Raffles Education not replacing 5 directors now on bail amid CAD probe

Raffles Education said that the resignation of almost the entire board of directors could destabilise the business and operations. ST PHOTO: THADDEUS ANG

SINGAPORE (THE BUSINESS TIMES) - Raffles Education has responded to Singapore Exchange (SGX) Regulation's queries and will not be replacing its directors who are currently out on bail.

In a filing on Monday (Feb 28), the mainboard-listed education provider said that the resignation of almost the entire board of directors could destabilise the business and operations.

Raffles Education added that its nomination committee (NC) regards the ongoing investigations by the Commercial Affairs Department (CAD) as relating to a one-off historical matter, and does not want to pre-empt or prejudge the outcome of the investigations.

Five of Raffles Education's directors were notified of their formal arrest and bail conditions of $30,000 each. The investigations are related to an RM410 million (S$132.5 million) loan extended by Affin Bank to the company's subsidiaries - Raffles K12 and Raffles Iskandar - which manage schools in Malaysia.

Raffles Education and its subsidiaries had been served a lawsuit by Affin Bank for immediate repayment of the loan on May 27 last year, but disclosed this publicly to shareholders only two months later, on July 29, at the request of SGX.

This could amount to a potential offence under Section 203 of the Securities and Futures Act, which states that an offence is deemed to have been committed if material information was not disclosed to shareholders when it occurred.

In its Monday filing, Raffles Education said that the five directors, as part of their bail conditions, have to routinely go to the CAD office to assist with ongoing investigations, and can travel out of Singapore if they have obtained clearance beforehand. None of them has been formally charged.

Hence the NC does not believe that the recent development impacts the current directors' ability to perform their duties, their character and integrity, or their suitability or ability to continue serving their roles. The NC will monitor material developments relating to the investigations, and the directors will keep the company informed of the subsequent developments.

The NC will redesignate current independent director, Mr Lim Siew Mun, as lead independent director. Another independent director will be appointed to provide additional oversight as soon as practicable.

Mr Lim and the new independent director will form an independent committee, and will be primarily responsible for supervising and reviewing all matters relating to the investigations.

Said Raffles Education: "The formal arrest and bail, and ongoing investigations, do not necessarily signify that there will be any further actions taken or charges in the future.

"At this point in time, there is no intention to appoint a special committee to independently investigate into the circumstances surrounding the investigations."

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