Date: May 18, 2005
On behalf of minority shareholders, who may have suffered a loss as a result of the share overhang, SIAS raised their concerns over the decision not to postpone the IPO. We also raised the question of compensation. SIAS also urged SGX not to allow in future any new issue to proceed immediately until all regulatory requirements are complied with, especially in situations which will result in overhang of shares in the market. Such a situation is detrimental to the interest of new shareholders.
We were briefed by Ms. Yeo Lian Sim the basis for allowing the IPO to proceed. From the SGXﾒs point of view, the major considerations were the overall interest of the market and that of all the shareholders. To stop the issue, in the view of SGX, would have been a major exercise. It had to be flexible and decide what was appropriate in the circumstances. The decision whether to proceed or not was also one for the issuer and the issue manager. The issuer had complied with all other conditions of shareholding spread and distribution enabling SGX to allow the issuer to proceed as requested. Further, the shortfall of shares was small at 2.37% or 11.6 million new shares and did not change the companyﾒs eligibility to list as previously stated by SGX. SGX also takes the view that investors must accept that when they trade in the market they have to assume risk.
Our response was that whilst new shareholders can be expected to face market risks, in this instant the new shareholders were facing an unusual risk. i.e. meeting with a shortfall in the regulatory requirements. It is not fair to expect them to face such a risk.
Since an oversight by the issue manager resulted in an overhang, the minority shareholders are understandably calling for appropriate compensation by the party responsible for the losses incurred by them. SIAS hopes that the issue manager will meet to discuss the possibility of compensation.
Mr David Gerald J.
President & CEO
Securities Investors Association (Singapore)