SingPost shares fall on news of ACRA probe
Acra has asked SingPost for the Joint Special Audit Report as it is commencing investigations into possible breaches of the Companies Act. Photo: SingPost
SINGAPORE – Investors dumped Singapore Post shares on Thursday (May 19) after the postal and logistics services firm said it was being investigated by the Accounting and Corporate Regulatory Authority (Acra) for possible breaches of the Companies Act.
After the pre-market filing with the Singapore Exchange, SingPost shares fell as much as 3.5 per cent to S$1.52 mid-morning before clawing back some losses to close down 1.6 per cent at S$1.55, with about 11 million shares changing hands.
On Wednesday, ACRA ordered SingPost to furnish it with the joint special audit report on its corporate governance dated May 3, as it was commencing investigations into possible breaches of the Companies Act highlighted in the report, SingPost said in the filing.
The special audit report focused on three acquisitions of freight forwarding companies SingPost made between 2013 and 2015 - a 62.5 per cent equity stake in Famous Holdings (FHPL); a 100 per cent stake in FS Mackenzie (FSM) through FHPL; and a 90 per cent stake in Famous Pacific Shipping (New Zealand).
Joint auditors Drew & Napier and PricewaterhouseCoopers found that former SingPost director Keith Tay did not declare his interest in the FHPL acquisition “as soon as practicable, and was arguably in breach of section 156(1) of the Companies Act. His declaration was only made on 8 January 2013, when the SingPost Board gave its final approval, even though Mr Tay was aware of his interest in the proposed transaction by 14 August 2012 (at the latest).”
Mr Tay was also the non-executive chairman and 34.5 per cent shareholder in corporate finance advisory Stirling Coleman, which was appointed by FHPL as financial arranger and financial advisor for FSM and Famous Pacific Shipping (NZ) in the transactions.
The auditors also found that he had breached some fiduciary duties relating to the FHPL deal and SingPost’s acquisition of Famous Pacific Shipping (NZ) in 2015. Mr Tay resigned from his post as SingPost’s independent director following the release of the special audit report.
Corporate governance expert Mak Yuen Teen, an associate professor at the National University of Singapore Business School, said: “I see this as a positive development. It is good that ACRA is pursuing further investigation - timely and effective enforcement is critical to a robust regulatory framework and to improving corporate governance standards.”
Mr David Gerald, president and CEO of Securities Investors Association (Singapore), said: “It is not surprised that ACRA is investigating. Should investigations show a breach, the law will take its course. At this stage, whether shareholders are affected or not, it is still too early (to say), but any purchase of assets by a listed company has an impact on the share value ultimately and the company will usually disclose it at an appropriate time. The question was whether the disclosure was necessary of the type of transaction that took place, whether there have been breaches of the fiduciary duty.”
Actions under the Companies Act are criminal in nature and punishable by a fine not exceeding S$5,000 or imprisonment for a term not exceeding 12 months, said Mr Mak.
“Most likely, the investigation will be for possible breaches of section 156 for failing to disclose interests. It is also possible that action will be pursued under section 157 for directors failing to exercise reasonable diligence in the discharge of their duties or for making improper use of their position or information obtained from the position to benefit himself or any other person.”
