Reply to PQ on actions taken against listed companies directors who make false statements of their experience and educational qualifications
Question No. 1 Notice Paper No. 7 of 2005 For Written Answer
Date: For Parliament Sitting on 18 February 2005
Name and Constituency of Member of Parliament Prof Ivan Png Paak Liang, Nominated Member
_______________________________________________________________________________ Question 1 To ask the Senior Minister what actions have MAS and SGX taken against directors of listed companies who make false statements of their experience and educational qualifications as in the recent case of Panpac Media with regard to Chief Executive Officer Chen Xiaotao and the earlier case of Media Ring with regard to director Richard Li.
Answer 1 The actions that MAS and SGX take against directors of listed companies who make false statements of their experience and educational qualifications will depend on the circumstances of each case.
2 Under SGX's continuous disclosure obligations, the appointment of any director, chief executive officer or other key appointments must be announced immediately. The announcement must include details of the person's particulars, work experience, other directorships and shareholdings. If there is a false or misleading statement, SGX will consider if the erroneous information had materially affected the share price or established a false impression of the price or volume in the issuer's securities. Depending on these facts, SGX may warn or reprimand offenders.
3 SGX may also refer the matter to MAS if it forms the view that the false and misleading statement was one that could have induced dealing in or affected the market price of securities, in breach of Section 199 of the Securities and Futures Act ("the SFA") or one that was fraudulent and had induced others to deal in securities, in breach of Section 200 of the SFA. In these instances, where sufficient basis for investigation exists, and depending on the severity of the contravention, the case may either be subject to criminal enforcement action by CAD or civil penalty action by the MAS.
4 Under the criminal regime, offenders of section 199 or 200 of the SFA may be fined up to $250,000 or imprisoned for up to seven years or both. Under the civil penalty regime, a civil penalty of an amount not exceeding three times any profit gained or loss avoided, subject to a minimum of $50,000 for an individual or $100,000 for a corporation may be imposed. In the event where there is no profit made or loss avoided, a civil penalty of between $50,000 and $2 million may be imposed.
5 In addition, directors of listed companies who make false or misleading statements of their experience and educational qualification in an initial public offering prospectus breaching section 253 of the SFA could be subject to criminal enforcement action. A breach of section 253 arises where the false or misleading statement is materially adverse from the point of view of the investor. Offenders of section 253 of SFA may be fined up to $150,000 or imprisoned for up to two years or both.