Investor questions rationale of extending suspension of certain stocks in a continuous suspension

“The delisting process of a publicly traded company often comes with challenges, particularly when minority shareholders refuse to tender their shares. In cases where a delisting attempt fails due to insufficient acceptances, an alternative strategy may emerge,” says investor Ong Chin Woo. He terms this move "continuous suspension of trading". 

For those who have followed the Great Eastern Holdings G07 privatisation, Ong is a minority investor of Great Eastern Holdings and a vocal advocate for minority shareholders; and he isn’t the first investor to question the extension of the suspension of Great Eastern.

Investors, including investor relations personnel of listed companies, analysts and retail investors are asking how Great Eastern Holdings is able to get three extensions to its suspension. The stock has been suspended since July 15, 2024.

Its free float dropped below 10% on July 12, 2024 following a privatisation offer by Oversea-Chinese Banking Corporation (OCBC).

All three extensions are compliant with regulations or have been approved by the Singapore Exchange S68.

On Jan 24, Great Eastern Holdings announced that the Singapore Exchange “has no objection in granting the Company a further extension until 25 May 2025 to comply with the requirements of the Listing Manual”.

According to Ong, the psychological toll of continuous suspension following a failed delisting attempt can be “marked by uncertainty, frustration, and helplessness, leading to fatigue, and ultimately compelling shareholders to sell their shares at an unfavourable price to the controlling party”. 

“Without a functioning market, valuation becomes ambiguous, and shareholders are left at the mercy of the offeror. The fear of indefinite illiquidity can pressure many investors to capitulate, playing directly into the hands of the offeror,” Ong continues.

Based on the Singapore Code on Takeovers and Mergers, shareholders who accept a delisting offer that was not deemed "fair and reasonable" are not retrospectively entitled to a higher price if the offeror raises the price after the stipulated 6-month period following the close of the failed offer. 

“While Singapore’s regulatory framework provides certain safeguards for minority shareholders, recourse remains limited in situations involving continuous suspension. Minority shareholders should remain vigilant and advocate for stronger safeguards,” Ong suggests.

The Edge Singapore has reached out to OCBC for comment.