SINGAPORE: Minority shareholders in Singapore have plenty to think about in recent weeks, with the red flag raised on corporate governance and transparency issues in not just one, but three companies.

These companies are Jade Technologies, Swissco International and China Aviation Oil.

Associate Professor Ho Yew Kee, Vice Dean, Finance and Administration, NUS Business School, said: "I think it is a sign that corporate governance is taking an effect on the market and companies suddenly realise that they can no longer do things in the quiet.

"For example, if an independent director is resigning, they can no longer sweep it under the carpet because they realise that they need to prepare statements. They have to explain to the market as to the kind of signal that is being sent by the resignation of the independent director."

Minority shareholders in Singapore are also increasingly ready to take action when they sense something amiss. But it could be a tall order to keep tabs, especially on smaller firms.

Industry experts said smaller companies are more vulnerable to such issues of corporate governance as they have a limited network of independent directors and a higher pressure for conformance of agreeable or acceptable behaviour.

Nonetheless, experts said regulators can help by taking a more active approach.

"One of the things the regulator can do is to sit down and talk to them on a confidential basis. The regulator has to make an independent decision as to whether there is sufficient merit to pursue the issues on hand, especially when you have a very influential independent director who will step down for that matter," said Prof Ho.

And if the ambit is too wide for the Singapore Exchange to scrutinise every company, some said a risk-based approach might work, with the spotlight focused on firms with higher risk.


- CNA/so