MINORITY REPRESENTATION IN PUBLIC LISTED COMPANIES

Mr Shriniwas Rai asked the Minister for Finance if he will consider amending the law to allow for minority representation in public listed company.

Dr Richard Hu Tsu Tau: Safeguarding the interests of minority shareholders is important. For this reason, there are currently already a number of provisions in the Companies Act and SES rules to do so. The safeguards are as follows :

a) the Companies Act confers certain fundamental rights on each and every shareholder, regardless of the number of shares he or she owns. These include the right to attend general meetings, to speak thereat and to vote on resolutions put forth at such meetings. Minority shareholders are at liberty to ask questions and voice their opinions at such general meetings;

b) under the law, each director has a duty to act honestly and in the interest of the company as a whole, ie, in the interest of all shareholders;

c) both the Companies Act and SES rules require all listed companies to establish an Audit Committee, which must have a majority of independent directors. The Audit Committee helps to review internal controls, financial statements and procedures for related-party dealings;

d) in cases of oppression or injustice done to any minority shareholder, sections 216 and 216A of the Companies Act provide avenues for redress; and

e) where the interest of substantial shareholders might be at variance with those of minority shareholders, such as in material related-party transactions, the SES rules require the appointment of independent financial advisers to advise the minority shareholders. Furthermore, substantial shareholders who have vested interests in such transactions have to abstain from voting on the relevant resolutions.

The current regulations are adequate to safeguard the interests of minority shareholders. Therefore, it is not necessary to amend the law to allow for minority representation in listed companies.