Why Mak Yuen Teen's latest study is causing such a stir among market watchers
SINGAPORE (Jan 18): On Tuesday, corporate governance advocate Mak Yuen Teen, an associate professor of accounting at the NUS Business School, released a study arguing that the reputation of the Catalist board has been hurt by recent transfers of underperforming companies from the Mainboard.
In his report, Mak urges the Singapore Exchange to consider disallowing companies from transferring from the Mainboard to Catalist, except on an “exceptional basis”, after thorough review by the bourse.
He also recommends that companies allowed to transfer to Catalist should be closely monitored after that, and should be required to continue to comply with applicable Mainboard rules for at least a reasonable specified period.
“SGX should continue to maintain direct oversight of these companies for some time after their transfer, instead of relying on continuing sponsors. Areas of scrutiny should include transferring companies’ financial performance after their transfer, corporate governance and the utilisation of more flexible Catalist rules,” he adds.
Finally, Mak wants SGX to take a closer look at whether there should even be a difference in listing rules between the two boards.
“SGX should review whether differences between the Mainboard and Catalist continuing listing obligations are justified, bearing in mind the need to balance greater flexibility for growth companies and investor protection,” he says.
Many market watchers, however, beg to disagree as they believe Mak’s study and its recommendations are “not practical”.
Some even argue that forcing an underperforming company to delist, instead of allowing it to transfer to Catalist, actually penalises the public shareholders.
Read about their concerns in Recommendation to disallow companies to downgrade to Catalist kicks up a storm, which is available in this week’s edition of The Edge Singapore, (Issue 865). Get your copy at newsstands today or click here to subscribe.
