Sunday, 24 September 2023

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Will Sheng Siong get a free pass for breach of listing rules?

by Pat Low

Sheng Siong explains non-compliance, says ‘not necessary’ to add more IDs due to group’s size” Mon, Jun 12, 2023

The Business Times carried this article buried deep in its ‘market-companies’ section. Straits Times, I believe, reported nothing. Not surprising.

Sheng Siong (SS) operates the Sheng Siong chain of supermarkets. The company is listed on the Singapore Stock Exchange.

The Singapore Stock Exchange (SGX) listing rules require companies to have Independent Directors (IDs) and Non-Executive Directors make up a majority of the Board.

SS Annual Report for year ending 31 Dec 2022 indicated it has 5 IDs and 5 Executive Directors and expressed an opinion the Board has adequate independence and does not require additional IDs considering the company size.

On 8 June, SGX wrote to SS advising the breach of Board rulings. SS has responded to explain the non-compliance, insisting they have confidence their Board has independence and they have already explained this in the 2022 Annual Report. Which means what exactly? That SGX should go pound sand?

After parliament, are we now to accept “ownself check ownself” in the corporate world?

Market watchers surely understand the SS snub of SGX isn’t an empty challenge but came with the sheen of authority rubbed onto those close to the Emperor.

Will SGX produce some new lexicon in classical Singapore Inc fashion to allow SS continuation of its breach of ruling? Or will SGX demand compliance and show us external regulatory mechanism wins over “ownself check ownself”?

Will SGX chair Koh Boon Hwee show his mettle, or slink away like an eunuch? Time to go buy some popcorn from Shengsiong and watch the next move of SGX.

I remember the early days of SS when their shop was a mess. An acquaintance once told me an insider friend narrated how disorganized the operation was back then. Credit to them for coming a long way and establishing themselves today as a household brand.

SS is so much a part of our daily life that it gets into the background of our mundane routines.

The thing about SS that triggers quick recall for most folks, is the 2014 kidnapping of the CEO’s 79-year-old mother.

The police were super efficient. The two kidnappers were arrested within 2 hours of the S$2m ransom being dropped off with the mother was unhurt.

There is much disquiet about SS’ ability to secure many HDB retail space. Such talk is unfair and prejudiced since we know the Housing Development Board (HDB, Urban Redevelopment Authority (URA) and Singapore Land Authority (SLA) let out their properties by public auction.

Currently, SS has 68 stores island-wide. Two of these seem incongruous – the one at Woodlands Industrial Park E7 and Serangoon North Ave 5. These two are located in industrial parks. Is there a reason why SS is allowed to conduct commercial business in an industrial park? It is very highly unlikely there was a rezoning for change of use. Is there some special process to obtain a change of use?

In 2001, department store operator Mustafa Centre had a 6-storey warehouse at Aljunied Industrial Park. URA turned down Mustafa’s 2004 application to change the building’s use to a wholesale centre for household goods and appliances.

Mustafa proceeded without approval to operate a department store on the first level and a supermarket on level two for a few weeks in 2009. Within weeks, URA shut down the operation, and Mustafa was fined $10,000. Commercial activities are not allowed in an industrial park.

Is there a reason why SS and Mustafa are treated differently? Excuse me while I go feed my worms.

This was first published on Pat Low’s blog and reproduced with permission.

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