SGX delisting changes will ensure greater balance of power: Analysts
Mr Loh said that with these new initiatives, retail investors can take comfort in the fact that SGX has measures in place to safeguard their interests.
The changes to the rules on voluntary delisting announced by the regulatory arm of the Singapore Exchange (SGX RegCo) yesterday will strike a greater balance in the powers held by majority shareholders and those who hold a minority stake in a company, analysts said.
The changes, which take immediate effect, require exit offers to be fair and reasonable, and for the shareholder vote to exclude the offeror and concert parties.
Associate Professor Lawrence Loh of the National University of Singapore Business School said: "Minority shareholders now have a more effective tool to exercise their say in deciding on any voluntary delisting and are not bound by the stronger offerors and controlling shareholders.
"In the new situation now, they can make a difference, and this may kindle more shareholder engagement or even activism."
Last month, minority shareholders of IT retailer Challenger Technologies managed to block the exit offer despite some 88.6 per cent supporting the buyout.
However, minority shareholders who opposed the delisting of shipbuilder Vard Holdings failed to block the resolution last year.
Mr Loh said that with these new initiatives, retail investors can take comfort in the fact that SGX has measures in place to safeguard their interests. They will also not be disadvantaged through being thrust "low ball offers" in an exit.
CIMB Private Banking economist Song Seng Wun said that the playing field between large investors and small retail investors can be levelled.
"It becomes a case of not just having the key stakeholders being able to ram through whatever they feel... to be fair and reasonable. Now, we can hear from both parties involved and there is room for different views to be put on the table."
He added that the changed rules will not make it harder for companies to delist, if their exit offers are fair and not unreasonably skewed towards one party.
Analyst Nicolas Van Broekhoven of researcher Smartkarma said these changes are in line with what has been done in places such as Hong Kong and Australia, and controlling shareholders will need to take the vote of minority investors more seriously.
"This rule change will make it harder for companies to delist cheaply and without giving due consideration to minority shareholder rights."
Gibson Dunn & Crutcher partner Robson Lee said there should also be a balance between giving minority shareholders more power and letting them overwhelm company decisions.
He said: "The exchange is mindful to balance it to ensure the minority issues will not be run roughshod over by the majority, but also that there will not be the tyranny of the minority to hold the majority in a stranglehold."
Mr Ho Meng Kit, chief executive of the Singapore Business Federation, said: "It strengthens SGX as these rules now ensure the interests of all shareholders, big or small, are adequately represented."
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