Homepage
PR Newswire
14-11-2012, 07:48 AM
The Straits Times
www.straitstimes.com
Published on Nov 14, 2012
Investments on ice
Thousands of investors are stuck with frozen stock, with at least 20 counters affected and some suspended for years
By Jonathan Kwok
WHEN Mr Ben Chua bought about $20,000 worth of shares in corn products company China Sun Bio-Chem Technology Group from 2007 to 2008, he was riding the lucrative "China wave".
"At that time, China stocks were quite popular," he recalled.
But the 61-year-old retiree was caught out when trading in China Sun was suspended in 2009 after accounting irregularities were uncovered.
Mr Chua's cash remains locked up as the shares are still suspended. But he is looking on the bright side: The firm has not been delisted.
"At least (the listing) is kept alive," he says.
Mr Chua is one of thousands of local investors holding suspended shares. At least 20 counters have had their shares suspended from trade. The firms face issues ranging from financial difficulty and accounting irregularity to failure of corporate governance.
As with China Sun, some suspensions have lasted years.
The issue was in the spotlight again recently when the Singapore Exchange (SGX) said that companies whose shares have been suspended for some time need to keep the market updated regularly on their state of affairs. In an Oct19 regulator's column, the SGX said it wants monthly updates from firms suspended longer than six months.
Experts said banding together is a good option for investors holding such counters. This could include enlisting the help of an investors' association, such as the Securities Investors Association (Singapore), or Sias.
"Chances are that the company is less likely to entertain them as individual shareholders," said Associate Professor Jeremy Goh of the Singapore Management University. "But collectively they can go and talk to the company and ask for some explanation. If they go through a collective shareholder activist group, the company is more likely to engage with them."
Prof Goh said shareholders will want clarity regarding the company's circumstances.
Associate Professor Mak Yuen Teen, of the National University of Singapore Business School, said investors can pressure the firm to meet regulators' conditions so that the suspension will be lifted. This can be done individually or via an association.
Sias president and chief executive David Gerald said his organisation allows investors to get together and ask the firm for a meeting. There, they can voice their concerns and get queries answered - on matters such as steps being taken to lift the suspension.
Suspensions have sometimes been lifted after such approaches, said Mr Gerald, citing the example of China Aviation Oil, which was restructured from its near-collapse in 2005.
Sias assisted shareholders and met directors and management of the jet oil supplier.
Shareholders of suspended counters have also contacted the SGX and its subsidiary, The Central Depository, which have forwarded their queries and concerns to the relevant companies.
The SGX, too, has addressed some investors' concerns and queries regarding listing rules governing suspensions.
The last resort is the expensive, drawn-out route of taking the firm and its directors to court.
"(But) it's not easy for them to sue the directors, even if the directors are not seen to be doing their best to get the trading suspension lifted," said Prof Mak.
Mr Gerald said shareholders may have the legal right to sue for losses in some cases, but it can be costly.
"Issues should be settled in the boardroom, not the courtroom," he said. "The boardroom is free."
Of course, investors are well advised to steer clear of risky companies in the first place.
The SGX Academy - the bourse operator's investor education arm - is running courses on detecting accounting gimmicks and fraud, on top of its other lessons on stock and market analysis and investment strategies.
jonkwok@sph.com.sg
www.straitstimes.com
Published on Nov 14, 2012
Investments on ice
Thousands of investors are stuck with frozen stock, with at least 20 counters affected and some suspended for years
By Jonathan Kwok
WHEN Mr Ben Chua bought about $20,000 worth of shares in corn products company China Sun Bio-Chem Technology Group from 2007 to 2008, he was riding the lucrative "China wave".
"At that time, China stocks were quite popular," he recalled.
But the 61-year-old retiree was caught out when trading in China Sun was suspended in 2009 after accounting irregularities were uncovered.
Mr Chua's cash remains locked up as the shares are still suspended. But he is looking on the bright side: The firm has not been delisted.
"At least (the listing) is kept alive," he says.
Mr Chua is one of thousands of local investors holding suspended shares. At least 20 counters have had their shares suspended from trade. The firms face issues ranging from financial difficulty and accounting irregularity to failure of corporate governance.
As with China Sun, some suspensions have lasted years.
The issue was in the spotlight again recently when the Singapore Exchange (SGX) said that companies whose shares have been suspended for some time need to keep the market updated regularly on their state of affairs. In an Oct19 regulator's column, the SGX said it wants monthly updates from firms suspended longer than six months.
Experts said banding together is a good option for investors holding such counters. This could include enlisting the help of an investors' association, such as the Securities Investors Association (Singapore), or Sias.
"Chances are that the company is less likely to entertain them as individual shareholders," said Associate Professor Jeremy Goh of the Singapore Management University. "But collectively they can go and talk to the company and ask for some explanation. If they go through a collective shareholder activist group, the company is more likely to engage with them."
Prof Goh said shareholders will want clarity regarding the company's circumstances.
Associate Professor Mak Yuen Teen, of the National University of Singapore Business School, said investors can pressure the firm to meet regulators' conditions so that the suspension will be lifted. This can be done individually or via an association.
Sias president and chief executive David Gerald said his organisation allows investors to get together and ask the firm for a meeting. There, they can voice their concerns and get queries answered - on matters such as steps being taken to lift the suspension.
Suspensions have sometimes been lifted after such approaches, said Mr Gerald, citing the example of China Aviation Oil, which was restructured from its near-collapse in 2005.
Sias assisted shareholders and met directors and management of the jet oil supplier.
Shareholders of suspended counters have also contacted the SGX and its subsidiary, The Central Depository, which have forwarded their queries and concerns to the relevant companies.
The SGX, too, has addressed some investors' concerns and queries regarding listing rules governing suspensions.
The last resort is the expensive, drawn-out route of taking the firm and its directors to court.
"(But) it's not easy for them to sue the directors, even if the directors are not seen to be doing their best to get the trading suspension lifted," said Prof Mak.
Mr Gerald said shareholders may have the legal right to sue for losses in some cases, but it can be costly.
"Issues should be settled in the boardroom, not the courtroom," he said. "The boardroom is free."
Of course, investors are well advised to steer clear of risky companies in the first place.
The SGX Academy - the bourse operator's investor education arm - is running courses on detecting accounting gimmicks and fraud, on top of its other lessons on stock and market analysis and investment strategies.
jonkwok@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
