I think in privatisation exercises, what is a fair price is not hard science and could be a matter of debate. But it’s not satisfactory when independent directors may not be truly independent of the offeror notwithstanding that SIC may deem them as independent, and reliance is placed on an IFA which is appointed by the board of the offeree whose independence may be in question. The OCBC-GEH saga does make me wonder if OCBC’s culture has changed. Some years ago, when the late Lee Seng Ghee was chairman, a senior executive told me a story I use in my classes. She said it was the first board meeting she attended. The board was discussing a major corporate action. The lawyers and advisers were advocating for it, saying it was good and ticked all the boxes. She said she was surprised when the then Chairman asked: “Is it good for minority shareholders?”. Rarely would a controlling shareholder ask that. Company culture and values can change over time.
keekiat chua
1w
I guess the main difference between the 2 CMs is that the late Mr. Lee was both a corporate executive and a controlling shareholder. A corporate executive nowadays only chase after profits and has no heart for minority shareholders.
Delvin Tan
3d
With boards so 'heavy' on ESG these days, the governance part of the ESG cannot be ignored. Yet OCBC board has been shown to try bully minority shareholders into accepting a not-fair offer.. And GEH board is not even fighting for the minority shareholders even though they are suppose to be independent and fiduciary, I really can't see how MSCI and Rifinitiv can continue to rate the G score in their ESG rating so high. Or does big blue chips get the benefit of the doubt.
Corporate governance advocate
1wDelaware was in the news recently after a judge overruled the board and voided Elon Musk’s pay. In the US, courts can play an important role in opining on the entire fairness of transactions, especially where a controlling shareholder is on both sides of a transaction. It’s not left totally to the board or IFA. Even though Delaware is known to be business friendly, it’s not investor unfriendly. And many corporations incorporate there. The problem in SG is that controlling shareholders can easily privatize companies cheaply - and we have seen many cases - and there’s no real protection for minority shareholders. https://plusweb.org/news/the-business-judgement-rule-and-the-entire-fairness-standard-as-it-applies-to-controlling-stockholders/