SGX-ST reprimand subjected to judicial review

The basis on which the Singapore Exchange Securities Trading Limited ("SGX-ST") exercises its powers under its Listing Rules has long been a source of debate among commentators. Prior to the recent decision in Yeap Wai Kong v Singapore Exchange Securities Trading Ltd [2012] SGHC 103 ("YWKvSGX"), there were two views on the source of the SGX-ST's power under its Listing Rules: firstly, the powers arise by virtue of the contract each company admitted for listing on the SGX-ST enters into with the SGXST, and secondly, the powers are derived from the Securities and Futures Act and the statutory underpinnings of the SGX-ST's functions as market regulator.

The significance of this distinction was supposedly that only if the SGX-ST was exercising powers derived from statute in carrying out its functions as market regulator would it be deemed to be exercising a public function, and accordingly its decisions would be subject to judicial review. YWKvSGX has affirmed that certain acts of the SGX-ST are susceptible to judicial review, and this article attempts to shed light on the basis of the Honourable Justice Philip Pillai's decision as well as the impact on both the SGX-ST and market participants.

The brief facts of the case are as follows: The applicant, Yeap Wai Kong ("Yeap") was a nonexecutive, independent director and member of the Audit Committee of China Sky Fibre Chemical Limited ("China Sky"), a company incorporated in the Cayman Islands and listed on the SGX-ST. The SGX-ST had noticed discrepancies in China Sky's financial statements and on 19 April 2011 asked China Sky to furnish certain information, which was not provided to the SGX-ST despite several requests. On 23 August 2011, the SGX-ST sent a 'show cause' letter addressed to China Sky and collectively its board of directors (but not to the individual directors by name) for breaching the SGX-ST's Listing Rules through non-disclosure of documentation in relation to discrepancy on a land acquisition agreement.

This was followed by a document directive from the SGX-ST on 3 November 2011, requiring China Sky to deliver specified documents to the SGX-ST. On 16 November 2011, the SGX-ST also ordered a special auditor be appointed by China Sky. China Sky failed to comply with these directions, despite the SGX-ST setting a deadline of 2 December 2011, and on 16 December 2011 the SGX-ST publicly reprimanded all the directors of China Sky, including Yeap for failure to comply with the...