The Singapore Exchange has responded remarkably fast to stamp out the concerns raised by my column last week about protecting the integrity of SGXnet – the online platform used by listed firms to disclose material information to investors.
Yesterday, it came out with changes on how listed firms could post their announcements on SGXnet. The changes take effect from Jan 10 next year.
Essentially, the changes involve a listed firm having to put the information in the correct template devised by the exchange before it can be sent out on SGXnet.
Four new information templates have been added to the existing announcement categories.
I am sure that this attempt at giving a breakdown will focus the mind of a listed firm’s management on the merits of the information they put out on SGXnet.
The changes had followed observations in recent weeks that SGXnet is in danger of turning into a soap opera channel, after it was used by the executive directors of China play Sino-Environment to make a series of allegations against a sacked financial controller.
Such abuses may undermine its credibility as a serious platform to facilitate the flow of information on important corporate developments from companies to investors.
I am glad that the SGX had also recognised the severity of the issue involved and has moved swiftly to tackle the issue.
One important new introduction is a section on the actions taken by SGX and other regulatory authorities against errant listed firms and their management. A wide spectrum is covered - investigations, disciplinary decisions, reprimands and other related issues.
This will tie in nicely with a recent proposed change in the listing rules to give SGX the right to publicly censure or object to the appointment of key executive officers or directors.
But SGXnet’s revamp is not the only challenge to be thrown up by Sino-Environment.
Last month, I had raised the issue as to whether the China-based waste recycler should seek court protection by appointing a judicial manager, given the public squabble between its management and the independent directors.
Since the findings on alleged fraud in the firm, amounting to $85 million and uncovered by special auditors PwC, were released two weeks ago, actions along similar lines have been taken to try to protect shareholders’ interests.
Yesterday, the High Court gave the company’s IDs the go-ahead to convene a shareholders’ meeting to try to boot out the executive directors.
If they do succeed in getting rid of the current management, they will have to proceed with the next step of removing them from the corporate shopfloor in Fuzhou, China as well.
I will be watching these developments closely. It will be a big test of our legal and regulatory framework on whether investors can safely put their money in China-based firms.
If shareholders do manage to remove the executive directors from the board, and then fail to get rid of them at the ground level in China, we will have a serious corporate governance issue on our hands.
Watch this space.