Shareholder Meetings in Singapore ~ Emerging Trends and the Rise of Activism

shareholder-meetings

Shareholder Meetings in Singapore ~ Emerging Trends and the Rise of Activism

April 2018 was an exciting month for BoardRoom Corporate & Advisory Services (“BoardRoom”) which was appointed as the Polling Agent for more than 230 Shareholder Meetings. Whilst the BoardRoom team has a strong legacy of successfully delivering Shareholder Meeting services (which includes Registration, electronic and paper Polling, as well as logistics arrangements) every April peak season is an exciting period for our teams who are committed to the successful delivery of every meeting.

Key Highlights of Our April 2018 Season
  • 232 Annual General Meetings and Extraordinary General Meetings conducted
  • More than 18,000 shareholders were registered by our teams
  • 150 permanent and contract staff were deployed to execute the Meetings
Emerging Trends from Shareholders’ Q&A

Facts & Figures ~ Shareholders continue to be keenly interested on how their investment in the Listed Company has performed over time. More detailed questions are being asked relating to key performance metrics, comparing results against the budget, and whether the performance is in line with the long-term strategy already set out.

Telling the Corporate Story ~ The Board of Directors and Senior Management have become more adept in sharing the vision of the business and now are more understanding of the perspective of investors. Savvy retail investors are increasingly concerned over detailed developments of the Company which includes acquisitions and divestment, as well as the causes of significant impairment. The Boards and Management respond by sharing more of the observable trends relating to their specific industry.

Return on Investment ~ One of the often recurring discussions pertain to dividend policy as Investors continue to pursue dividend yield and acutely question Management on their rationale for cash preservation. Businesses now have to be clear about how they align their corporate story to the long-term strategy, in the attempt to convince investors to wait longer for larger pay day.

Board Governance ~ The topic of Board diversity has become increasingly rife. As at 31 December 2017, women directors increased to 13.1% of directorships on boards of the Top 100 primary-listed companies on the Singapore Exchange (SGX). The 20% increase from 2016 is the highest increase over the past three years, after 10.9% in 2016, 9.5% in 2015 and 8.6% women on board in 2014. Another key area pertains to the potential changes in the Code of Corporate Governance relating to the “Nine-year-Rule” for Director Independence. The proposed revision provides a “hard-line” criteria that Independent Directors cannot serve for more than 9-years on the same company. While waiting for the final outcome, Companies and Shareholders already see this development as an opportunity for Companies to commence the search for new qualified Independent Directors.

The Rise of Activism

Shortly after the conclusion of the April 2018 season, there were some developments in Shareholder Activism during meetings, one of which was widely-publicized. In an unprecedented move, the Singapore Exchange called for one listed-company to hold a new EGM due to inaccuracies in the submission of information for the meeting and shareholder disputes relating to the conduct of the original EGM.

NUS Business School Associate Professor Lawrence Loh, who is also a director at the Centre for Governance, Institutions and Organisations, made the following comments on SGX RegCo’s unprecedented move –

“It reflects the increasing trend by the regulator to be more interventionist when something is amiss, and willing to take on company-specific action. This more direct approach in regulating companies is much preferred than spraying across the horizon, without actually targeting or hitting anyone specific.”

For more information on BoardRoom’s Shareholder Meeting Services, please contact us at info@boardroomlimited.com or drop me a text via LinkedIn!

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5 things to consider when expanding your business into Asia

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5 things to consider when expanding your business into Asia

Overseas expansion can give your business a boost by giving you access to untapped markets. That said, venturing into a new market isn’t a decision to be taken lightly. Here are five important things to think about before expanding your business overseas.

1. What government support schemes are your company eligible for?

There’s a good chance you’ll find a government scheme to support your foray overseas, whether from your country of origin or target market. Singapore’s new Enterprise Development Grant, for example, will allow qualifying businesses to upgrade their capabilities, innovate and expand their operations overseas. Businesses considering moving into Hong Kong, for example, can tap one of several support schemes, such as government-led incubator programmes and financing schemes. A competent corporate services provider like BoardRoom can help assess your market readiness and help you get up to speed on the government schemes you can benefit from.

2. How different are industry standards in your home country and target market?

Your company might be a leader in your domestic market, but such success isn’t guaranteed in a new market. For starters, be sure to do comprehensive checks on manufacturing and production standards in your target market to ensure your products make the grade. For businesses looking to move into Singapore, in particular, a good place to start would be getting up to speed with prevailing business and industry standards.

3. Will cultural and language barriers pose a challenge?

While cultural norms in Asian markets like Singapore and Hong Kong are widely influenced by both the East and West, it’s worth getting acquainted with the nuances of local business culture before venturing overseas. For example, business people in these markets are shrewd negotiators, though communication at meetings can often be subtle. “Face” is very important to business people in these markets, so it’s important to be able to read between the lines in every situation. In a nutshell, good manners, respect for others and professionalism go a long way when doing business in the region.

4. What are the compliance requirements I need to take note of?

Expanding overseas is an adventure in itself, but there’s always the nitty gritty to take care of. Markets like Hong Kong and Singapore each have their own unique statutory requirements for businesses, which require a considerable eye for detail to get sorted. While it’s good to get familiar with the compliance requirements in each market, it’s probably worth hiring a professional to do the heavy lifting. Corporate services providers such as BoardRoom have a wealth of experience in this area, enabling businesses to focus on what they do best. Click here for a helpful guide on the useful services you can benefit from.

5. How will I manage my finances?

Having ready access to adequate funding is essential when considering overseas expansion – whether through loans, grants or other sources. If you are opting for a loan, a good credit rating is essential for your business to get the funding support it needs. For greater convenience, consider using a bank which is present in all the markets you intend to operate in. For hassle-free day-to-day operations, consider outsourcing your accounting and payroll functions to a competent corporate services provider such as BoardRoom.

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Singapore Budget 2018: 5 Key Tax Changes You Need To Know

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Singapore Budget 2018: 5 Key Tax Changes You Need To Know

With the copious tax amendments introduced by Finance Minister Heng Swee Keat in Budget 2018, here are the five most crucial ones that will affect the future of your company.

1. Corporate Income Tax (CIT) rebates

Poised to lower business costs and aid company reorganisations, the CIT rebate for YA 2018 has been revised to 40 percent of tax payable, capped at S$15,000.

This corporate tax rebate will be extended for another year to YA 2019 at a rate of 20 percent of tax payable, capped at S$10,000.

2. Tax transparency for Singapore-listed Real Estate Investment Trusts Exchange-Traded Funds (S-Reit ETFs)

The Reits sector was given a significant facelift with the extension of tax transparency for S-Reits to Reits ETFs. This will allow for equal tax treatment for both individual S-Reit investments and Reits ETF investments, and should reinforce the Reits sector, making Singapore a more attractive Reits listing hub.

Reit ETFs distributions obtained by individuals will also benefit from tax concessions, as long as those distributions did not derive from a Singapore partnership or the carrying on of any trade, business or profession. A 10% concessionary tax rate on such Reits ETFs distribution received by qualifying non-resident non-individuals.

Currently, a 17 percent corporate tax rate is applicable to distributions from S-Reits out of specified income to Reit ETFs. All investors of Reits ETFs will not be taxed on the distributions made out of such income from Reits ETFs.

Subject to conditions, the tax concessions for Reits ETFs will take effect on or after 1 July 2018, with a review date of 31 March 2020. Application for tax transparency treatment can be submitted on or after 1 April 2018.

3. The Double Tax Deduction for Internationalisation (DTDi)

Targeted at supporting internationalisation for businesses, the DTDi will be enhanced by raising the expenditure cap from S$100,000 to S$150,000 per YA. Qualifying expenses include expenditure incurred on activities such as overseas business development trips and participation in overseas trade fairs.

Administered by IE Singapore and the Singapore Tourism Board, this enhancement will apply to qualifying expenses incurred on or after YA 2019.

4. The Start-up Tax Exemption (SUTE) and the Partial Tax Exemption (PTE)

Lending a hand to smaller enterprises and start-ups are the SUTE and PTE, which are tax exemptions that ease the cost of running a business. Beginning on or after YA 2020, both exemptions will only apply to the first S$200,000 of chargeable income.

The revised SUTE, which is for new start-ups, will reduce tax exemptions to 75 percent for the first S$100,000 of chargeable income, and decrease the next chargeable income to S$100,000.

As for the PTE, the only adjustment is on the second chargeable income, which has been reduced to S$190,000.

5. Intellectual property (IP) tax deductions

The tax deductions for costs on protecting IP, and IP in-licensing will be improved in the coming years, from YA 2019 to YA 2025.

Catered in particular to smaller firms, the IP protection scheme will raise tax deductions to 200 per cent for the first S$100,000 of eligible IP registration fees incurred for each YA every year.

Tax deductions for IP in-licensing costs will also be bumped up to 200 per cent for the first S$100,000 of qualified fees incurred for each YA every year.

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Singapore Budget 2018: 4 Major Grants And Schemes To Help Your Business

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Singapore Budget 2018: 4 Major Grants And Schemes To Help Your Business

In his Singapore Budget 2018 speech on Feb 19, the Minister of Finance, Mr Heng Swee Keat, announced a multitude of measures to take local businesses to the next level.

With a massive budget of S$800 million set aside for the Enterprise Development Grant (EDG), the PACT scheme, and the Productivity Solutions Grant (PSG), these tools will help companies defray costs, facilitate innovation, and foster adoption of technologies and productivity boosters.

Here are four major business grants and schemes that will benefit your company.

1. The Enterprise Development Grant (EDG)

A combination of SPRING Singapore’s Capability Development Grant, and IE Singapore’s Global Company Partnership grant, this new streamlined effort is aimed at helping local businesses become more competitive both within and beyond national borders.

Companies that are looking to upgrade and expand internationally can use the EDG to cover up to 70 percent of qualifying costs and activities from FY2018 to FY2019.

Administered by Enterprise Singapore (ESG), a new statutory board under the Ministry of Trade and Industry, the EDG will be available for application through the Business Grants Portal (BGP) from the fourth quarter of 2018.

2. The PACT scheme

Managed by ESG and the Economic Development Board, the PACT scheme (also known as Partnerships for Capability Transformation) focuses on promoting collaboration between various businesses, from SMEs to larger corporations. It is a merged scheme that consolidates a number of existing grant schemes, served to support partnerships, into a single plan.

The result is a “more holistic” measure that will offer a maximum of 70 percent of qualifying costs, used for collaborative projects between companies in areas such as capability upgrading, business development, and internationalisation.

3. The Productivity Solutions Grant (PSG)

To encourage innovation, providing easier access to relevant, quality tools is imperative. The PSG was introduced to do just that.

Targeted at SMEs, it will fund up to 70 percent of eligible fees directed at the purchase of off-the-shelf productivity tools, including technology solutions and business equipment.

Not only does it integrate several existing grant schemes into a more focused effort, it also replaces the expired Production and Innovation Credit (PIC) scheme that supported smaller enterprises in adopting technology and equipment through tax deductions.

Applications through the BGP for the PSG will open at the start of April this year.

4. The Wage Credit Scheme (WCS)

An existing scheme that works to co-fund wage increases for employees, the WCS has been around since 2013, and will see another three-year extension, from 2018 to 2020. As before, it will support gross monthly wage increases of at least $50 for Singaporean workers up to a gross monthly wage of $4,000.

However, the percentage of government co-funding will decrease with each year – from 20 percent of qualifying wage increases in 2018, to 15 percent in 2019, to 10 percent in 2020.

According to Mr. Heng, the WCS is expected to cost about S$1.8 billion over the next three years, which will help businesses save a great deal of money. Not to mention, the scheme will alleviate unemployment concerns among local citizens with its pro-Singaporean hiring stance.

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Fine-tuning the Quarterly Reporting regime to save on compliance cost? But who’s counting? (5 February 2018)

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Fine-tuning the Quarterly Reporting regime to save on compliance cost? But who’s counting? (5 February 2018)

quarterly-report-imageIn the long-awaited outcome for SGX to reveal its plans for the Quarterly Reporting (QR) framework in Singapore, a Consultation Paper has been issued by the Exchange – worded in a way that seems to leave the decision-making in the hands of the investing public and corporate stakeholders. Some sectors may be comforted that the Consultation has taken into consideration certain options and alternatives which indicate a fine-tuning of the current QR framework, rather than an outright razing of the practice. Perhaps this is in response to the loud detractors of the QR since its inception.

MARKET-CAP CRITERION? YAY OR NAY?

quarterly-report-imageUnless you’re an ice-cream seller, it is near-impossible to please everyone. And I don’t think that SGX is going to find much luck in respect of this Consultation Paper. Some listed companies which hoped to be spared from what they claim to be a burdensome QR regime, citing unnecessary costs of compliance and reporting, will probably continue to gripe about retaining this practice. SGX has also been under pressure with the opinion that the QR regime makes Singapore unattractive to new IPOs. But is this true? Some Singapore companies which have attempted a dual-listing in an Exchange not-far-north have gone through much tighter listing-regulatory regimes and there doesn’t seem to be a lack of other companies trying the same.

One of the suggestions by SGX is to raise the market-cap criterion of listed companies that have to issue Quarterly Financial Statements from S$75 million to S$150 million. This criterion has been perceived as arbitrary and led to the view that this shifts the game towards institutional investors, where the reduction of transparency will further negate interest from retail shareholders and investors.

Although the raised-threshold addresses the reporting burden on smaller companies which may not have the resources for it, these same companies are also more likely to be family-run and do not fare as strongly for investor relations. Some analysts have noted that the Annual Reports of the smaller companies generally lack meaningful disclosure and therefore removing QR for such companies would further negate interest from investors.

Moreover, a “bright-line” criterion based on a market-cap quantum will bring further complications to companies with volatile share prices swinging between a bull and bear market. What if a company’s market-cap were to cross over and under S$150 million between quarters? And what of comparative-period financial information if a company was suddenly hurled above the threshold? Conversely, some minority investors hold the view that more regular information-flow is much needed during a bear-market and the market-cap is shrinking!

A CONSISTENT RISK-BASED APPROACH

Some capital market stakeholders have argued against a blanket-exemption, and for a risked-based approach. It has been suggested that listed companies with poor compliance records, qualified audit opinions, included on the SGX Watchlist etc, should not be exempted. Another suggestion in the SGX Consultation Paper allows minority shareholders to vote every 3 years on whether a Company can opt out of QR. This acknowledges that minority shareholders know best on whether frequent disclosure is important to their investment decisions.

Another critical question to be addressed – is this really about compliance cost? Quarterly financial reports are not required to be audited nor reviewed, and these are often already regularly provided by the Company’s in-house finance team. Most companies will probably have financial systems set up to monitor sales, expenses and receivables on a monthly-basis!

There are also other ongoing Consultation Papers issued by the SGX which indicate a more rigorous compliance regime – especially pertinent is the proposed Listing Rule changes consequential to Code of Corporate Governance review.

Here is my Personal Wish List resulting from this review –

quarterly-report-image

  • The frequency of reporting should not reduce from a quarterly-basis. But the extent of the disclosure should be amended to encourage more transparent information in a simple format.
  • GX RegCo should consider calibrating its approach to queries raised towards the listed companies on their disclosures. Very often, management of listed companies cite SGX-queries as a significant load on their reporting burden.
  • Should the frequency of reporting be reduced (say to half-yearly), the Board and Audit/Risk Committees of listed companies must continue to meet on at least a quarterly basis so as to ensure that business and risk developments are escalated and discussed. Critical developments could then be identified for Continuous Disclosure.

What I really hope to see – is for the QR framework to be enhanced in alignment with Corporate Governance and Continuous Disclosure, so that we address the most critical issues of information asymmetry and market efficiency.

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Opportunity Still Exists For PIC Savings

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Opportunity Still Exists For PIC Savings

It’s not too late to realise considerable tax savings for training, lease or purchase of IT and automation equipment, R&D, IP and other qualifying expenditures under Singapore’s soon-to-expire Productivity and Innovation Credit Scheme (PIC). Be prepared, however; tax authorities will be keeping a close eye on all incoming claims. You will also have to act fast; the program terminates for good at the end of your 2017 financial year.

PIC allows companies to deduct up to 400 per cent of the value of qualified expenditures to reduce their taxes. Alternatively, a company can convert up to $100,000 of qualified expenditure into a non-taxable cash payout at 40 per cent of that value. So the benefits can be considerable.

To take advantage, however, you will want to make sure that your claim meets all applicable rules and guidance from the IRAS. As a general rule of thumb, for example, you will want to make sure that both payment and delivery of any qualified products or services occurs before the close of your 2017 financial year.

How might this apply in the real world? Let us say that your company signs an agreement in September, 2017 for employee training on a new business process. While you make full payment upon the contract’s signing, the training itself does not occur until August of 2018. In such a case, the IRAS will likely treat the training as not qualified for PIC.

If you are still in your 2017 financial year, you can still realise tax savings under PIC. If you have moved on to 2018, the window of opportunity is closed.

Other restrictions may apply to your particular tax situation. Additional information on PIC can be found here.

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Singapore Budget 2016

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Singapore Budget 2016

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The Companies (Amendment) Act 2014

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The Companies (Amendment) Act 2014

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Multiple Proxy Requirements based on Companies (Amendment) Act – Phase 2

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Multiple Proxy Requirements based on Companies (Amendment) Act – Phase 2

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More “Small Companies” will be exempt from audit requirements

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More “Small Companies” will be exempt from audit requirements

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