calls on the board to expeditiously comply with the SGX RegCo's NOC before the appointment of an IFA to opine on the privatisation offer."
In his letter, he asked that the 2 to-be-appointed independent directors be named, and for information on their links to the current board. He also queried their independence, given that they were shortlisted by the remaining board members of Hwa Hong in the absence of a nominating committee.
Noting that it has been "business as usual" for Hwa Hong since the shortlisting of the 2 IDs, Mr Gerald urged the board to "do more" to safeguard shareholder interests, especially minority shareholders.
Other questions which he believes should be addressed by Hwa Hong's board to assuage minority shareholders include when the new IDs and independent reviewer will be appointed; why a financial advisor was appointed by Hwa Hong instead of an independent reviewer; and whether the company had explored strategic alternatives in the past 2 years.
He reiterated: "To ensure good corporate governance and independence is maintained, the SGX RegCo's NOC should be accomplished at the earliest timeline, before the appointed IDs review the recommendations of the IFA. How will the appointed independent directors hold themselves to high levels of independence without this independent review?"
- Additional information from The Straits Times