Sin Boon Ann
Singapore
“Madam, with growing affluence, rising obesity has also become a national problem. Other than the health risk for the individuals, there are other related problems such as healthcare expenses, loss in productivity and so on.”
“Madam, mental health problems still hold some stigma in the society and will prevent patients from seeking help and professional advice early and impede their re-integration into the workforce and community after treatment.”
“Sir, the silver tsunami is almost upon us and we must be prepared for the transformation of our social landscape. One in every five residents will be above the age of 65 by 2030. Many Singaporeans can expect to live another 20 years more but the quality of life can vary greatly.”
“If they are eligible for HDB concessionary loans, they will not be affected. However, quite a number of HDB upgraders or downgraders do not qualify for such loans. They may be upgrading due to additional children in the family or taking in elderly parents.”
“Sir, rigorous and thorough training for our servicemen is necessary to prepare them adequately for their role as defenders of our country. However, training safety is just as important.”
“But I feel more needs to be done to consolidate the understanding even further. What are MINDEF's action plans with this aspiration in mind? What are the upcoming educational publicity and other programmes MINDEF has planned to enhance the awareness and understanding of our public.”
The complete record
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“While we may each retain our distinct ethnic grouping, there is an overarching need to subordinate this to the higher need of forging common bonds among the different races, which transcend ethnic ties. Our language policy must therefore serve that purpose. In our case, we need to understand that our cultural values are evolving all the time. As a fourth generation Chinese in Singapore, I am proud of my Chinese heritage and culture. I went to an English school and learnt Chinese as a second language, although I cannot say I am very good at it. Yet, as a fourth generation Chinese in Singapore, I cannot say that I am as much a Chinese as my fellow Chinese in China, Taiwan or Hong Kong are. I am not sure whether I want to be. While we make every effort to preserve our heritage with our children, we cannot fight against the tide of change, especially when we are cut off from our roots. I wonder sometimes whether practices like the mid-Autumn festival, wherein we tell our children that in China this is a time when the harvest is gathered, will continue to have the same significance for us three generations or four generations down the road. Language must serve the purpose of nation building. There are inherent values which we should seek to promote that will preserve our East Asian way of life. These include, for instance, our communitarian values, respect for authority and care and concern for the family. These values may be distilled from the language and be imparted to our children. Through the teaching of the second language in our schools, these values are reinforced and in the process help to promote our nation building efforts.”
“The emphasis on the second language also means that students may have less time for the other subjects, particularly the English language. Sir, I have heard many times the comment that the quality of the written and spoken English among younger Singaporeans today has dropped. In fact, in terms of the technical command of the language, the younger Singaporeans on average do not seem to have as adequate a grasp of the English language as those who had gone to school perhaps 10 years earlier. We need to learn our mother tongue in order that we can preserve our roots and our values. As it is, our present policy is fundamentally sound. Requiring our students to learn the mother tongue has the effect of achieving our principal objectives. The effort that some of our children have to go through seems tremendous. One might ask whether a sledgehammer has been employed to kill an ant. It is right that we should now stand back and ask ourselves whether this policy should stand and whether it should not be refined further. Sir, in reviewing the teaching of our second language and our language policy, in particular, we should ask ourselves the basic question of what we want our society to be in the next millennium. I think we have to accept the fact that we can never replicate, in the case of the teaching of Chinese as a second language, the full extent of Chinese civilisation and culture in Singapore for posterity, and should we? We are an independent country. Our people may have come from many lands. Whether we are here by choice or by circumstance, we have to decide on our own common destiny. We have to build a multi-racial nation that is uniquely and distinctly Singapore.”
“Many parents will be anxious to put their children nearer the top of education success, and would logically not spare any effort to ensure that their children do not suffer from any disadvantage. This includes ensuring that the relative disadvantage that comes from learning Chinese as a second language is overcome. This may be attempted through tuition and remedial classes in Chinese. For many, this may be a desperate act as the small difference in marks can well mean a great difference in ranking in class and in school. Such is the extent of the competition in our schools today. This concern is certainly not helped by the fact that Chinese and English as language subjects carry the same weightage. So for a child struggling with his Chinese, attaining a mere pass for his Chinese, will inevitably pull down his overall average marks, even if he is good in his other subjects. I am told that this is the case with many ACS boys. The sad truth is that these boys, while they may have done well in the other subjects, have their overall average marks pulled down because of the Chinese language. As a result, they do not qualify for ACS (Independent) which is widely seen as a better school but have to settle for ACS at Barker Road. Many students know this and in order that they do not suffer from the fate of a lower average because of Chinese, parents and students invariably spend an inordinate amount of time learning the language, and often times at the expense of the other more useful and fruitful pursuits. In other words, the students do not have a life as a result; and for many parents, this is an additional contribution to stressful living in Singapore.”
“For this child, learning Chinese, as our DPM has said, is merely a matter of formalising what he already learns at home. On the other hand, a child coming from an English-speaking environment suffers the distinct disadvantage of treating Chinese as a new language, a language that is perhaps no different than if you were to take up Tamil or Thai. To him, the Chinese language may be a totally new language and his exposure to the language may be confined to just what has been taught in the classroom. Unless the child has the discipline and makes a conscious effort to retain and to practise the language in order to master it, and I can assure you, Sir, for a hyperactive 10-year old is almost an impossible undertaking, he will not be able to master Chinese as well as his classmates from a Mandarin-speaking environment is able to master his English. In other words, the child from an English-speaking environment operates under a real handicap when it comes to learning of the Chinese language. This is not helped by the fact that the Chinese language is one of the most difficult languages to master. After all, the Chinese ideogram requires more rote learning than romanised languages, like the English language. Sir, Singapore, as it is, is already a very competitive society. Our values reflect the virtues of meritocracy and equality. Education has long since been recognised as a principal means by which social mobility and success is attained. For many Singaporeans, being a parent of a child winning a President's scholarship and succeeding through his own sheer effort and talent afterwards in life is a natural thing to wish for. Because of the emphasis on excellence in education, schooling becomes an extremely competitive undertaking for most students and parents.”
“After 20 years, I would say that the review is timely as we would have had sufficient experience from our implementation of the second language policy to fine tune its application. How have we fared thus far? Overall, I believe that had we not embarked on the policy of learning the second language, a whole generation of school children would have lost the opportunity to imbibe the inherent cultural values that came with the mother tongue. Indeed, it is my observation that we have been so successful at the teaching of the second language that in the case of Chinese we have wide acceptance and use of the second language among Singaporeans today. In fact, we find more students using Mandarin as the lingua franca in schools and in the universities. Even in schools which traditionally used English as the spoken language, Mandarin is increasingly being spoken freely. Among the HDB heartlanders, Mandarin is often used as a main language of communication. I know because when I go on my house visits, I find myself using Mandarin to communicate with my residents more than I use English. While we may have achieved some degree of success in getting the second language across to the students, we have to ask ourselves, as indeed we are now asking ourselves, the price which we have to pay in order to get there. For many students, especially those whose parents speak Mandarin at home, the learning of the second language does not appear to be a problem. You see, exposure to a bilingual education is not evenly placed. The student has, in the case of one who comes from a Mandarin-speaking background, every opportunity to learn a second language at home and to brush up his English in school.”
“Mr Speaker, Sir, I welcome the DPM's timely announcement on the change of the teaching of the second language in our schools. I support the proposal. Sir, it has been nearly 20 years since this House last considered any major policy announcement which affected the teaching of the second language in our schools. If you will recall Sir, the then Education Minister Dr Goh Keng Swee and his team of systems engineers went about reviewing our strategies to streamline our efforts to bring about an efficient and effective education policy for the country. While the Goh Report brought about many changes, the one major impact which left a deep impression in our schools relates to streaming and the teaching of the second language. The report had laid the foundation today for the teaching of the second language at the two levels as we know it. Underlying the report is the assumption that students must know their mother tongue to preserve their cultural roots. The fear, as I understand then, was that we did not want our society to become a loose limb calypso society speaking a pidgin form of Chinese, Tamil or Malay and without any real cultural link to the countries of origin. Certainly, we did not want to be a West Indies of the East. However, because we appreciated the different learning abilities of our students, we allowed them to learn the second language according to their ability. The objective then was to let the children know enough of their second language so that they should be able to read a newspaper published in the second language. Indeed, the object was ambitious, to say the least. Twenty years on, and I am glad to note that the Minister has announced that the Government intends to change some of the existing policies relating to the teaching of the second language.”
“Mr Deputy Speaker, Sir, for the record, it is Mr Sin, and not Mr Sng.”
“And indeed, everyone, including politicians, must take the legal consequences of their words. It is not only Government leaders who sue in defamation. I am sure Mr Chiam knows this very well. He has also invoked the law of defamation. When justified, he has sued. He has won cases, not just against other Opposition politicians but also against PAP leaders. Indeed, Mr Jeyaretnam himself has invoked the law of defamation when he sued the Prime Minister who was then DPM in 1989. That case went up to the Privy Council and was dismissed.”
“Again, without going into the details, surely the courts examined these words very carefully, not only in the context of what was the natural and ordinary meaning, but also what was the innuendo meaning in the context in which the words were uttered, and after a full consideration in the cases that Mr Jeyaretnam had mentioned, the courts had held that indeed defamation was made out. Mr Jeyaretnam talks about democratic society and freedom of speech. He makes a big pitch about it. Let me first say that there is no democratic society in the world, let alone true democracy, words in the motion, whatever true democracy means, where the right to exercise free speech includes the right to defame individuals, including public officials, not here, not in the US, not anywhere. As Mr Tay has pointed out, every society has to strike a balance. What is this balance between the individual's right of free speech and the interest of society? Our defamation laws are well established. They have worked well and I would say that there is no need for a Commission of Inquiry to look into changes. Mr Jeyaretnam talks about democratic freedom. Sir, it is not a democratic freedom to defame and attack another person's reputation with falsehoods to impugn his integrity without basis. Our defamation laws give everyone, including politicians, and that is what it should be, the right to protect one's reputation and honour. It is one thing to engage in robust political debate and criticise the Government as leaders or policies in the process. In fact, Opposition leaders, Members like Mr Low Thia Khiang, Mr Chiam See Tong and others, have done for many years. They have not been sued for these criticisms. But it is another thing to defame.”
“And for those who are not speaking up, it is not so much for fear of being put in prison or Government reprisal, but I think Mr Zulkifli also said it is partly due to a cultural basis. People may not want to speak up in public to avoid the embarrassment of being put down or having to rebut and to debate publicly. Sir, certainly, it is not the fear of defamation that puts people off from speaking up. In any case, even if there are some, like Mr Zulkifli has mentioned, who may have this fear, I hope that, after today's debate, knowing what the ambit of the law of defamation is and how Government leaders have in the past used it, the few instances when PAP leaders had used defamation in what context and what were the words in question, I think such fears can be put to rest. What is Mr Jeyaretnam's motivation for moving this debate? I think he shows it quite clearly. He has talked about cases he had been involved in, two of which he was involved in, and the other one involving Mr Tang Liang Hong, a Party member. Like Mr Sin has mentioned, and the other two Nominated MPs have also said, these are cases which have been dealt with fully by the courts, up to the Court of Appeal, which have examined them in the context of the law and in the context of accepted standards, tests and principles, whether the words in question were defamatory or not. Of course, Mr Jeyaretnam, in this House, tries to tell us that they were all innocent statements, they were innocent denials.”
“This, in fact, was a subject matter of a motion which Mr Jeyaretnam himself had moved in this House six months ago. So we have already dealt with that effectively. It is not only me who says this, because here again if you look at independent polls, I think it was 1996, the PERC polls talked about the state of the legislatures in the Asian region. The PERC polls put Singapore at a very high placing, saying that despite the absence of strong Opposition in the House, there was rigorous and vigorous debate. So there you have it. The other thing about Mr Jeyaretnam is that he keeps returning to old themes. He laments why there are so few Opposition Members in Parliament. He has given other reasons in the past. He has a new one this time. He says that Opposition politicians are defeated in the polls because of the law of defamation. Mr Jeyaretnam, what else will you come out with next? Sir, let me first say that the motion is misconceived. It must be rejected because its basic premises are false and untenable. These are, firstly, that the law of defamation denies every citizen the right to comment on and criticise the conduct of public officials and the discharge of public functions and duties. And secondly, without changes to the law of defamation, citizens cannot exercise their right without fear. Sir, Mr Sin has just said that this is far from the truth. Because, as Mr Sin has said, and indeed this is the case, Singaporeans are not afraid to criticise Government policies or indeed officials, if justified. I think in the last debate in this House, again on Mr Jeyaretnam's motion, Mr Zulkifli and Mr Simon Tay had alluded to this, that as a civil society, we are opening up and more people are speaking up.”
“Mr Jeyaretnam, a loser in the last election, is here today by the grace of the same Government he now claims is suppressing this right of free and fair speech. Has the Government tried to stop him from speaking in Parliament? No. On the contrary, we have been patiently listening to him going on and on in this House almost ad nauseam on the same themes like an old record. If we had a strict democracy, where the right of admission into this august House is through the vote of the people, then these people, like Mr Jeyaretnam, will not be here today, and we all agree that Singapore will be poorer for it. So, Mr Jeyaretnam, how are we, with all that we have sought to do in these past years, any less democratic? How can we be said to be oppressive and stifling free expressions and discussions? Mr Jeyaretnam, unfortunately, has his pet peeve and would waste no time in bringing it into this House without considering whether it stands to reason. Today's motion is yet again another example. For the above reasons, I do not support the motion. Assoc. Prof. Ho Peng Kee: Sir, first, let me say, before going into the motion proper, but I would not take as long as Mr Jeyaretnam did, when he introduced this motion with a 20-minute speech which sounded like a history lecture, that this House is doing well. Mr Jeyaretnam asked whether this House is effective. He has criticised this House as not doing its job of checking the Executive. But, of course, from his standpoint, Mr Jeyaretnam would like a gridlock, as happened in some countries, where the Legislative arm and the Executive arm cannot see eye to eye, and government cannot function. But, Sir, in Singapore, we do things differently. Yes, Parliament has a role, and Parliament plays its role effectively.”
“The answer is a resounding no. Sir, over the years, we have put in place institutions that encourage people to participate in policy formulation and implementation. Mr Simon Tay, for example, is involved in a forum that looks at deciding policies that will carry Singapore to the next millennium. If it was our intention to gag opposing, or even remotely, dissenting voices, he would have no place in this Committee today. And that is why we have the Feedback Unit, the Forum page of the Straits Times, the Internet, and, as I said earlier, more recently the Singapore 21 Committee where the people involved have actually gone out of their way to solicit views as to the kind of society Singaporeans want in the next millennium. In all these discussions, one would say that there were no attempts to put any unreasonable restrictions other than those which go beyond the bounds of human decency, in matters which they have been allowed to raise. Did we go after them because of such adverse remarks? Was there ever any indication of oppression or fear which prevented them from speaking out? No. If there was any effort on the Government's part to gag these voices or to instil in them a fear to speak out against what is perceived as bad Government policies, we would not have seen or heard any of these strident criticisms that we see or hear of these days. We should realise that nowhere in the world would you find a Government that has taken the trouble of constitutional reform to ensure that there is adequate representation in Parliament for the minority voices. It is for this reason that we have in this House today Nominated MPs and the NCMP. These representatives have no obligation to anyone and are encouraged to speak without fear or favour.”
“Let us decide what those standards are and let us be our own judge. Secondly, the reports that have emerged suggest that we have no avenue for constructive criticism at all. Is this true? Are we deterred as a people from speaking up publicly? Mr Simon Tay said earlier, people are discouraged from speaking simply in case there is a chance that they may be sued for defamation. I did say earlier that a distinction must be made between defamation which goes towards the integrity and the good name of a person as opposed to a fair criticism and comment of the policies of a country. I think, in any election, there must be a contest of ideas. In the last elections, we have seen that the people have had no restraint in publicly criticising, rather stridently at times, some of our Government policies. But let there be no mistake about it, that here it is the good name and the reputation of the people concerned that we are trying to protect. And it is a matter of policy, we have decided, or at least I feel we have decided, that if we allow people to launch into scurrilous attacks against the good name of the people concerned, then the people may feel discouraged from participating in the political process. But then, of course, Mr Zulikifli has also said that people who are involved in elections should be prepared to have their feet muddied in the process. But then I ask Mr Zulkifli, the hon. NMP, why should politicians be any different? Are they not human? Are they not entitled to have the right to defend their good name in a court of law? At the end of the day, let us ask ourselves: Is there a forum for our people to express deep unhappiness over policies? Are there people in prison today because they spoke out their minds and spoke from conscience? No.”
“It is not for any one, Stuart Littlemore included, who has no stake in his country, and who had himself sued others for defamation, to pass judgment and to say where that balance should be. Here, in Singapore, we have leaders who have worked hard at transforming this country into an economic miracle. The success of this country rides not only on the back of the labour of our people but is also founded on the integrity and honesty of the leadership. Their integrity has helped to build up the trust that the people have in the leadership of this country. It is this inherent trust that our people have in our Government that has led to the quiet confidence that this Government will lead the country through its present difficult time. The leaders did not forge this trust overnight or through subterfuge. It is through years of hard work, and the success of our leaders at every general election is an affirmation of that trust. We are not going to allow anyone to fritter away the trust that our people have in the leadership by allowing anyone to cast aspersions on the character of our leaders which is indefensible in law; and certainly not allow anyone who, after they have lost their case in a court of law, should now come to this House to ask for the rules to be changed so that he has the licence to defame others. The principles of defamation may be similar in most common law countries, but the standards of defamation are and should be different. The Guardian, in its editorial, has called our leaders thin-skinned. If that is the allegation, so be it. We have seen the buffoonery of the English press in the handling of their own leaders under the guise of freedom of expression. If that is the standard they want us to go down to, Sir, we are not interested.”
“Sir, at this moment, I would like to touch on the comments of several parties who have spoken publicly on this matter. Against the issue of reformation of defamation laws is the question, as alleged by some critics, of whether we use defamation laws here to stifle and oppress opposition voices. Both the ICJ and the Amnesty International observed the defamation trials involving Mr Jeyaretnam. Amnesty International in their report expressed the concern that the decision to launch defamation was unnecessary and unreasonable. They feel that the combined action of the leadership and the decision of the court placed restrictions on freedom of expression that cannot be justified by international standards. Amnesty International went on to pontificate that civil defamation has been misused by the Executive to intimidate and deter those with dissenting views. The suits have a chilling effect on the political life and place unreasonable and unacceptable restrictions on the right of Singaporeans to freely hold and express their views. The International Commission of Jurists, on the other hand, through their self righteous representative Stuart Littlemore, blatantly stated that the courts have assisted the plaintiffs in this case. Sir, I have two comments to make on these. First, we must recognise that as a matter of first principle, every country with its duly elected government has the sovereign right to determine its own destiny. I have stated, at the onset, that the freedom of expression and speech must be balanced in every democracy against the right of any individual to protect his reputation and standing in the eyes of the community. Where that balance lies is to be decided by the people of the country concerned.”
“What the law cannot accept, however, is the allegation of improper acts through indefensible statements or innuendoes which diminish the standing of the person in the eyes of his peers. This is the real intention of Mr Jeyaretnam's call for the reformation of defamation laws in this country. Mr Jeyaretnam is aware that our laws apply equally to all. If I choose to defame Mr Jeyaretnam publicly outside this House, he can sue me in a court of law. Whether or not he chooses to sue me is a separate matter. That is the essence of our democracy. The rule of law applies to all. It does not matter if Mr Jeyaretnam was making the defamatory remarks against me, or if I was making a defamatory remark against him. The law is respecter of no class or rank. Sir, we recognise that with widespread literacy and universal suffrage, Singaporeans have the opportunity to participate in the political and community affairs of our country. With better education, Singaporeans are better able to articulate their views more effectively. We have seen that over the years, Singaporeans are more actively involved in the political processes than before. They would want more information rather than less of it. We recognise this and we encourage the flow of free and frank discussions. This is necessary for the maintenance of democracy in this country. However, and I say it again, it is another thing altogether to say that that right extends to defaming the character of another fellow human being and to destroy his or her reputation. Mr Jeyaretnam's motion in part relates to some recent matters which involved several international NGOs. I am referring in particular to defamation suits against Mr Jeyaretnam which attracted much media and international attention.”
“"The rule that the New York Times case leaves vulnerable the reputation of all who are, or would be, in public life by depriving such people of any legal recourse from defamatory falsehoods directed against them, except in those rare cases where actual malice can be established. Such a rule would likely discourage honest and decent people from standing for public office." Thus, the rule destroys rather than preserves the delicate balance between freedom of expression and protection of reputation which, as I already noted, is vital to the survival of a democratic process of government. For that reason, I would oppose introducing such a rule in this country. So there you are, Mr Jeyaretnam, it is not by uniform consensus that the rule in the New York Times case is universally applicable even by western standards. For many of our public servants, they are not likely to allow anyone to fritter away their good name through spurious allegations which cannot be substantiated. If we allow that, there will be many, I am sure, who will have second thoughts about being a part of the public service. And I am sure you agree that this is not in our interest. Of course, if the pubic servant concerned was engaged in some illegal or improper acts, Mr Jeyaretnam is at liberty to report the matter to the proper authorities. Let them deal with it. Indeed, it if were true, there is nothing to stop Mr Jeyaretnam from stating the substance of his concern publicly. If an officer, for example, were engaged in an act of corruption by accepting some form of gratification, it would be a defence to a claim in defamation if one can justify the statement.”
“What Mr Jeyaretnam wants, although he has said that this is not the case that he wanted, is a licence to defame people without being called to account for the basis of his allegations. Mr Jeyaretnam knows that it is no defamation for anyone to comment and even to criticise stridently, any policy of the Government. Outside this House, people are free to criticise Government policies and Acts. At the last general elections, many of the Opposition Members had been volubly vocal about many of our Government policies. Are these criticisms made out of fear? Sir, what we must realise is that at the end of the day a distinction must be made between the criticism of a particular policy for which the fight for the vote of the people must stand on as opposed to an attack on the integrity and the good name of the person concerned. Sir, what we must realise is that in a country as important as ours, human resource is our only asset. Making it more difficult for public officials to sue in defamation may well discourage many from joining the public sector. The Government would end up being poorer for it. It may not be the case for some, but for many, honour, reputation and integrity are qualities that many work hard at building and preserving. The case which Mr Jeyaretnam cited, and that is the New York Times' case, has been considered in a Canadian court, Court of Appeal which decided not to endorse it. In Derickson v Tomat [1992] 88 DLR 401, the British Columbian Court of Appeal in that case took the opportunity to consider whether or not the New York Times' case ought to be adopted in Canada. The judge said that this particular decision has no application in Canada, and I will read the dicta from the decision.”
“" Sir, the freedom of expression without fear or favour serves as an important underpinning in our democracy. Without the freedom to speak up, our people will not have the ability to determine their own future in this country. To be able to criticise and comment is the spur by which our Government is kept perpetually on its toes. In any democracy, if the people do not have the right to speak nor the courage to get themselves involved or heard, there will not be any check on the Government. In the end, they only have themselves to blame if the Government abuses its powers at the expense of the people. However, while we recognise the constitutional right of free speech, it is another thing altogether to give people the carte blanche licence to go into scurrilous attacks on the integrity and reputation of any individual member of society. The cases which Mr Jeyaretnam referred to in his earlier speech did not provide the complete picture because while he tried to paint the picture that he merely made those remarks innocently, as a lawyer, he should know that taken in toto, those remarks represent certain innuendoes which, if not pursued in a court of law, will result in the undermining of the character of the person concerned. Certainly, an innocent remark which he presented earlier, as asking questions about the conduct of a particular Minister, can be seen as disparaging the good name of the Prime Minister, as it was indeed so, as found by the court in the decision which he referred to; and that is the Teh Cheang Wan's case. What Mr Jeyaretnam is asking for is not freedom of speech. That is an inalienable constitution right of Singaporeans.”
“Sir, I had broadly stated the underlying principles of defamation only to show that contrary to what Mr Jeyaretnam seems to suggest, there is generally a right to proffer what is on the surface, defamatory comments on the conduct of public officials or anybody whatsoever, provided that the author of the statements is able to raise the defences which I mentioned earlier. If I may add, defamatory statements are not just statements alone but also include innuendoes or suggestions indicating the conduct or otherwise of the person concerned. Mr Jeyaretnam had numerous encounters with defamation laws. Unfortunately, not all of his encounters have met with successes in his favour. Perhaps that is the reason, and we have heard this to be so, why he is asking this House to appoint a Commission to reform the laws of defamation. We must recognise that in every democratic society, there must be a constitutional right of free speech. We are no exception. Our Constitution provides the assurance that all Singaporeans have that right. However, we must also recognise that there is equally the right of individuals to protect his honour, reputation and dignity. The right of free speech must be subject to some form of legal control. An English jurist put it well when he said: "Firstly, any person is entitled prima facie to his good name, and imputations are not to be made without justification which are detrimental to his reputation. Secondly, any person should be entitled in a free democratic community to publish fearlessly statements of fact and expressions of opinions however forthright or unpopular and even though they may reflect on or displease particular individuals or groups.”
“Mr Deputy Speaker, Sir, Mr Jeyaretnam's motion to call on the Government to appoint a commission to examine and recommend what changes should be made to the law of defamation is misconceived and should not be supported by this House. Sir, for the benefit of Members of this House who may not be familiar with the subject, the general starting point of a defamation law begins with a published defamatory statement which refers to the person concerned. I underline the words "persons concerned" because this will be relevant subsequently when I respond to Mr Simon Tay's point. A defamatory statement is one which is calculated to injure a person's reputation and to diminish the willingness of the others to associate with him. Where it is alleged that a defamatory remark has been made against a person, the person who is alleged to have made the defamatory remarks would not be liable for those defamatory remarks if he is able to establish certain defences such as justification, absolute privilege, qualified privilege or fair comment. For instance, if I called somebody a cheat and a liar, I would, on the face of the statement, be liable for defamation. However, if I am able to, among other things, show that the person whom I had called such was indeed a cheat and a liar, then I would not be liable as I had spoken the truth. Alternatively, if it was found as a fact that a particular person indeed told a lie, it would not be defamatory for one to pass an opinion that it was wrong to lie, since this comment was based on a proven fact.”
“I would urge all the people of Singapore to, at this time, close rank and stand behind our leaders as we work to pull Singapore out of this most serious challenge in recent years. Together, we will succeed.”
“I do not think the developers who promote these projects have to swear statutory declarations about the truth of their advertisements, neither were they required to file complete details about their companies or its track record, or provide performance bonds to any trustee in respect of the promotion of their developments. Yet, at that time, there were many Singaporeans who went to such exhibitions and bought properties purely on the basis of scale models of developments. I remember telling myself that some of these investors could get themselves into trouble because of these relatively lax requirements. Some years later, I was right. These days, it is not uncommon for people to complain about how they have been short changed in their property purchases in China, and the sad truth is that there is very little they could do about it. Sir, my point is that while we may want to concentrate on focusing on insulating our industry from systemic risks, we cannot, at the same time, neglect our moral responsibility of having to protect our own investors against the more unscrupulous promoters. On the contrary, I would argue that we should review our laws to see how we may strengthen our laws to protect our investors even more. Finally, Sir, the strategies recommended by the CSC and the measures introduced by the Government are indeed comprehensive and broad ranging. Our journey has only just begun. However, while the Committee can point us to the direction which Singapore should take, for many of these strategies, there is substantial work to be done. I have no doubt that our Government would be able to rise to the occasion.”
“While I agree with that principle, I would submit that there is a difference between allowing the people to make the final choice of business as opposed to maintaining a framework to ensure information flow which is backed by legal sanction if necessary, to allow investors to make the appropriate choice. Let me explain. Under our present laws, it would be an offence for anyone to offer securities to members of the public without complying with the necessary requirements of disclosure through a prospectus that must be filed with the Registry of Companies. The Act sets out the type and nature of information that must be provided in detail. The purpose of such requirement, presumably, is to ensure that investors get enough information about the company to make intelligent choices. Such requirements serve to protect the investors well. Unfortunately, such policy of investor protection does not seem to be applied uniformly. We seek to protect investors under the Act in their investments in securities. However, there seems to be a gap in their protection when it comes to property investments overseas. We see many of these sad stories in respect of our people's investments in China. I remember, in the early days some years ago, when China projects were first launched in Singapore, there was an air of excitement. For land scarce Singaporeans, the prospect of owning a piece of sizable real estate in China cheaply and at a price which was extremely affordable is something which is very attractive. I remember saying to myself then that it seemed a little anomalous that while we required people who sell securities to members of the public to make such detailed disclosures in the prospectuses, such requirements are not necessary for people who sell properties in Singapore.”
“In recent years, it became fashionable to form property development companies. The fact is that many of our GLCs are into property development and are often in direct competition with each other. This form of competition has resulted in needless waste of resources. Lest we get lost in the myriad of investment activities, we should ask ourselves whether each GLC should seek to redefine itself in terms of its core mission rather than reaching out all over, like the proverbial octopus. I would argue that our GLCs should take a step backwards and re-examine its mission statement. To avoid wastage from unnecessary competition, GLCs should restructure its group holdings, get rid of its peripheral businesses and be single-minded by concentrating on its core business and competition if it wants to compete on the world stage as a world-class company. Banking and finance In its sectoral report, the Committee recommended a number of strategies to help make Singapore a premier financial hub in the region. Among some of the strategies recommended included the point that financial institutions should be allowed to assume higher risk profiles that they are comfortable with within prudential limit. Along with the suggestion, it was stated that the authorities should move away from protecting the individual investors to focusing on protecting the industry against systemic risks. The Committee also reported that over-protecting investors from specific asset risks also means losing out on potentially lucrative opportunities. Sir, I understand that the stand taken by the Government has always been on the basis of caveat emptor. It also means that it is not the business of the Government to ensure that every investment made by its people will be rewarded with success.”
“Because the funds held in these companies are those which belong to the public, there is some expectation that these companies be made more transparent through greater disclosures to the public and adopting good principles of governance, which in this case may include indexes, for example, to show the extent of the return on capital, and subjecting the managers to the same forces of the market discipline of hire and fire. This will provide some assurance to the public that even private limited companies of the Government are properly run. I am not saying for a moment, Sir, that these companies are not properly run. On the other hand, I will be the first to say that we have some of the best companies in this stable. However, as the saying goes, justice must not only be done but must be seen to be done. I would say that these concerns have been generated in recent months by the high profile failures and acquisitions of some of our Government-linked companies. The concern that I am expressing is that unless we can impose a framework for greater discipline among these companies, we may be exposing ourselves to greater weaknesses by encouraging these companies to become world-class companies. Spectacular world-class companies may also suffer from spectacular world-class failures. These companies are not created overnight by pouring in massive capital alone. Therefore, I would cite caution in the way in which we approach this issue. There is just one more point that I would like to touch on before moving on. Over the years, we have engendered the growth of Government-linked companies that are multi-disciplined conglomerates. We have GLCs, for instance, that have interests ranging from shipbuilding and repair to food retail outlets.”
“Their close association with the Government has given these companies some advantages in their dealings with clients and financial institutions. Some of these Government-linked companies are listed in the stock exchange and are thus subjected to the requirements of the stock exchange to observe the on-going process of corporate disclosures of information. This requirement of relative transparency provides some amount of discipline on the part of the company and is often seen as a principle of good corporate governance. In a sense, shareholder and market accountability helps to protect the shareholders' interest in their investments in the company. Sir, this is fine with listed companies. The question remains about the unlisted ones. For these companies, which are not listed on the stock exchange, the perception is that they may not be subjected to the same discipline of accountability and control as the listed ones. The conduct of these companies is quite naturally not as transparent as those that are listed on the stock exchange. There is not enough information filtering through about these companies. In the case of ordinary companies, it is understandable that there is some amount of privacy that must be observed, as these are private shareholders' funds. In the way in which the private limited companies have developed, it is meant to provide the benefits of limited liability without at the same time of having the undue burden of disclosing too much corporate information about the company, other than perhaps the accounts filed with the Registry of Companies. On the other hand, there are some who feel that private limited companies of the Government are not private.”
“In my speech at a Budget debate, I had argued that we could have leap-frogged the process by taking over some of the companies with leading brand names in the world. This may be more advantageous than trying to nurture world-class companies, as this gives us almost immediate access to markets and also the cutting edge in technological developments. Rather than inventing the wheel, we should buy the wheel and make further improvements to it. We have the money for it. Sir, choosing our Government-linked companies to lead in the process of creating world-class companies raises certain underlying issues about these companies and their roles. We know that Government-linked companies play an important role in the development of our economies and have, to some extent, helped build our national profile in the global economy. Our favoured son, Singapore Airlines, for instance, has always made us proud as an example of a world-class carrier. However, Singapore Airlines is but one of the more prominent example of the many Government-linked companies that we have in our stable. Over the last decade, numerous companies and subsidiaries linked to the Government have been spawned, especially when Government functions and departments are increasingly being privatised and corporatised. Government-linked companies are unusual and in a way different from the ordinary private sector companies. In shareholdings and management, these companies have close linkages to the Government. For many of these companies, our Government holds a substantial portion, if not all, of the shareholdings in them. Their corporate management is often staffed by those who are seconded from the civil service or those who had retired from the civil service.”
“What about the other private Singapore investors who answered the call of our Government to go overseas and who run into difficulties with unreasonable and bureaucratic foreign officials? Can our Government be there for them? I note the recommendation of the Committee to encourage local investors overseas to pool their resources together. Sir, this is not enough. We should have strong Government backing for our overseas investments. This may be given through the setting up of specific Governme nt agencies, other than TDB, which can be relied upon to assist our investors in a more dedicated way. This can include, for instance, helping them to resolve problems at the Governmental level. For countries like Vietnam and China, businesses are often carried out with government agencies. If a framework can be established whereby our Government can lend some official support and is able to use that to get the cooperation of their counterpart in the relevant places in these countries, I believe it will help our investors go a long way with their investment. Building world class companies The Committee has recommended that to be globally competitive, we need to be able to build up a stable of our own world-class companies with core competencies that can compete effectively in the global economies. To kick-start the process, it is recommended that Government-linked companies with their present size, core capabilities and share of talents, are best placed to lead the drive to kick-start the process of building world-class companies. Sir, while I agree that we should build up a stable of world-class companies, nurturing our own companies to attain world class status is not the only way.”
“During that time, I can say that the experience of those who have ventured overseas has been rather varied and different. Some have found their investments profitable; most others have found the going tough. Singaporeans, in their venture overseas, have tended to rely on areas that they are most comfortable with and perhaps with the most experience in. Consequently, Singapore investments overseas are most visible in industrial parks, hotel developments and office complexes. Unfortunately, these are investments that call for substantial infusion of capital and with long clawback periods for the initial capital injection. The extended period of time required makes these investments rather vulnerable to the vagaries of the internal and external economies and politics. When these companies first ventured overseas, little did they realise that dealing with the local governments and appreciating the extent that the local politics can make a difference to the extent of the success of the venture. Take our Suzhou Industrial Park, for example. This is often seen and is, in fact, often touted as the flagship of Singapore's regionalisation programme overseas. If we look at the development of the Suzhou Industrial Park, we have every reason to be proud of its standing as representing everything that Singapore stands for. Yet, it was not without its difficulty. Some years ago, we realised to our consternation that the Mayor of Suzhou was undermining our development by promoting a rival industrial park there. It took the efforts of our Government and the influence of our Senior Minister Lee to put our position firmly with the Chinese that they cannot take us for a ride. The Suzhou Industrial Park has the support of our Government.”
“I must, at this moment, declare my interest in the matter as a member of the Association of Small and Medium Enterprises. I know that we have various incentive schemes for the small and medium enterprises. However, the feedback I got is that these schemes are rather difficult to apply for. The red-tape that the applicant has to go through is discouraging enough. Take, for instance, the Local Enterprise Financing Scheme. Will the Minister kindly enlighten us on the extent to which our local companies have been successful in applying for financial assistance through the Local Enterprise Financing Scheme in the last six months? Of course, we have often heard the lament from our local businesses that every time they are reasonably successful in an area of business, the big local boys, in the form of the Government-linked companies, will either come to compete with them, often unfairly because of their sheer size, or to buy them over. We have seen this before, whether it is in property development, construction or even in the pastry business. The net effect of competition from the larger companies has been to crowd out the smaller companies. Sir, we should, as far as possible, refrain from doing this if we are ever going to give these small and medium enterprises a fighting chance. I would therefore urge that the new economic promotion agency should not repeat our oversight of concentrating on big foreign investments to the exclusion of the smaller players in Singapore. Strengthening the External Wing Developing the external wing as a means to hedge against the risk of over reliance on the local economy is often seen as a sound and effective strategy of our Government. It has been more than five years since we heard and, for some, heeded that call.”
“They are more likely than local companies to pull out their investments and cut down operations in Singapore when it is expedient for them to do so. We have seen this in the mid-80s and how our employees became displaced in the process. These MNCs do not owe us a living and we do not expect them to. In the area of manufacturing, we should therefore hedge against this dislocation by continuing to concentrate on our local enterprises. We should build on our local manufacturing bases. The Report has quite correctly pointed out that we need to build up a strong capability in all parts of the value chain. Hopefully, we can nurture enough local companies with strong capabilities that will provide an alternative base for the manufacturing sector. In this regard, we have much to learn from Taiwan where the strength of the local small and medium enterprises have helped to shelter the country against the forces of contagion which have affected the region. Sir, I recognise the need to strengthen our local manufacturing capability. We should do more to help our small and medium enterprises (SMEs). We recognise that our SMEs, because of their size, have inherent limitations. I have spoken to many operators of SMEs and their feedback has a very familiar ring about it; limited access to funds, stiff competition from Government-linked companies, and a perception that the Government does not take them seriously enough. I took a look at the participants of the CSC Report and I was sad to note that a committee as important as this, and for all the importance that we have attached to local companies, we have not included the Association of Small and Medium Enterprises in the Committee. Sir, I think this is a glaring omission.”
“In that sense, we should now seize this opportunity to redefine some of our economic goals and the means by which these goals may be attained. The Committee has identified several strategies, by which it is hoped would help preserve Singapore's status as one of the most competitive states in the world. Most of the strategies did not come as a surprise. However, there are also many which are seen as bold initiatives for Singapore. Sir, I support, in principle, the proposals of the Committee as set out in the Report. The vision, as articulated by the Committee, is one that I agree with, ie, making Singapore an advanced and globally competitive knowledge economy within the next decade, with manufacturing and services as the twin engines of growth. While it is easy to identify with the broad proposals of the Committee, I do have a number of issues which I would like to raise in this House. Time does not permit me to cover the proposals in a comprehensive manner. I shall confine myself to only some of the recommendations. Manufacturing and Services as Twin Engines We recognise the importance of manufacturing and services as important engines of growth for our economy. Indeed, since independence, our high economic growth has been led by the manufacturing sector; hence, the emphasis on manufacturing. While we recognise manufacturing as providing the engine of growth, I note, at the same time, our high dependence on multi-national corporations (MNCs). We are no doubt grateful to these MNCs for bringing investments to Singapore and providing Singaporeans with employment. However, we should recognise that MNCs are not indigenous companies.”
“This, if not for the other political problems that are confronting some of the countries in the region, would have made these countries extremely attractive alternative places for direct investments or relocation of investments from Singapore. Sir, while I agree that cost cutting measures taken by our Government will help to provide immediate relief to our businesses, cutting business cost alone is not going to be the only long term solution to sustaining or improving Singapore's competitiveness against the region and the whole world. More must be done. Indeed, this was recommended by the Committee. In general, one must go beyond the symptomatic approach of cost cutting to one where paradigm shifts and other strategies would have to be engaged. To the credit of the Committee, this was the approach taken. As an example, the Committee has boldly recommended that we should move away from investor protection approach in regulating the securities industry to one where the authorities play a supervising role, ensuring that the market is sufficiently transparent to allow the investor to make his own independent judgment about investment decisions. Leaving aside the question of whether or not this is an acceptable approach, the recommendation does suggest a rather radical shift in the thinking of our policy makers. Sir, in some ways, our country is now at the crossroads. The economic crisis has brought upon us hardships for our people and our businesses. Yet, at the same time, there are opportunities and challenges that present itself. We have been relatively unaffected by the contagion of the region. Yet, we cannot rest on our complacence and not take advantage of this opportunity to pull ahead of competition.”
“Mr Deputy Speaker, Sir, like most of my colleagues and as the last speaker on the list, I too support and agree with the motion standing in the name of the Minister. The Report of the Committee represents what is by far the most comprehensive study since the mid-80s to address the immediate problems and the long-term strategies to keep Singapore on the right track of sustained economic growth and development. Yesterday, in this House, we heard the DPM giving the Government's response to the CSC recommendations. The response has been most encouraging. It shows that our Government takes a very serious view in dealing with our immediate problems. The measures that have been proposed so far are broad ranging. It seeks to deal with our immediate problem of business cost in one fell swoop rather than to deal with it in a piece-meal manner. These cost cutting measures no doubt will cheer the business sector. This should send a very strong and positive signal to our people and foreign investors. The measures introduced by the Government could not have come at a more appropriate time. The regional economic crisis, as we all know, has led to a deepening of contrast in the cost competitiveness of the economies of the region. The weakening of the currencies in some of the more severely affected countries has made Singapore, which is relatively unaffected by the crisis, a much more expensive place to do business in. This is no good for us, especially when our economy is very much export driven. Just looking at the cost of business alone, Malaysia, Thailand and Indonesia, by virtue of their currency depreciation, which in some cases depreciated by more than 100% against the US dollar since early last year, are now that much more competitive against Singapore's exports.”
“I wish to ask the Deputy Prime Minister whether he will consider giving greater financial assistance or rebate for workers who may take this opportunity to go for further training and to improve their skills in order to prepare them for the next upturn in the economy.”
“Dr Richard Hu Tsu Tau: Mr Deputy Speaker, Sir, all speakers have expressed some similar concerns about the provisions of the Bill. I will deal with each speaker separately. Mr Leong Horn Kee has asked whether we should not allow the buy back scheme to be extended to all shares rather than just ordinary shares. The reason why ordinary shares were stipulated is because they form the bulk of the shares issued. Although the number of preference shares is not insignificant, what we are really talking about are the non-redeemable preference shares where such a provision of buy back might be extended to. For the time being, the proposal is to confine it to ordinary shares until we gain more experience in this particular process. Generally, I would say that the provisions are on the prudent side because of our lack of experience in administrating such changes. We have perhaps over provided for the protection of the small shareholders at the expense of flexibility. Hence, the limitation of the share buy back to 10% for each instance and the cap on the price movement of 5% of the average of five preceding days' share prices. Also, there is the need for shareholders' approval on the maximum share prices allowable. All this may sound restrictive, but they are designed to protect smaller investors who may not be familiar with the procedures and, therefore, may not comprehend the implications if more flexibility is introduced into the scheme. I come next to Mrs Lim Hwee Hua. She is concerned that the buy back scheme itself may trigger a signal to outsiders that there is something basically wrong with the company for it to want to buy back its own shares. Is that the concern?”
“There may therefore be a danger of collusions whereby major shareholders in need of funding make their shares available at exactly the right time. The Minister might respond that these possible collusions would be tackled under the general insider trading rules. However, it seems to me that these rules may not be themselves sufficient since the information of when a company buy back will happen may not in a sense be price sensitive since the price is pretty much fixed. It is more a question of when the shares are available rather than what price. The third point I want to make about the share buy back is the opposite effect. Rather than having a bail-out of major shareholders, there is in fact the effect of consolidating and increasing the effective holdings of the bigger shareholders. And here I share the concern of Mr Sin Boon Ann that this will effectively increase the percentage held by certain shareholders. And the question is whether the Takeover Code would be triggered. This is not clear, since section 213(3) of the Companies Act provides that the effect must be of acquiring effective control, that is, acquiring shares. In the event of a share buy back, the shareholder does not acquire any shares but, nevertheless, may find himself put above the statutory limit. The final point relates to the deeming provision. As Mr Sin has said, it is good for clarity in this issue that for too long, we have been concerned that deeming provision upon deeming provision will lead to endless tiers of deemed interests. However, there is some concern that we may be moving in the opposite direction of greater transparency. This is because we will be using one tier only. It will be more possible to have shell companies. With these comments, I leave it to the Minister.”
“The institutions we then turn to will increasingly be the SES and, more than that, the investing public, and we have an increasing number of citizens who are using their private funds, their CPF funds, for this purpose to create a citizenry who are also shareholders in our companies. Let me, with this background, turn to my concerns regarding disclosure and transparency as regards the share buy back scheme and the deeming provision. Let me try to avoid repeating many of the points my colleagues before me have made. My first concern with the share buy back scheme is that it is possible that it may be open to price manipulation. This is primarily because the investing public often does not know what is happening when a buy back starts to happen. The provisions in the Act provide that notice be given to the Registry of Companies (ROC). However, I think that in the climate of the small investors in Singapore, this may be insufficient. The SES undoubtedly will also make the buy back decisions known to the mass net. But again, this might not be enough since the mass net goes to mainly people with seats in the Stock Exchange. It might not reach the smaller investor. The smaller investor then will see the price go up or down and the volumes go up and down and there might be some sort of psychological effect on them which they may not understand. They might therefore follow blindly. Secondly, as regards the share buy back scheme, clearly the Bill is on good ground in providing that for listed companies, this must be bought from the open market. However, Sir, there are two dangers. The first is of a bail out. Even though you buy in an open market, it depends on who has made, what shares are available.”
“Finally, new section 76C (6) defines an "equal access scheme" as one which, inter alia, satisfies the requirements of all persons having a reasonable opportunity to accept offers made to them. The use of the term "reasonable opportunity" may introduce uncertainty into the legislation. It may be better to introduce a fixed minimum period during which the offer is open. If left as it is, it may be open to each individual shareholder to argue that, given its present circumstance, he was not given reasonable opportunity to accept the offer. Additionally, with respect to new section 76C(6)(c), it may be neater if the words "that there shall be disregarded" be deleted and substitute therefor with the word "for". This would make the drafting simpler and neater. Sir, I have chosen to confine my comments principally to the share buy back scheme and I would like the Minister to respond to these comments. But for the comments, I support the Bill. Mr Simon Tay: Mr Speaker, Sir, I think we are in search of lighter regulation to provide more freedom for businesses and companies in Singapore to liberalise without creating an unfair market or a market which people can take advantage of, to do unfair things. In moving this amendment, we realise that we are letting go of some of the institutions of old. We are letting go of Government's close supervision, to some degree, and are deciding to rely on some other institutions more. We are also letting go, among the choice of institutions, of the Court's since the share buy back scheme will reduce the role of restructuring under the Court's supervision.”
“Does it therefore mean that, apart from preference shares, the provision of the new section 76B will be applicable to all classes of ordinary shares, irrespective of whether or not there are further differentiation within those classes of ordinary shares? How would the definition of equal access scheme apply in cases where different classes of ordinary shares have been created? The new section 76C (2) provides, inter alia, that the notice specifying the intention to propose the resolution to authorise an off-market purchase referred to in the earlier subsection must, among other things, determine the maximum price which may be paid for the shares. On a plain reading of the Bill, one wonders how a notice can determine the price of shares. Does it mean that the notice must state how the maximum price of the shares is to be determined? In its present form, the expression does seem a little odd. Sir, I think it would be more accurate to describe the notice as specifying the maximum price of shares rather than determining the maximum price of shares, as is presently stated in the Bill. The same comments apply to new section 76E (2) (b) as well. New section 76C (4) also provides that the authority for an off-market purchase referred to in the section may, from time to time, be varied or revoked by the company in a general meeting. Having provided for such powers, the new provision is, however, unclear as to what happens after those powers have been exercised by the company. Does it mean that everything which has already been done prior to the revocation or variation of the powers is no longer valid to the extent of the variation or revocation? The same comments apply to section 76E (5) as well.”
“The clause provides that the person shall have an interest in the share in which a body has an interest in if, inter alia, the body corporate is accustomed, whether formally or informally, to acting in accordance with the directions of the person concerned. In using the word "informal", one would have much difficulty in applying the provision with precision. In its ordinary meaning, it is conceivable that the management consultant to a company, which habitually acts in accordance with the management consultant's direction, may also have an interest in the shares of the company that the company is deemed to have an interest in. Will the Minister explain if this is the intention of the Government? Additionally, the words "controlling interest" are used to determine if the person has an interest in the body corporate. There is, however, no definition of what the words "controlling interest" mean. Would the Minister clarify what the words "controlling interest" mean, having regard to the use of the proportion of shares as being more than 20% in the proposed section 4A? Does "controlling interest" therefore mean something more than the percentage of voting rights attached to the shares? If it does, will the Minister please explain to this House what these interests are? Clause 5 sets out the new sections 76B to 76G of the Act which relate to the share buy-back scheme. In the new sections, the words "ordinary shares" are used. Ordinary shares in the Act are rather not defined words. Presumably, ordinary shares are used to exclude redeemable preference shares or any preference shares for that matter.”
“So long as the Government continues to promote transparency within the legal framework of our companies, both in the business dealings and the shareholders' structure, the integrity of our company legislation should not be compromised as a result of the introduction of a share buy-back provision. I would, therefore, support the Companies (Amendment) Bill as a matter of policy. Sir, having stated my general support for the Bill, there are, however, a few minor drafting details that I would like to touch on. Firstly, clause 2 of the Bill seeks to amend the definition of "interest in the shares of a company" in section 7(4) to increase the threshold upon which a person is deemed to have an interest in a body corporate from 15% to 20% of the voting power. In the present form, section 7(4) has often caused much confusion. The often asked question is whether in a circular fashion, the section applies to shareholders of a company who is deemed to have an interest in the shares by virtue of a potentially unlimited change of 15% interest. In a way, clause 2 of the Bill seeks to overcome that by making it clear in the notes that the purpose was "to restrict its application to not more than one level". Sir, while I am happy to learn that the Ministry has recognised the need to clarify the application of the present section 7(4), I submit that the draftsman has not gone far enough. In fact, I would say that the proposed provision is still unclear. Rather than restricting the application to just one tier, when read literally, there is a possibility that the clause may apply to more than one tier.”
“As a result, the share price would tend to rise upon a share buy-back announcement. Because of this, I am concerned, as was expressed by several of my colleagues earlier, that the potential for insider dealing may arise. Quite obviously, those with inside information may be tempted to trade on the shares before the buy-back scheme is announced. A curious situation may also arise where the company engaging in share buy-back may be privy to price-sensitive information. For instance, what if the company was working on a major invention which it knows would affect the share value and which it intends to announce after the completion of the share buy-back scheme? Would the Minister say that the company is engaging in insider dealing? Additionally, there is always the possibility of manipulation by unscrupulous managers trying to prop up their share prices due to a market downturn or poor intrinsic value. Alternatively, managers and directors with share option schemes may prop up the value of their options by initiating price buy-back schemes not for the benefit of the company but for their own benefit. The consequent rise in value of the shares will substantially profit these managers. I would like to ask of the Minister whether he would consider managers initiating share buy-back for the purpose of enhancing the value of their stock options as being engaging in acts of market manipulation. Sir, while I have expressed some reservations, it is not to be taken to mean that I do not support the Bill. On balance, I think the benefits of the share buy-back outweigh the risks. At the moment, there are adequate safeguards to deal with this concern.”
“We should also note that the share buy-back results in an indirect transfer of bondholders' wealth to the shareholders. This is applicable especially to companies that use long-term debt as a form of financing. By buying back shares, the company is, in fact, increasing its gearing ratio while reducing the proportion of its financing through equity. Because of the increase in a company's financial risk, the bonds are now riskier. But bondholders are not compensated for the higher risk with higher coupon interest. This would invariably make bond issuing in such an environment less attractive and in the long term, it may impact on our Government's effort to develop the bond market in Singapore. Thirdly, share buy-back schemes increase the risk of triggering the provisions of Rule 33 of the Takeover Code which compels the making of a takeover bid if the party concerned is left with holding 25% or more of the shares and unwittingly acquires shares which are in excess of the relevant threshold. In such an event, the shareholders may not be prepared to mount a takeover bid. To avoid such a possibility, it may be necessary to ask for waiver in advance from the Securities Industry Council or the Minister. Additionally, in the case of listed companies, a shareholder may not by choice become a substantial shareholder in a company but become one as a result of the share buy-back scheme. The consequence of being a substantial shareholder is that his identity would have to be disclosed to the public. Now, Sir, not everyone would like to have their identity disclosed as substantial shareholders in a listed company. Fourthly, in most other jurisdictions, share buy-backs are generally regarded as positive information.”
“Its limitation to 10% of share capital serves to ensure limited reduction each time. Secondly, there is a requirement that shares can only be bought out of the profits of the company. Thirdly, the directors and officers must be satisfied that the company is not insolvent at the time of the purchase of the shares. The Bill says a company is insolvent if (i) it cannot pay its debt as it falls due or (ii) the value of the company's assets is less than the value of its liabilities, including contingent liabilities. If the company fails either of the two tests, it is regarded as insolvent and cannot do a share buy-back scheme. By insisting that the purchase price may only be paid out of the profits of the company, the creditors at least can have the assurance that shareholders cannot simply declare a return of capital to their detriment. Through this, the share buy-back scheme is able to achieve flexibility of capital management with minimal risk of compromising any party's interest. Sir, while I note that the Government has taken measures to ensure that the shareholders and the creditors are protected under the Bill, I do have a number of concerns which I would like to point out. Firstly, by allowing the share buy-back, companies may be encouraged to return surplus capital instead of using the money for high-yielding investment opportunities. The return of surplus capital may be an indication of weakness in the corporation's strategic plan and the return of capital may just serve to exacerbate that weakness. Secondly, by reducing its working capital through the share buy-back programme, the proportion of debt would invariably increase in the company's capital structure. This would increase the company's financial risk.”
“A company may want to buy back its own shares for many reasons. This would include, for instance, a desire to return surplus cash to shareholders so that the capital may be put to better use elsewhere or to increase earnings per share or net assets per share, or to increase the marketability of the company's shares, or perhaps defend the company against possible takeovers. Where the company intends to reduce the capital of the company or the shareholder base of the company, the share buy-back scheme allows the management the additional option to achieve the objective without the necessary inconvenience of the existing arrangements. Sir, share buy-back schemes were introduced much earlier in a number of countries. These countries include, for instance, the United States, United Kingdom, Australia and Hong Kong. The application of share buy-back scheme in these jurisdictions is becoming increasingly widespread these days. In some jurisdictions such as the United States, the shares subject to re-purchase are taken out of circulation but remain in issue. In others, shares which have been re-purchased are cancelled. Whatever the approach, the economic outcome is similar. A reduction in the number of shares in circulation is likely to increase in the value of the remaining shares arising from the interplay of supply and demand factors. Additionally, if the earning potential remains relatively undiminished, the earnings per share will increase and, in theory, that should increase the share price. As far as existing creditors go, the Bill seeks to protect their interest in a number of ways. First, no more than 10% of the shares may be purchased by the company or such other percentages as are allowed by the Minister.”
“This is seen, for instance, in general prohibitions against providing financial assistance in the purchase or acquisition of a company's shares without strictly observing the proper procedures and reduction of capital without getting the court's sanction. These restrictions are generally meant to provide safeguard for the creditors of a company. Sir, does the introduction of share buy-back schemes fly in the face of all that the company laws seek to do, that is, to protect the interest of creditors through the doctrine of maintenance of capital? Sir, I think not. Looking at the overall scheme of the proposed share buy-back provisions under the Bill, one gets the impression that the objective of the Bill is not to return capital at the expense of creditors but to ensure the proper management of a company's capital. At the moment, a company may pay off any paid-up capital by returning that which is in excess of the needs of the company or the company may reduce the paid-up value of the shares in the company and reflect what is left of the capital after it has been reduced by trading losses. To achieve this end, the company would have to go through the relative inconvenience of having to petition to the court to get its approval and the process is subject to the right of the creditors to object to the reduction of capital. Besides reduction of capital does not necessarily reduce the total number of members of the company. What the reduction does is that it uses paid-up capital across the board. In other words, reduction of capital does not necessarily achieve the objective of reducing the absolute number of shareholders in a company. Sir, as proposed, the share buy-back scheme allows a company to manage its capital more effectively.”
“Mr Deputy Speaker, Sir, thank you for allowing me to join in the debate on the Companies (Amendment) Bill. Before I proceed, I would like to declare my interest on the subject matter. I am a practising solicitor and would have in the course of my work to advise clients on the Companies Act, including the amendments. The Bill, apart from taking the opportunity to clarify certain provisions of the Act, is radical in nature as it seeks to introduce share buy-back schemes into our company legislation. Up until now, a general rule in the company law is that a company may not return any assets to its members while it is a going concern, except in the form of dividends paid generally out of profits. As it is commonly understood, when a company is liquidated, the shareholders are the last to get their money back. The creditors will get their payments first before the shareholders get anything. Accordingly, if the shareholders are allowed to get their monies back first, it would reverse the order of payment as it is understood for a company in liquidation, and this would not be fair to the creditors. When a creditor does business with the company, he does so on the faith that the capital shall be applied only for the purpose of business and he has therefore the right to say to the company that the company must keep the capital and not return it to the shareholders. Otherwise, the creditor will not have faith nor confidence to do business with the company and commerce, as we know it, may not have taken off to the extent that we see it today. It is for this reason that the Companies Act has a rather strict regimen to ensure the maintenance of capital in a company.”