Watchlist Delisting

[CityFarmer]

Hi specuvestor,

What you said is true and for minorities, sadly there is nothing we can do. FDS Networks is incorporated in Bermuda and it is not even under S'pore Companies Act! Get a Bermuda law expert? Well, the cost is not even worth it for a small minority shareholder.

FDS was delisted due to loss-making. IIRC, the net asset of the company was less than 2 million then. So legal cost is not even worth it for the controlling shareholder too

[ghchua]

Hi CityFarmer,

FDS Network's loss making business had already been sold. They couldn't find a new operating business within the stipulated timeframe to meet the listing requirements and therefore SGX delisted them.

http://infopub.sgx.com/Apps?A=COW_CorpAn...cement.pdf

(1) Update on Watch-List Status – Delisting Notification
The Board refers to the Company’s announcement dated 4 September 2013 and wishes to
update that the SGX-ST has via its letter dated 16 September 2013 (“SGX Letter”) rejected the
Company’s application for a second extension of the Review Date to enable, inter alia, the
Company and its advisors to conduct and complete their legal and financial due diligence
exercise in respect of the Proposed New Acquisition.
The SGX-ST is of the view that the Company’s Proposed New Acquisition is not sufficiently
advanced and that it is uncertain at this point in time, as to whether the Proposed New
Acquisition is able to meet the requirements of Listing Rule 1314 for the removal of the
Company from the Watch-List. Hence, the SGX-ST will proceed to delist the Company.

http://infopub.sgx.com/FileOpen/FDS%20Ci...leID=19947

Page 11 of circular
© Estimated Net Realisable Asset available for Distribution
According to the Company’s best estimate, the amount available for Distribution, after
deducting all the Company’s existing liabilities and costs and expenses incurred in
connection with the Proposed Members’ Voluntary Liquidation, will be approximately
S$1,377,000, the breakdown of which is as follows:
Items Amount (S$’000) (1)
Cash at bank 2,301
Fixed assets (at written down value) 1
Net payable (725)
Estimated Expenses for Proposed Members’ Voluntary Liquidation (200)
Estimated Net Realisable Asset available for Distribution 1,377

Page 16 of circular

14. DIRECTORS’ RECOMMENDATION
14.1 Shareholders should read and consider carefully this Circular in its entirety before giving their
approval pertaining to the Proposed Members’ Voluntary Liquidation. The Directors are of the
opinion that the Proposed Members’ Voluntary Liquidation is in the best interests of the Company.
Accordingly, the Directors recommend that Shareholders vote in favour of the resolutions relating to
the Proposed Members’ Voluntary Liquidation set out in the Notice of the SGM.

[lanoitar]

The Companies Act's "Oppression of Minority" (Section 216) is cold comfort to most minorities. The last time I checked, 2 reputable law firms quoted 6-figure fees. The cost of enforcing Section 254 (Application to the court to wind up the company) is somewhat lesser, but still 6-figures. If you lose the case, you'll be liable for a further 30-50% of the cost of the defendant's legal fees. In short, it is exorbitant, and can only be justified if your stake is significant.

All cases involving Section 216 or 254 has to be lodged within 6 years of wrong-doing. For the 1st batch of companies that were de-listed without an exit offer in 2010, the legal recourse is almost over.

What we really need is for the legal system here to allow for "Contigency Fee", at least for specific cases. This will allow lawyers to be paid a percentage of the proceeds (from liquidation), if the case is successful. Nothing will be paid otherwise. Unfortunately, it has all been talks but no action so far.

[specuvestor]

yes VBs... that's what we discussed in the Keppel thread as well. Pushing through corporate actions and legal recourse are expensive for OPMI.

In theory that's how it works but in practice not so simple

I think the technicality is that at 95.5% the company has right to acquire ie call option

At 90% the shareholders have right to force company to buy ie put option. But without class action in Singapore, someone has to be vested enough to enforce the put option either through the company or court.

Nobody cares about structure, to be specific the LEGAL structure, until crap hits the fan. It applies to offshore incorporations to S-chip whereby the jurisdiction is there yet difficult to enforce. That's why for OPMI one of the most important consideration when analysing structure in the Asset-Business-Structure framework is to understand where is the incentive for management and major shareholders. Unless you can make a difference it is usually better to swim along the sharks than against them

The review on REIT managers is basically due to my oft discussed grudge of the disconnect between the managers and the REIT holders structure, which MAS is picking up relatively early.

Listed entities are already complicated enough. That's why most OPMI investors shun unlisted entities.