TSMP Law Corporation Joint Managing Partner and Head of Corporate Stefanie Yuen Thio was quoted in a CNA feature story published on 19 November 2019 on how retail investors can be protected when companies opt for restructuring.
On the SIAS’ proposal to the authorities to consider having “a formal requirement whereby all companies which face liquidation are to engage SIAS”, she said: “Should SIAS be granted ‘official standing’ as the investors’ association de jure, listed corporates may attempt to buy ‘soft’ influence through donations and sponsorships. Even in the absence of such external meddling, it would be tough for SIAS to prove its independence if, for instance, allegations are raised by stakeholders with competing interests. This could undermine its effectiveness as a retail investor advocate when insolvencies arise.”
She would also like to see the laws changed to better allow retail investors to take action against errant boards. This will include amending the Companies Act to permit class action lawsuits and to help minority investors obtain timely company information in order to pursue legal claims against the directors and management. Laws on third-party litigation funding could cover minority shareholder lawsuits in insolvency situations.
Meanwhile, she also suggested the Singapore Exchange’s Central Depository, which holds the shares of investors, to provide a communication service for shareholders to rally other shareholders for a common cause. Nevertheless, all these should be accompanied by more efforts to raise investor education.
She cited the example of perpetual bonds or “perps”. “(These) are not really bonds in the traditional sense and a savvy investor would not invest without understanding the risks associated with a bond that the issuer has no obligation to repay.”
“When corporates go into default, there is usually very little left to go around so the parties would be picking scraps off a carcass,” she said. “It’s much better to arm investors with knowledge and the ability to assess potential investments so that they do not put their life savings into companies that are financially overextended or badly managed.”