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Monetary Authority Of Singapore: First Civil Penalty Enforcement Action For Failure To Disclose Shareholding Interests

Date 17/01/2020

The Monetary Authority of Singapore (MAS) has imposed a civil penalty of $200,000 on Mr Lim Soon Fang for not disclosing changes in, and providing false information regarding his shareholding in Asia-Pacific Strategic Investments Limited (ASIL) [1] . This is the first civil penalty action by MAS for breaches of shareholding disclosure requirements under Part VII of the Securities and Futures Act (SFA) since the civil penalty regime was extended to these contraventions in November 2012.

2   Ms Loo Siew Yee, Assistant Managing Director (Policy, Payments & Financial Crime), MAS, said, “It is important for substantial shareholders to make timely and accurate disclosure of their interests in listed companies. This enables investors to be aware of changes in the control of a company and make informed decisions when trading in the company’s shares. MAS will take appropriate action against any person who disregards these disclosure obligations.”

3   Mr Lim became a substantial shareholder of ASIL in October 2013 [2] . Between October 2013 and October 2014, Mr Lim traded actively in ASIL shares, resulting in changes in his interests in the company that were required to be disclosed under the SFA. His trades had on multiple occasions also led to him ceasing to be or becoming a substantial shareholder of ASIL, which are events that must be disclosed. During this period, Mr Lim contravened:

(i) section 135 of the SFA for failing to notify ASIL that he had become a substantial shareholder of the company on four occasions;

(ii) section 136(1) of the SFA for failing to notify ASIL of changes in his interests in the company on 32 occasions; and

(iii) section 137 of the SFA for failing to notify ASIL that he had ceased to be a substantial shareholder of the company on five occasions.

4   Mr Lim also provided false information to ASIL regarding his transaction volume in ASIL shares and his shareholding in the company on three occasions.

5   Mr Lim has admitted that he had been reckless in breaching his disclosure obligations under the SFA and in furnishing false information regarding his shareholding in ASIL to the company.  He has paid a civil penalty of $200,000 to MAS.

***

Additional information

(A) The civil penalty regime

(i) A civil penalty action is not a criminal action and does not attract criminal sanctions. The civil penalty regime, designed to complement criminal sanctions and provide a nuanced approach to combat market misconduct, became operational at the beginning of 2004. The regime was expanded to include disclosure of interest breaches under Part VII of the SFA in November 2012 to allow MAS to take civil penalty action against flagrant breaches of the disclosure requirements.
(ii) Under section 137ZD of the SFA, whenever it appears to MAS that any person has intentionally or recklessly, contravened any disclosure obligations under Part VII of the SFA, or in purported compliance with these obligations, intentionally or recklessly furnished false or misleading information, MAS may, with the consent of the Public Prosecutor, bring an action in a court against the person to seek an order for a civil penalty in respect of that act. If the court is satisfied on a balance of probabilities, that the person has contravened a provision in this Part concerning his disclosure obligations, the court may make an order against him for the payment of a civil penalty of a sum not less than $50,000 and not more than $2 million.
(iii) Notwithstanding the above, MAS may also enter into an agreement with the person to pay, with or without admission of liability, a civil penalty for a contravention of any disclosure obligations under Part VII of the SFA.

(B) Duty of substantial shareholder to notify corporation of his interests under section 135 of the SFA

Section 135 of the SFA provides that a person who is or (if he has ceased to be one) had been a substantial shareholder in a corporation shall give notice in writing to the corporation of particulars of the voting shares in the corporation in which he has or had an interest(s) and the nature and extent of that interest(s). The notice shall be given within two business days after the person becomes aware that he is or (if he has ceased to be one) had been a substantial shareholder.

(C) Duty of substantial shareholder to notify corporation of change in interests under section 136(1) of the SFA

Section 136(1) of the SFA provides that where there is a change in the percentage level of the interest or interests of a substantial shareholder in a corporation in voting shares in the corporation, the substantial shareholder shall give notice in writing to the corporation within two business days after he becomes aware of the change.

(D) Duty of person who ceases to be substantial shareholder to notify corporation under section 137 of the SFA

Section 137 of the SFA provides that a person who ceases to be a substantial shareholder in a corporation shall give notice in writing to the corporation within two business days after he becomes aware that he has ceased to be a substantial shareholder.

(E) Furnishing false information

Section 137ZD(1)(b) of the SFA provides that whenever it appears to MAS that any person has in purported compliance with section 136 of the SFA, furnished, announced or disseminated any information which he knows is false or misleading in a material particular or is reckless as to whether it is, MAS may, with the consent of the Public Prosecutor, bring an action in a court against the person to seek an order for a civil penalty in respect of that act.

  1. [1] ASIL is a company listed on the Singapore Exchange Securities Trading Limited.
  1. [2] A substantial shareholder is a person who owns 5% or more of the voting shares of a company.