GE shareholders to decide whether insurer resumes trading with choice on bonus issue from July 29

SINGAPORE - Great Eastern (GE) shareholders will receive forms from July 29 to choose whether to take up non-voting shares or receive bonus ordinary shares, a move that will determine whether the insurer can resume trading.

Those opting for Class C shares will need to fill out the form and submit it to the Central Depository, also known as CDP, by 5.30pm on Aug 7.

However, no action is required on the part of shareholders who wish to receive bonus ordinary shares.

The development comes after

a proposed delisting resolution

failed to pass at GE’s extraordinary general meeting (EGM) earlier in July. The conditional exit offering of $30.15 per share made by GE’s parent company OCBC Bank also lapsed.

GE’s shares have been suspended from trading on the Singapore Exchange since July 2024. The pause occurred after the insurer’s public float fell below the 10 per cent minimum required by the exchange.

Minority shareholders – who were the only ones allowed to vote – were then asked to vote on the resumption of trading resolution, which necessitates the adoption of a new Constitution to create Class C non-voting shares and undertaking of the proposed bonus issue.

More than 98 per cent voted for the new Constitution and the bonus issue resolution. Shareholders will get bonus ordinary shares in respect of their shares, unless they elect to receive Class C non-voting shares.

Mr David Gerald, president of Securities Investors Association (Singapore), said that shareholders need to be mindful that while Class C shares carry the same economic rights to dividends and distributions, the shares are not listed, not redeemable and carry no voting rights. They also cannot be exchanged for ordinary shares for a period of five years.

“A holder of Class C shares will likely find it hard to sell the shares as they have to find a willing buyer privately to do so. Retail investors need to carefully consider if they are willing to give up their voting rights and liquidity by electing to receive Class C shares,” Mr Gerald said.

Meanwhile, shareholders who opt for bonus ordinary shares will receive one bonus ordinary share for every share they currently hold, effectively doubling their shareholding, he said.

Mr Gerald added that, if and when trading resumes, GE shares will undergo price discovery in the open market, where a new post-bonus, post-delisting-offer equilibrium price will be established.

In a circular to shareholders dated June 9, GE said that bonus ordinary shares are identical to shareholders’ existing shares and will count towards meeting the free float requirement, whereas Class C non-voting shares will not count towards the free float.

Speaking at a media briefing on July 28, group chief financial officer Ronnie Tan said the company is optimistic that GE will resume trading.

He said: “As explained at our EGM, the Class C shares were essentially structured to allow OCBC to support GE to resume trading in the event that the delisting resolution was not approved. Through the structure, we are optimistic that GE will resume trading through this process.

“It doesn’t make sense for shareholders, other than OCBC, to take on Class C shares because it has disadvantages. Shareholders will be giving up quite a lot if they want to choose Class C shares.”

GE’s board of directors had recommended that shareholders, other than OCBC, do not elect to receive Class C non-voting shares.

OCBC said it intends to receive the Class C non-voting shares, which will dilute its own shareholding of voting shares in GE to 88.19 per cent, from 93.72 per cent.

This will help to restore GE’s minimum free float of 10 per cent and allow trading to resume.

However, if a sufficient number of shareholders choose Class C shares, GE may not be able to restore its free float and its trading will remain suspended.

Mr Tan said that if shareholders opt for Class C shares in respect of more than one-third of the shares held by minority shareholders, GE will not be able to meet the free float requirement.

GE on July 28 reported that its net profit declined 11 per cent to $248.2 million for the quarter ended June 30, from $280.4 million in the same period a year ago. The drop was attributed to lower profit from the insurance business for the quarter.