Out-Law / Your Daily Need-To-Know

Singapore investor lobby group prepared to take legal action to protect shareholders' rights

21 Apr 2016, 5:05 pm

Singapore investor lobby group Securities Investors Association (Singapore), or SIAS, would take companies to court if necessary to protect the rights of minority shareholders, according to local press reports.

SIAS president David Gerald told The Business Times that "we will take legal action if the company doesn't want to come to the table, refuses to see reason and continues to do wrong".

SIAS also has access to advice on a pro bono basis from "big name [law] firms" in Singapore, so will be able to defend itself if companies or boards try to take action against it, Gerald said.

"Companies should not take us and the minorities for granted," he told The Business Times.

Gerald said he is keen to let members and other investors know that they can join SIAS in a 'representative action', which is similar to a class-action suit in other jurisdictions, The Business Times said.

"Investors must know they are protected. And I have been advised by our lawyers that SIAS can represent aggrieved shareholders. We can even set up a litigation fund, which minorities contribute to, even if they may not be involved in the legal action, to support the principle," Gerald told The Business Times.

However, Gerald stressed that legal action would be a last resort for the organisation.

"I sincerely hope we do not see the day when we launch a class-action suit against a company. I believe in resolving things in the boardroom, not the courtroom, in the interest of all parties," he told The Business Times.

Since its inception in 1999, SIAS has taken a conciliatory approach as a first stance, because adverse publicity is bad for a company's share price, Gerald told the newspaper.

"When shareholders read negative reports on companies, they tend to dump the shares. Even highly sophisticated, savvy investors, like high-net-worth investors and institutional investors, get nervous," he said.

"Tripartism" is often the solution, where a company, its shareholders and regulators jointly come to a solution, Gerald told The Business Times.

"That .. should be the way in which Singapore capital markets operate. Because when you have acrimony in the capital markets, people will think twice about investing in our country," he said.