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The concept of getting its members and SGX to contribute
money for SIAS to engage analysts to conduct research and analysis on listed
companies in my view is a waste of resource and time.
While it may seem to be
the correct thing to do – having analysts put up questions with regards to the
companies' financial well-being and corporate governance, the questions raised
would only receive a mediocre answer from the management to “pass” the
question.
Without a strong shareholder with the support of many other shareholders pushing for change, the existing management of most companies would not make
any huge changes to the company – there are simply no laws that require
management to really listen to shareholders.
Management can also dismiss the
questions being asked as insignificant because of the notion “management knows
best because they are managing the business”.
Management may also agree to
change as per shareholders’ wish, but if changes do not occur after a year, the
management would be not held accountable.
Throughout corporate America, we have seen many examples of
shareholders unable to go against management simply because they did not rally enough shareholders’ support and because management owns enough shares to
silence the noise.
In Singapore, the majority of the listed companies have
management owning more than 50% of the total shares outstanding.
I believe the Singapore market is currently working on the mantra “if you think the management is
incompetent, invest your money elsewhere”, which was prevalent during the early
days of US’s corporate activism.
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I think there are 2 better ways to solve the issue than
engage a group of analysts to ask questions. One, we promote shareholder
activism the way the US does, getting activist investors to get on the board of
these companies and push for improvements for the shareholders.
Two, we change
the laws to allow minority shareholders’ votes to be able to overwrite
management’s shares when certain events are triggered, events such as a buyout
or change of management (especially if they are major shareholders).
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Remember to offer your opinions. If you don't put your two cents in, how can you expect to get change?
Have a feedback? Tell us now!
Subscribe to us or
Follow us: Investment Stab on Facebook
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