Yeap Wai Kong v Singapore Exchange Securities Trading Ltd

Philip Pillai J:

[1] This application raises two issues: first, whether the Singapore Exchange Securities Trading Limited’s (“SGX-ST”) public reprimand of a director of an SGX-ST listed company is susceptible to judicial review? And second, if it is, whether the applicant was accorded a fair hearing as required by the rules of natural justice?

[2] The applicant, who was, during the material time, a non-executive director of China Sky Fibre Chemical Limited (“China Sky” or “Company”), applied for leave to apply for a quashing order of the SGX-ST’s reprimand of him, on 16 December 2011 (“SGX-ST Reprimand”) and was granted leave. The gist of his complaint is that SGX-ST reprimanded him in breach of the rules of natural justice.

[3] Judicial review is the limited means through which the court holds bodies exercising a “public” function to fundamental thresholds of legality. It is to be emphasised that in judicial review the court is not concerned with the merits or correctness of the decision under review. Judicial review is not an appeal to the court nor does the court substitute its own judgment for that of the decision-maker. In the exercise of its supervisory jurisdiction, the court confines itself to reviewing the decision making process, to ensure that the process met the standards of “legality, rationality and procedural propriety” (per Lord Diplock in Council of Civil Service Union v. Minis ter for the Civil Services [1985] A.C. 374). Since judicial review is confined to decisions which are characterised as being of a public function, it is unavailable for the enforcement of private law rights, for which private law and other court processes are readily available.

[4] The foundations of Singapore law on judicial review are the common law principles as they have developed in England prior to the influence and impact of the European Union law, the latter having no application to Singapore. Accordingly it is necessary for this court to return to the pre-1972 bedrock judicial review principles, and to apply those principles to the present case. In considering post-1972 judicial review decisions in England, care has to be taken to extract only those common law principles where these principles have not morphed into English law judicial review principles as a result of European Union law, such as the European Convention on Human Rights which was incorporated into English law by the 1998 UK Human Rights Act. A similar cautionary approach is warranted when considering judicial review decisions by the Australian courts which have been shaped by the Australian Administrative Decisions (Judicial Review) Act 1977 which has no application to Singapore.

[5] Michael Fordham, Judicial Review Handbook, 2nd ed, 1997 (at p 5) provides a useful bird’s eye distillation of the court’s approach to judicial review at pages 145, 148 and 172:

[6] The foundational common law principles in England have as their starting point the source test (“Source Test”), which was then extended by the nature test (“Nature Test”) to take into account the changing public governance landscape. The development from the statutory Source Test where the court looks to whether the body had its origins in statutes, to the Nature Test where the court looks at the nature of the decision, is discernable in the following sequence of the seminal English judgments. In Reg v Criminal Injuries Compensation Board, Ex parte Lain [1967] 2 QB 864, per Lord Parker CJ at 882 where he describes the limits of the origins of certiorari, (today the quashing order):

[7] At 884 to 885, Diplock LJ observed:

[8] In Reg v Panel on Take-overs and Mergers, ex parte Datafin plc And Another [1987] 1 QB 815 (“Datafin”), Sir John Donaldson MR described the same development in the following manner at 838:

[9] In the modern era, public policy is increasingly effected not only by government and statutory bodies but also through self-regulating entities in sectors where the domain nature and complexity of the sector requires front- line expertise coupled with back-line regulators to regulate the relevant sector. The question arose in England in Datafin, with respect to the then newly created London Panel on Take-overs which operated the City Code on Take-overs and Mergers (“London Panel”). The legal question there (and in this application) was succinctly framed by Sir John Donaldson in Datafin at 828 in the following terms:

[10] While the London Panel “oversees and regulates a very important function of the United Kingdom financial market ... [it performs] this function without visible means of legal support” (see Datafin at 824). The court also noted that the London Panel had no “statutory, prerogative or common law powers and it is not in a contractual relationship with the financial market or those who deal in that market” (see Datafin at 825).

[11] While lacking statutory authority, Sir John Donaldson MR noted (at 826) that the Panel:

[12] Sir John Donaldson MR was mindful that financial markets required speed and certainty of decisions. He agreed with the observation of Lord Diplock in Reg v Inland Revenue Commissioners, Ex parte National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617 at 642 to 643 that in the context of judicial review of such decisions, the procedural need to apply for leave for prerogative orders would:

[13] The observations of Lloyd LJ in Datafin (at 847) on the spectrum between a statutory source and contractual/consensual private decision-makers are also instructive:

[14] However, Lloyd LJ noted at 848 that to hold that the Source Test was the sole test of whether a decision is subject to judicial review would be to impose an artificial limit on the developing law of judicial review. He concluded that, quite apart from the Source Test, the court would also apply the Nature Test. In the event that he was wrong and if the only test applicable was the Source Test, Lloyd LJ was prepared to consider that the London Panel was established “under the authority of the Government” such that it satisfied the Source Test (at 849).

[15] This process of development of the law of judicial review is summarised in the following terms by Judicial Remedies in Public Law, Clive Lewis QC (Sweet & Maxwell 2009) at para 2-003:

[16] The preceding account of the foundational common law judicial review principles demonstrates the vitality of the common law in upholding the rule of law by adjusting to meet changing public governance landscapes. Only where the sole source of a decision-maker’s power is contractual or consensual would such decision-maker not be susceptible to judicial review.

[17] In Singapore, our courts have in Public Service Commission v Lai Swee Lin Linda [2001] 1 SLR 644, UDL Marine (Singapore) Pte Ltd v Jurong Town Corp [2011] 3 SLR 94 and ACC v CIT [2010] 1 SLR 273, applied both the Source Test and the Nature Test.

[18] As SGX-ST is not a statutory body, I proceed next to analyse the following factors in this order, the extent to which it is interwoven into the legislative and regulatory matrix, whether the reprimand function has a statutory underpinning and finally its nature, to determine whether the SGX-ST Reprimand isto be characterised as a public function within the Nature Test.

[19] The primary statutory regulator of the securities and futures market in Singapore under the Securities & Futures Act (Cap 289, 2006 Rev Ed) (“SFA”), is the Monetary Authority of Singapore (the “MAS”). Its securities and futures regulatory powers and functions are described below [20- 21]. The SGX-ST is a company incorporated under the Companies Act (Cap 50, 2006 Rev. Ed). The SGX-ST operates a securities market, whilst the Singapore Exchange Derivatives Trading Ltd (“SGX-DT”) operates a futures and derivatives market. Both SGX-ST and SGX-DT are approved exchanges and are held by Singapore Exchange Ltd, an approved holding company of both SGX-ST and SGX-DT under s 81U SFA.

[20] The SGX-ST describes itself in its website in the following terms:

[21] SGX-ST is an approved exchange under s 16 of the SFA. S 16(1)(c) SFA provides that an approved exchange in discharging its obligations under the SFA is to have particular regard to the interests of the investing public, and is not to act contrary to the interests of the public. S16(1)(e) obliges it to maintain business and listing rules which make satisfactory provision for a fair, orderly and transparent market in securities that are traded, and to regulate and supervise its members. Section 16(1)(f) SFA provides that it is to enforce compliance with its business and listing rules. Amendments to its business and listing rules may be directed by and in any event require the approval of MAS. Section 24 SFA expressly provides that the business rules of the approved exchange shall be deemed to be and operate as a binding contract between the exchange and each member and the members inter se. S 25 SFA, introduces a statutory enforcement process under which the SGX-ST’s business or listing rules may be enforced or effected further by a court order issued to the company or its associated persons. Acquisitions of defined minimum thresholds of substantial shareholdings in SGX-ST require prior MAS approval under s 27 SFA. In an emergency, the MAS is accorded emergency powers to direct SGX-ST to take prescribed actions under s 34 SFA. The appointments of SGX-ST’s chairman, chief executive and directors of the SGX-ST require the prior approval of the MAS under s 28 SFA. The listing of the SGX-ST itself requires the MAS’s approval under s 30 SFA. The MAS is empowered under s 46 SFA to issue directions to the SGX-ST, on pain of a criminal offence for non-compliance.

[22] The SFA prescribes that the SGX membership and listing rules are to satisfactorily provide a fair, orderly and transparent market for the trading of listed securities. A fair and transparent market is contingent on the timely and accurate disclosure of material information. A review of SGX-ST’s Listing Manual reveals a two-pronged approach to ensuring a fair and transparent market for trading of listed securities.

[23] The first approach is to impose on the listed company the obligation to comply with the Listing Manual and to make timely, continuing and periodic disclosures, as prescribed in SGX-ST’s Listing Manual Chapter 7 “Continuing Obligations”. This Chapter 7 contains Part II “Equity Securities-Immediate Announcements” and Part III “Equity Securities-Periodic Reports”. This corporate disclosure obligation is underscored by the Company’s Listing Undertaking issued to the SGX-ST under authority of a board resolution. Where the listed company defaults or contravenes these continuing disclosure obligations, SGX-ST Listing Manual Chapter 13 provides for trading halts, suspension and delisting. Rule 1302 enables the Exchange to grant a trading halt to enable an issuer to disclose material information or suspend trading at the request of the issuer. Suspension of trading may be imposed by the Exchange where an issuer is unable or unwilling to comply with or contravenes a listing rule. Rule 1305 provides that the Exchange may delist an issuer by removing an issuer from its Official List if it is unable or unwilling to comply with, or contravenes a listing rule.

[24] The second approach is consonant with developments in other global stock exchanges, including the Hong Kong Stock Exchange: i.e. the SGX-ST has introduced powers to publicly reprimand executive and non-executive directors of listed companies for non-compliance with the Listing Manual. The second approach is expressed in SGX-ST’s Listing Manual, Part IV “Equity Securities-Other Obligations”. Rule 720(4), which was introduced in 2011, provides:

It is not disputed that Rule 720 has been properly enacted and approved by the MAS in accordance with s 23 SFA.

[25] A public reprimand of directors of a listed company by the SGX-ST, a front-line securities regulator, carries financial and business implications. Some of the possible implications may be gleaned from Lord Denning’s observations in Re Pergamon Press Ltd [1970] 3 All ER 535 (“Re Pergamon Press”) in relation to inspectors’ reports issued by inspectors under the English Companies Act. While such inspectors only have powers to ‘investigate and report’, they may,

[26] In Re Pergamon Press, the English Court of Appeal considered and held that such inspectors were bound by the principles of natural justice. The English Court of Appeal then set a limited scope of fair hearing as being appropriate to the inspectors’ function: before the inspectors could condemn or criticise a person, they must give the person a fair opportunity for correcting or contradicting what was said again him.

[27] What then are the potential implications of a SGX-ST public reprimand of a listed company’s directors? SGX-ST is a vital part of the institutional ecosystem of Singapore’s financial sector. It operates an open and international securities market within the 24/7 global network of securities markets. SGX-ST’s public reprimand of a listed company’s directors accordingly may potentially impact a director domestically and internationally in several ways, depending on his background. These include: adverse business reputational implications, implications on their continued service on board committees and directorships of other listed companies and other professional and financial services licence implications.

[28] In the light of the above, the legislative and regulatory matrix of the Singapore securities market, the statutory underpinning of the reprimand power and the nature of the reprimand function, the reprimand power would, in my view, properly be characterised as a public function within the Nature Test and consequently susceptible to judicial review for minimum compliance with the standards of “legality, rationality and procedural propriety”.

[29] The common law prescribes minimum standards of procedural propriety by requiring a fair hearing and the absence of bias. There is no one-size-fits-all template for a fair hearing. What constitutes a fair hearing depends on the nature and context of the decision. What then constitutes a fair hearing, when directors fail to comply with the relevant exchange listing rules to disclose material information, in the context of the securities market where the timely and accurate disclosure of material information is critical?

[30] I find considerable guidance from Lord Mustill’s elaboration of the relevant factors, which are equally applicable regardless of whether the Source Test or the Nature Test is applicable. R v. Secretary of State for the Home Department, ex parte Doody [1994] 1 AC 531 at 560 D-G:

[31] In short, fairness, in the context of disclosure of information in the securities market, requires that the person affected is informed of the case against him and that he has an opportunity to make representations before the decision.

[32] It is the applicant’s case that the SGX-ST did not accord him with a fair hearing in that: (i) SGX-ST had not given him any notice or information that they were considering or intending to impose a sanction on him and (ii) SGX-ST should have informed him of the case against him and given him a right to be heard.

[33] I next turn to set out the chronology of events leading to the SGX-ST’s reprimand of all the directors of China Sky on 16 December 2011, in order to evaluate whether the applicant had been given notice that SGX-ST intended to reprimand him, whether he was notified of the case against him and whether he had an opportunity to make representations.

[34] China Sky is a company incorporated in the Cayman Islands. Its principal business is the manufacture and sale of chemical fibres. China Sky is the ultimate investment holding company for Quanzhou Tianyu Chemical Fibre and Weaving Co Limited, a company incorporated as a foreign investment enterprise in the People’s Republic of China. China Sky has been listed on the SGX-ST Main board since 3 October 2005, and is commonly referred to in the market as an S-Chip stock.

[35] The applicant was a non-executive, independent director and member of the Audit Committee (together with Mr Lai Seng Kwoon and Mr Er Kwong Wah) of China Sky from 2 May 2011 to 5 January 2012, when he and they resigned. At the material time the other directors of China Sky, all of whom are China residents were Mr Huang Zhong Xuan (Chief Executive Officer) (“CEO”), Mr Cheung Wing Lin (Non-Executive Chairman), Mr Song Jiang Sheng (Executive Director) and Mr Wang Zhi Wei (Non-Executive Director). The Group Financial Controller of China Sky at the material time was Mr Sunny Hui San Wing (“CFO”).

[36] The story unfolded in April 2011 when China Sky issued its Annual Report 2010 (“the AR 2010”). The SGX-ST reviewed the AR 2010, and having noticed several discrepancies, queried the Company on 19 April 2011 and asked the Company to provide the information in an announcement. The primary matters relevant to this application are as follows: (collectively “the Discrepancies”):

(a) Not having previously reported any Interested Party Transactions (“IPTs”) in its Annual Reports for the financial years 2007, 2008 and 2009, China Sky’s AR 2010 reported that the aggregate value of the IPTs for the financial year 2009 was RMB 1.5 million (S$300,000) and for the financial year 2010 was RMB 866,000 (S$173,000). The AR 2010 did not however reveal any particulars of these IPTs nor was the interested person(s) in these transactions identified (“the IPT Discrepancy”).

(b) China Sky’s AR 2010 reported that the Group had paid an unnamed third party (“the Third Party”), under an agreement signed in 2006, a RMB 149 million deposit. The Third Party would acquire the land use rights from the relevant Chinese authority and transfer such rights to the Group. China Sky’s AR 2010 reported that it had not yet obtained the land use rights certificate for this land. It also reported that it had paid a further deposit of RMB 114 million for construction work on this land. The AR 2010 did not reveal the identity of the Third Party, the details of the land, the reasons for payment notwithstanding non-receipt of the land use rights certificate or the reason for payment for construction on this same land prior to receipt of the certificate (“the Land Discrepancy”).

[37] China Sky’s announcements on SGXNET on 22 April 2011 generated further SGX-ST queries which led to the following Company announcements:

(a) That the previously reported IPT amounts had been erroneous and had to be revised downwards and that these were professional fees paid to SK Lai & Co, an accounting firm owned by Mr Lai Seng Kwoon, the Chairman of the Audit Committee and an independent director.

(b) That the Third Party in the land transaction was Fujian Fuyuan Chemical Fiber Co Ltd (“Fujian Fuyuan”), and that the RMB 114 million paid for the construction on the land was non-refundable. It also disclosed that the Company had decided to defer its expansion and completion of the land acquisition in light of the global financial crisis of 2008/2009.

[38] There followed in April 2011 further announcements correcting the 22 April 2011 announcement and raising the land acquisition price to RMB 168 million instead of the RMB 149 million previously announced. SGX-ST issued a further query on 27 April 2011 which led to another announcement on 29 April 2011 which made further corrections and explanations.

[39] On 2 May 2011 China Sky announced the appointment of the applicant as independent director and member of the reconstituted Audit Committee. On 3 May 2011, China Sky announced that in order to enhance their corporate governance practices, they had appointed Rodyk & Davidson as legal advisor to conduct a review of the existing corporate governance procedures to identify weaknesses and recommend measures to address them, and that the applicant would be overseeing the implementation of measures, if any, recommended by Rodyk & Davidson.

[40] From 16 May 2011 until 16 November 2011, a period of six months, the SGX-ST sent repeated email requests for information, clarification and production of documents to China Sky’s CFO, many of which were copied to the CEO and to all the Audit Committee members. The CFO repeatedly replied assuring SGX-ST that the Company would provide the documents requested and attempted to arrange for the CEO and the Audit Committee members to meet SGX-ST’s officers to discuss the matter face-to-face. Notwithstanding these assurances, no documents relating to the Land Discrepancy were provided to the SGX-ST.

[41] On 14 June 2011, China Sky’s lawyers Loo Partners sent an email to the SGX-ST attaching a letter from the CEO. This email was copied to the applicant and the CFO. The CEO requested an appointment to meet the SGX-ST officers in the letter, and added the following:

[43] Further attempts were made to arrange meetings with the SGX-ST officers. On 11 August 2011 the SGX sent an email at 3.05 pm to the CFO, copied to management and all the Audit Committee members, stating inter alia:

[44] The applicant himself sent an email a few minutes later at 3.09 pm to the SGX-ST, urging them to meet with China Sky’s management. This email was copied to China Sky’s lawyers, the CFO and all the Audit Committee Members.

[45] Following the lapse of about 3 months from the first SGX-ST query, SGX-ST sent an email to China Sky’s CEO and all the Audit Committee members on 23 August 2011, attaching a letter dated the same day, which was addressed to the Board of Directors (“SGX-ST Board Show Cause Letter”). The letter particularised and cited each of China Sky’s breaches of the Listing Rules and concluded in the following terms:

[46] On 24 August 2011 the CFO sent an email attaching a letter, copied to all the Audit Committee members. The letter was signed off by the CEO as “Executive Director and Chief Executive Officer, On behalf of the Board”, and was addressed to the Board of Directors and the SGX-ST. It read:

The SGX-ST by email of 25 August 2011 granted the extension of time request and confirmed that there would be no further extension to this final timeline.

[47] On 23 August 2011, SGX-ST sent a separate show cause letter to Mr Lai in his personal capacity as an independent director of China Sky and as the Chairman of the Audit Committee for his personal breaches of the Listing Manual, asking him to show cause why SGX-ST should not issue a public reprimand against him. He similarly requested for an extension of time and was granted an extension of time to 27 September 2011.

[48] On 27 September 2011, China Sky replied by letter and announcement, including a 20 page detailed reply to SGX-ST’s Board Show Cause Letter. The same day, Mr Lai’s personal solicitors, Shook Lin & Bok, replied on his behalf to SGX-ST on the separate personal show cause letter to Mr Lai.

[49] On 3 November 2011, SGX-ST sent an email to the CEO, the CFO and all the Audit Committee members, attaching a letter directive addressed to the Board of Directors. This Directive directed both the Company and Mr Lai to provide the documents requested by the SGX-ST by 9 November 2011, “failing which the Exchange will take the view that the Company and SK Lai’s views cannot be substantiated.” (“Document Directive”). The Document Directive was sent by email to the CEO, the CFO and all the Audit Committee members. The Document Directive sought the production of the following documents:

(a) Minutes of all Audit Committee meetings approving all the IPTs;

(b) Board minutes (or extracts thereof) regarding the IPTs;

(c) Statutory declarations by the company secretary for each of the minutes submitted to SGX-ST, declaring that these minutes constituted a fair and true disclosure of the proceedings of the meetings;

(d) A list of all the IPT transactions specifying the dates on which each transaction was entered into, the description of each transaction, the amount paid, whether Board or Audit Committee approval was obtained for each transaction and the amounts disclosed in the annual reports; and

(e) All signed agreements entered into for the provision of the IPT services.

[50] The Document Directive, addressed to the China Sky Board of Directors, was emailed by the SGX-ST to each of the Audit Committee members. On 4 November 2011, the CEO wrote a letter, which was signed on behalf of the Board and addressed to the Board and to the SGX-ST, requesting a further extension of time in light of the preparation and finalization of the Company’s third quarter results and received a same day email from the SGX-ST in the following terms:

[51] On 9 November 2011, China Sky’s CFO sent an email to SGX-ST attaching soft copies of its Audit Committee and Board minutes relating to the IPTs for the period between 9 November 2005 to 24 February 2011. This email was copied to all the Audit Committee members. The CFO promised to provide the remaining documents and explanations the following week. This was the first time that China Sky had provided any documents to SGX-ST. There then followed an email on 11 November 2011, which provided a PDF copy of a China Sky Circular Board resolution (signed by 6 of the 7 directors) dated 14 May 2011, which ratified all past IPTs from 2006 to 2010 and attached copies of earlier internal audit reports/proposals now being ratified by this board circular resolution.

[52] On 16 November 2011 SGX-ST issued its second directive to the China Sky Board of Directors (“Special Auditor Directive”), to appoint a Special Auditor. This Special Auditor Directive was sent by email to the CEO and all the Audit Committee Members. The Special Auditor Directive letter was addressed to the “Board of Directors” of China Sky and also mentioned each director by name and designation. The name and designation of the applicant was unaccountably omitted but the applicant confirmed that he received it. This Special Auditor Directive required China Sky:

[53] On 17 November 2011 the Company announced this Special Auditor Directive and that the Board would be meeting on an urgent basis to consider the directive.

[54] On 22 November 2011 the Company announced an Update on the Regulatory Actions by SGX-ST and other Authorities in Relation to the Proposed Appointment of Special Auditors, issued by the CEO, by order of the Board, which stated inter alia:

[55] SGX-ST sent an email attaching a letter on 22 November 2011 to the CFO, CEO and all the Audit Committee members. The letter was addressed to the “Board of Directors” and also “Attention-ed” to each director by name and position, asking for information as to when legal and professional advice would be obtained and when they would comply with the Special Auditor Directive, and stated that SGX-ST looked forward to their full cooperation in working expeditiously and keeping the market informed. China Sky’s lawyers, Loo Partners sent an email to SGX-ST on 24 November 2011 to confirm that the CEO would be “liaising with all the relevant parties with a view to apprise (sic) the Board on the legal implications of your Directive dated 16 November 2011”.

[56] Following repeated queries from SGX-ST the Company announced on 30 November 2011 the appointment of Asia Ascent Law Corporation (“Asia Ascent”) as its legal counsel to advise on the Special Auditor Directive. The SGX-ST asked the Company, in an email copied to all the Audit Committee members, when the Company intended to comply with the Exchange’s Special Auditor Directive and set a deadline of 2 December 2011 for the formal appointment by the Company of the Special Auditor all the Audit Committee Members. Asia Ascent, the lawyers, replied to SGX-ST by email copied to all the Audit Committee members, stating that they needed time to advise the Board on the Directive. SGX-ST replied the same day, copied to the same persons, that:

[57] On 1 December 2011, Asia Ascent informed SGX-ST by email that they had been appointed to advise China Sky on the Special Auditor Directive. In their second email that day to the SGX-ST, they requested that “all contact between the Exchange and the various individuals comprising the Board of Directors, the CFO and the Company Secretary of our clients be directed through our office henceforth for clarity of communication”. Both these emails were copied to the CFO and all the Audit Committee members.

[58] On 2 December 2011, SGX-ST replied to Asia Ascent by email copied to the CFO and all the Audit Committee members, which stated that:

[59] On 6 December 2011, SGX-ST sent a letter addressed to the “Board of Directors” of China Sky, copied by email to the CFO, Asia Ascent and all the Audit Committee members. This letter was also “Attention-ed” to every director by name, including the applicant. It read:

[60] On 8 December 2011, Asia Ascent emailed SGX-ST, copied to all the Audit Committee members and the CFO, attaching Asia Ascent’s letter copied to clients. This letter stated “Accordingly, the Board instructs us to urge you to state categorically your basis for the issue of the Directive. Each Director of the Board is aware of his fiduciary duty to act in the best interests of the Company and intend to continue to act accordingly”. It asked SGX-ST to furnish the following:

[61] On 12 December 2011, Asia Ascent forwarded by email to SGX-ST, a letter dated 9 December 2011 signed by the CEO, “on behalf of the Board of China Sky”. This email was not copied to all the Audit Committee members and stated that:

[62] The letter also confirmed that the SGX-ST’s response was to be sent to Asia Ascent and all contact and correspondence between SGX-ST and “the various individuals comprising the Board, the CFO and the Company Secretary should continue to be directed through [them]”.

[63] Mr Er Kwong Wah affirmed in his affidavit, that this letter was based on an earlier draft which was circulated to the directors in or around mid-November 2011, on the applicant’s suggestion. It is not disputed by the applicant that the applicant as one of all the Audit Committee members received all the material SGX-ST emails. The applicant does not dispute that all the Company’s announcements and communications with the SGX-ST sent by the CEO by order of the Board had been seen and approved by all China Sky directors prior to their issue.

[64] Asia Ascent sent SGX-ST a letter dated 12 December 2011 referring to a telephone conversation between SGX-ST’s Mr Richard Teng and the CEO in which they observed that this telephone conversation was in “breach of the established protocol that all communication with our clients must be effected through our office”. There followed an account of what transpired in this telephone conversation, and a request that SGX-ST furnish “exact and specific details of documents and information” which had not been provided and the “nature and details of punishment” and to “state the precise provision of relevant law, including any provision of the Listing Manual in support thereof.”

[65] On 16 December 2011, SGX-ST issued and announced the Reprimand:

The Annexure to the Reprimand set out in extensive detail, particulars of the discrepancies and omissions of material disclosure of the IPT and Land Discrepancies, previously set out in the SGX-ST Board Show Cause Letter of 23 August 2011, which warranted an independent review and report by a Special Auditor.

[66] On 19 December 2011, the CEO issued an announcement by order of the Board stating the following:

[67] This was followed on 21 December 2011 by a further announcement by the CEO by order of the Board stating inter alia:

[68] On 22 December 2011 the CEO by order of the Board issued a response to the SGX-ST Reprimand Annexure. In short, its position was that with respect to the IPT and Land Discrepancies, adequate disclosure had been made following the announced responses to SGX’s queries. Further:

[69] On 22 December 2011, Mr Er Kwong Wah issued an announcement in which he explained that he had been travelling and had not seen or approved the Company’s announcements of 21 and 22 December 2011. He announced that “in practice all announcements from the company, particularly the ones concerning the Reprimand, Special Audit Directive and SGX Regulatory Actions must be approved by all Directors before issue”. Later the same day, the applicant issued an announcement:

[70] Mr Lai Seng Kwoon issued a same day announcement:

[71] On 29 December 2011 the SGX-ST sent an email, copied to the CEO and all the Audit Committee members, attaching a letter addressed to the Board of Directors and also “Attention-ed” to every director by name and position, which the CEO announced the following day. It stated:

[72] On 5 January 2012, there was no announcement by China Sky of the appointment of any Special Auditor. The same day, the applicant and the two other Audit Committee members announced their immediate resignations from the board of China Sky.

[73] The applicant wrote a letter of complaint on 9 January 2012 to the Chairman and CEO of the SGX-ST copied to the Chairman and CEO of the MAS setting out his complaint and requested an apology for the reprimand. He received an interim and then a fuller reply from the SGX-ST which did not accede to his request for an apology. In February 2012 the applicant sought leave under O 53 ROC for a quashing order to quash the SGX-ST Reprimand on grounds of a breach of natural justice and was granted leave for this hearing.

[74] The issue turns on whether the applicant was given notice that the SGX-ST was intending to reprimand him, the case against him and whether he was accorded an opportunity to make representations.

[75] From 16 May 2011 to 23 August 2011, the SGX-ST sent repeated emails to China Sky’s CFO, all copied to the applicant as an Audit Committee member, raising queries on the IPT and Land Discrepancies announcements which only raised further questions. For 3 months, the directors approved the Company’s announcements containing corrections of earlier announcements which raised more queries. The failure to make the required disclosures resulted in the SGX-ST Board Show Cause Letter of 23 August 2011 which was addressed to the Board of Directors, emailed to the applicant and received by all the directors. The letter which was entitled “CHINA SKY CHEMICAL FIBRE CO. LTD (THE “COMPANY”) LISTING RULE BREACHES, meticulously pinpointed the particular Company announcements and set out the non-disclosures and misleading disclosures against the specific Listing Manual Rules that had been breached and concluded:

[76] It is clear from the foregoing that the applicant had been provided with full particulars of the breaches of the Listing Manual and with notice that SGX-ST intended to publicly reprimand and reserved the right to take further action. The applicant’s counsel submitted that as this letter was addressed to the Company, it was not addressed to the applicant as an individual director. It is beyond dispute that the SGX-ST Board Show Cause Letter, which is expressly addressed to the Board of Directors, is necessarily meant to and does include every director. It was received by every director. The submission in this factual context, that the show cause letter addressed to and received by the Board of Directors does not put the individual directors on notice of an intended reprimand and the case against each of them carries no weight. It is further on record that the Board of Directors took legal advice on this letter (see [44] above).

[77] It is clear from para 3 of the SGX-ST Board Show Cause Letter that the SGX-ST intended to issue a public reprimand. The only relevant provision of the Listing Manual relating to a public reprimand is Rule 720 and relates only to directors of listed companies, and not the companies themselves. In short, all the directors were given unequivocal notice that SGX-ST intended to publicly reprimand them. They were all also given full particulars of the case against them. They were given opportunity to provide documents required under the Documents Directive of 6 November 2011 and finally to appoint a special auditor to review and report on the same continuing non-disclosures by the Special Auditor Directive of 16 November 2011. The SGX-ST Reprimand of 16 December 2011 came only after a lapse of six months of continuing non-disclosures, non-compliance with consequential Directives and directors’ approved Company announcements signifying a refusal to make or procure accurate material disclosures as repeatedly requested by SGX-ST.

[78] During these six months, the Board of Directors, the CEO and CFO and all the Audit Committee members, including the applicant, were in direct communication with the SGX-ST on these matters and had full opportunity to explain or make representations, if they so wished. Quite apart from China Sky’s original lawyers, the Company had appointed Asia Ascent to advise them on the Special Auditor Directive. The Company’s letter to the SGX-ST on 24 August 2011 in response to the SGX-ST Board Show Cause Letter expressly invoked their rights to “natural justice and due process” (see [44] above). If any individual director wished to put his personal representation upon receipt of the SGX-ST Board Show Cause Letter of 23 August 2011, which was at variance with their subsequent directors’ approved Company announcements and communications to SGX-ST, he had full opportunity to do so. There is nothing on record to show that any of the directors saw any need to procure the announcement of the material information set out in SGX-ST’s Board Show Cause Letter, nor comply with the subsequent Directives whose objectives were to provide independent verification of the same material information. Instead, during this period, the directors approved China Sky announcements and communications, which ex facie repeatedly and unequivocally refused to do so.

[79] Since an orderly transparent securities market is contingent on the timely and accurate disclosure of material corporate information, the lapse of time from May 2011 to December 2011 during which no disclosure was made as requested by the SGX-ST, despite the full knowledge and approval of all the directors, is troubling. The Document Directive, and later the Special Auditor Directive were both the consequence of the continuing failure to provide accurate material disclosure of the IPT and Land Discrepancies raised by the China Sky AR 2010.

[80] The applicant next argues that he personally had not been accorded a fair hearing on two grounds. Firstly that the original show cause letter of 23 August 2011 was addressed only to the Board of Directors. The succeeding Document Directive of 2 November 2011 was similarly addressed to the Board of Directors. The Special Auditor Directive of 16 November 2011 was addressed to the Board of Directives and additionally “Attention-ed” to the individually named directors but inexplicably omitted the applicant by name. The applicant was a recipient of all these operative SGX-ST emails letters and Directives. Nothing turns on the omission of his name from the Special Auditor Directive. The applicant cannot deny that the SGX-ST Board Show Cause Letter and the Directives were addressed to the Board of Directors of which he is a member or that they put him on notice of their contents. The applicant’s final argument that SGX-ST ought to have issued him additionally with a personal show cause letter is without merit as he had received the SGX-ST Board Show Cause Letter and Directives, all of which were all addressed to and received by him as a board member.

[81] The applicant is aggrieved that he was reprimanded by the SGX-ST. He joined the China Sky board and Audit Committee shortly after the SGX-ST queried China Sky’s AR 2010. He actively engaged in attempting to arrange for the CEO and CFO to meet the SGX-ST officers to resolve the problems. Even after the Special Auditor Directive he is recorded in the minutes of the board meeting of 19 November 2011 of having urged the company to comply with the Special Auditor Directive. His well-meaning efforts at urging compliance and arranging meetings appear to have distracted him from fully appreciating the significance of the SGX-ST Board Show Cause Letter and the subsequent Directives.

[82] The SGX-ST fully and substantively accorded the applicant a fair hearing by having given him notice of its intention to reprimand, particulars of the case against him and full opportunities between August to December 2011 to be heard.

[83] Application dismissed.