TSMP Law Corporation Joint Managing Partner Stefanie Yuen Thio was quoted in a feature story published by the Business Times in the weekend edition of 23-24 November 2019 on how South-east Asia’s startup founders can avoid governance lapses.

She noted that in recent months, WeWork’s botched Initial Public Offering (IPO) has served up a striking example of how governance can get out of hand. She said, for one, the market is all too aware of how WeWork’s key investor, Softbank, has “come out to publicly acknowledge corporate governance failures in this high-profile investment”.

She added that ultimately, founders must bear in mind that they must be accountable for money entrusted to them by third-party investors. Proper financial controls become an indispensable expense. “There’s a legal obligation to account for the spending, and if the startup hopes to attract even bigger investors at higher valuations, with the possibility of a trade sale or an IPO thereafter, corporate governance is a key indicator of how well-managed it is,” she said.

On board members, she said: “Big names make good corporate patrons; many don’t add value – like how a lot of Singapore-listed companies used to seek out Members of Parliament to sit on their boards, thinking that they would lend cachet. While some did bring value, others just took up space. Worse, if the VIP was bent on protecting himself, he might not advance the objectives of the company with as much vigour as a non-big name director.”