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A Corporate Governance Breach At Sing-post Case Solution & Answer

A Corporate Governance Breach At Sing-post Case Solution

Executive Summary

Singapore Post Limited (otherwise called “Sing-post”), was confronted with key corporate administration breaks in May, 2016. The organization was rumored to have public postal administrations in Singapore. The corporate administration issue began taking ascent in December 2015, as the organization declared that the board failed to disclose the interest of its independent director– Keith Tay, in the acquisition of 2014. The declaration was made over the past declaration on the Singaporean Stock Exchange.

-Keith Tay was an independent director, who had a 34.5% stake in SCCL (Sterling Coleman Capital Limited). SCCL was serving the as the monetary guide in the securing made by Sing-post. Despite of the fact that the declaration articulation that Tay had even controlled casting a ballot over the buyout choice made by the top managerial staff. Because of public clamor over such issues, Signpost chose to employ an exceptional auditing committee in order to distinguish the irreconcilable situation and identifying the corporate governance issues.

The appointment of the auditing committee confirmed the non-disclosure of the Tay’s interest in the acquisition. Moreover, it highlighted the irrelevance of the Board members to the existing standards, which had collectively led to a disrupted origination image in the general public and the shareholders. These issues needed to be taken under consideration in order to have the public trust revived for the organization. The case analysis recommends that the organization should have implemented a proper code of conduct with full disclosure of information and evaluation of the mergers as well as the acquisitions.

Introduction

Singapore Post Limited (also known as “Sing-post”), was-facing with key corporate governance breaches in May, 2016. The company was well-reputed for its public postal services in Singapore. The corporate governance issues started taking place in December 2015, when the company announced that it had made a disclosure about the interest of its independent director– Keith Tay, in an acquisition made by the company in the year 2014. (Gennaro Bernile, 2017)The announcement was made over the previous announcement related to acquisition on the Singaporean Stock Exchange.

The company’s independent director Keith Tay was a non-executive Chairman, who had 34.5% stakes in SCCL (Sterling Coleman Capital Limited). SCCL was serving the as the financial advisor in the acquisition made by the Sing-post. Though the announcement statement that Tay had even restrained from voting on the buyout decision made by the board of directors. As a result of public outcry over such issues; Signpost decided to hire a special auditing committee in order to identify the conflict of interest and issues related to the acquisition.

The auditors generated an auditing report, whereby it concluded the organization didn’t deliberately conduct a corporate governance breach, a rather it was breach caused by carelessness. The shareholders and the regulators also showed their concerns over the auditing report. The key question was how to earn the shareholders’ as well as the public’s trust back by ensuring the implication of the corporate governance standards and what would be the impact of such lapses by the company over the Singaporean Corporate Governance environment, which was leading due to efficacy in the regulatory environment and convenient business practices.

Problem Statement

The success of any business depends on the corporate governance practices with proper code of conducts being followed. However, Sing-post, a famous postal services company, which remained famous for its reputable services and corporate governance, got involved in a breach over corporate governance. The company’s independent director had 34.5% stake in the company’s financial advisor, who had been also serving as the seller  the company’s three key acquisitions.

The company did not disclose the involvement of its independent director in SCCL, even though he refrained from voting over the buyout. The announcement of such mistakes in the earlier announcement led to an outrage and mistrust among the shareholders and the general public. The auditing committee hired by the Simon Israel (the company’s newly hired non-independent Chairman).

The auditing report claimed that the company lacked a proper code of conduct and the breach was merely a result of carelessness, not a deliberate action over the corporate governance breach. The company had a good history of operations and trust among its shareholders and general public, and the disclosure of such an announcement tainted the trust of shareholders and public over the company. The senior management was now concerned about regaining the trust lost by the organization and implementing the suggestions made by the auditing committee over implementing the corporate governance standards……………………..

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