Mahathir victor SIAS weighs India options

Singapore's legendary investor forum plans to offer research & corp governance solutions in India

Securities Investors Association (Singapore) or SIAS, the body that famously challenged a move by Malaysian government to freeze shares owned by Singaporean investors successfully, is exploring avenues to start operations in India.

"We are keen to offer our research and corporate governance services in India to help investors understand their investments better. We would like to approach Sebi to see how we can proceed," David Gerald, president and CEO, SIAS told Business Standard in an interview.

SIAS is also keen to work with company owners and issuers in India for 'win-win solutions', wherein it can help them adopt practices that will enable them attract investors from the South East Asian countries.
 

Over the years, SIAS has gained prominence among both investors and companies in the region through its collaborative approach of bringing owners to 'board rooms rather than dragging them to court rooms'. It has also won international recognition having been inducted in OECD roundtable.

"We seek accountability with decorum, work with company as owners not as activists," Gerald said. He was hopeful that SIAS could also learn a lot from the much larger and happening Indian market.

SIAS' entry could liven up the corporate governance space in India. Unlike SIAS, the shareholder and investor associations in India have limited their roles to consultations with the regulator periodically. Though some of them have taken up issues to court, there have not been any major success stories. On the other hand, independent proxy advisory firms such as Institutional Investors Advisory Services, Ingovern and Stakeholders Empowerment Services, which have taken the lead in research and activism in the recent times do not have a shareholder membership.

SIAS' methods are consultative and sees itself as a bridge between investors, company boards and regulators. However if all fails, SIAS has not budged from a fight.  In fact, fifteen years ago, the investors' body was born out of one such fight.  But, it was an epic fight in which a group of investors took on a foreign government and won.

Following the East Asian financial crisis, in September 1998, the Malaysian government under prime minister Mahathir Mohamed froze $4.47 billion worth of shares held by over 172,000 Singaporean investors in what was known as CLOB (Central Limit Order book) market.

Gerald himself had started investing only six months earlier. He and a couple of his lawyer friends had decided to try their luck in the stock market. The trio decided to invest S$5000 each. They gave it to a Singapore broker,  who put the entire money ($15,000) into Malaysian stocks. One was gambling stock and other was a Palm oil stock. The entire money was gone.

"Nine months after Mahathir did that, no one could do anything. He wouldn't talk to the government. He said i would only talk to the investors. But, investors were not organised. A few investors got frightened and surrendered their shares. That's when I put up my hand," Gerald, who himself was born in Malaysia and raised in Sri Lanka before moving to Singapore in late 1950s, recalls.

SIAS was born on 29th May 1999. Gerald's education and practice as a lawyer and his experience in organising group activities in his student years came in handy. Though relatives and friends thought it would be foolish to take on the might of the Malaysian government, Gerald found supporters and initial funding.

Eventually, nearly 50,000 or over a fourth of the affected invested came under SIAS banner.  There was no financial support from government. regulators such as SGX and Monetary Authority of Singapore  offered facts and figures, but remained at arms' length.

"But they let us do whatever we wanted. We had lawyers who advised us pro bono. We had financial advisers pro bono. We organised and became one voice. We took the file to international media, I was regularly on CNN, CNBC, BBC , WSJ and dow jones. I covered all of them.  They were sympathetic to our cause," Gerald often quoted in Singapore media on investor issues said.  With pressure from international institutions such as MSCI and Franklin Templeton, SIAS had its way before its first anniversary.

With the objective achieved, people thought SIAS would be dissolved.

But, Gerald and SIAS had learnt enough during the struggle to keep it going . "In my visits around Singapore I found, many investors did not know why they were investing.  The companies were not stealing money or committing fraud. But they were not willing to be accountable. There was a need to press for opening up."

SIAS took up investor education and started teaching about different instruments, financial planning etc. Besides, taking up specific issues with companies, it also started rating companies based on transparency and governance standards. The body has published a wide range of literature including investors' rights booklets, Code of conduct for shareholders,  how to prepare for meetings and how to behave at meetings...and also  guidelines for chairman of meetings...It frequently holds investors' dialogue sessions with shareholders, owners and management on stage asking questions on corporate actions.

Funds came from two ways. It charged direct annual subscription from members of S$30 per year. Secondly, it has a royalty program, through which listed companies can make SIAS services available for their shareholders.

By 2003, it started giving away the Singapore corporate governance awards that was recognised by listed companies and regulators.

High credibility
Gerald says, the awards have helped improve standards of companies. "We have seen tremendous improvement. They are still evolving. Our award winners have outperformed the Straits Times Index. So, there is a good reason to vie for these awards because there is support from investors."

SIAS has kept up with the times adopting new standards such as OECD principles of corporate governance and modern communication tools.   "We are on the verge of starting a video dissection of the annual report on a video. Let the shareholders follow this analysis on a video."

SIAS' credibility is high that former ministers do not think twice about take up official positions. The immediate past second finance minister is chairman of SIAS now. Gerald is the elected as president together with committee members. SIAS constitution was amended to make him a full time CEO. At the time, they needed somebody with passion. "Money was not much I was making one-tenth of what I could earn as lawyer. But it was the fire in the belly," Gerald says with a smile. 

As he turns 70 soon, Gerald acknowledges that SIAS itself has some succession planning to do. "We have many qualified people. I am sure someone would stand up."

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LOBBYING HARD

• SIAS launched in 1999
• Has over 70,000 members
• Member of OECD roundtable
• Focuses on Investor education, corporate governance
• Prefers to settle issues through 'boardroom'