SINGAPORE (Nikkei Markets) -- As complaints of poor corporate governance continue, the Singapore Exchange has stepped up its scrutiny of listed companies, underlining the challenges of dealing with errant companies under the current disclosure-based system.
Based on corporate filings, the bourse operator queried companies on more than 50 occasions in March, up from 12 in February.
Since November, when SGX started making some compliance notices public, four companies have been asked to carry out certain tasks or face disciplinary action, a spokeswoman said.
Over the past decade, Singapore has moved away from an interventionist approach to regulating the stock market with the objective of giving investors greater choice and freedom to take calculated risks.
But critics of the disclosure-based system, which relies on a lighter touch and market discipline, say it has many shortcomings. As an example, they point to the fact that retail investors cannot easily seek recourse through the courts as the city-state does not allow class action suits and lawyers cannot act for clients on contingency.
SGX's stepped-up querying when it finds disclosures unclear or insufficient has yielded results in some instances, showing the need for a middle ground.
An early March query caused debt-laden commodities trader Noble Group to reveal that former co-chief executive Jeff Frase had received a near $20 million-package in 2017 despite the company's massive losses.
Still, the bourse operator has treaded softly in deciding whether to take regulatory action.
Investors also continue to grumble about poor corporate governance among smaller listed companies, especially those whose main shareholders and management reside abroad.
Last week, Goldilocks Investment, a major shareholder of Noble, expressed its unhappiness about the "vague and evasive" statements given by the company in response to queries by SGX.
Noble has provided "no substantive justification" as to why existing management deserved free equity as well as a full release from potential lawsuits over the huge losses made in recent years, Abu Dhabi-based Goldilocks said in a media statement.
Hong Kong-based Noble, which has debts of $3.5 billion, is trying to get shareholders and creditors to approve a restructuring agreement that would hand control to creditors in return for swapping about half the debt to equity. The commodities company posted a net loss of nearly $5 billion last year.
Goldilocks objected to the proposed restructuring as that would leave existing shareholders with just 10% of the company, while management could potentially get as much as 20%.
The firm has already initiated legal proceedings against Noble and several of its senior executives.
In another instance, corporate governance activist Mak Yuen Teen alleged last week that the chairman of Datapulse Technology, Low Beng Tin, gave inaccurate accounts of regulatory action previously taken by SGX and the Monetary Authority of Singapore against a company in which he was lead independent director.
Given SGX's reprimand of Singapore Post in an earlier case, one would expect that the multiple incorrect disclosures made by Low would likewise attract sanction, he said.
Mak, an associate professor of accounting at NUS Business School, also questioned the impartiality of the law firm appointed to review the internal controls and corporate governance practices at Datapulse, noting the prior relationship between Low and the senior partner leading the review.
SGX had ordered Datapulse, a cash-rich company that once made media storage devices, to appoint an independent reviewer after Datapulse bought a personal care product company in Malaysia that was connected to its former chief executive without "extensive due diligence."
A group of shareholders is trying to replace Datapulse's board of directors, and an extraordinary general meeting is scheduled for April 20.
Besides Noble and Datapulse, SGX has also issued public compliance notices to Emerging Towns & Cities Singapore and YuuZoo Corporation. Trading in YuuZoo shares was suspended earlier this month after it missed a disclosure deadline relating to queries regarding its 2017 results.