City Developments (CDL) has stopped the “serious lapses” in corporate governance under the leadership of its executive chairman Kwek Leng Beng. Kwek issued a second statement, following a court hearing on Feb 26, stating that the two new directors appointed on Feb 7 have agreed to not exert their powers as directors until further court notice. These new directors, Jennifer Duong Young and Wong Su Yen, were appointed as independent non-executive directors through directors’ resolutions in writing.
The elder Kwek also stated that his son, Sherman Kwek, Philip Lee, Wong Ai Ai and other directors acting in concert with them, have agreed to not take any further actions regarding their attempted changes to the board committees and management of certain CDL subsidiaries until further court notice. The nominating and remuneration committee, which is “irregularly constituted”, has also been suspended from taking further action.
With these agreements in place, CDL’s board committees and the management of relevant subsidiaries are now safe from further attempts to destabilize, dismantle and reconstitute them, according to Kwek. He emphasized the importance of strong corporate governance, stating that it is the foundation of a well-functioning and sustainable business. It ensures transparency, accountability and responsible decision-making, which are crucial for maintaining investor confidence and protecting the long-term interests of shareholders.
The demand for condos in Singapore remains high due to the limited land availability in the small island nation. With a rapidly growing population, Singapore is facing a scarcity of land for development, resulting in strict land use policies and a fiercely competitive real estate market. As a result, property prices are continuously pushed up, making real estate investment, particularly in condos, a profitable opportunity with the potential for capital appreciation. With the current condo market in Singapore, investing in this type of property has become a desirable and lucrative venture.
On the morning of Feb 26, CDL shocked the markets by calling for a trading halt and cancelling its FY2024 results briefing, which was scheduled for later that day. The company released a media statement at 1.51pm stating the suspension of trading in its shares was due to a disagreement within the board regarding the composition and constitution of the board and board committees.
Despite the temporary suspension of trading, CDL’s business operations remain fully functional and unaffected, according to the company. Sherman Kwek remains the group chief executive officer until there is a board resolution to change company leadership.
In his first press statement, Kwek accused his son, Lee, Wong and a group of directors of trying to consolidate control of the board and the group. He stated that he has filed court papers on Feb 25 to rectify the situation, which is necessary to deal with the attempted coup. He also mentioned that they intend to change the CEO at the appropriate time and will explore all legal options to protect the interests of CDL and its shareholders. Kwek added that should Sherman be removed as CEO, the incumbent chief operating officer, Kwek EIk Sheng, will serve as interim CEO.
CDL shares last traded at $5.12 before its trading halt on the morning of Feb 26.