G.H.Y Culture & Media: More Governance Concerns
By Mak Yuen Teen

On 31 January 2021, I posted an article on this website raising concerns about governance risks of G.H.Y Culture & Media (GHYCM), which listed on the SGX Mainboard in December 2020 (" Governance Risks at G.H.Y. Culture & Media" ). The article can be accessed here: https://governanceforstakeholders.com/2021/01/31/governance-risks-at-g-h-y-culture-media/

On 14 May 2021, GHYCM announced that it has appointed Ms Lian Lee Lee as Group Deputy CEO. Ms Lian is the spouse of Mr John Ho, a substantial shareholder and group advisor of GHYCM. Mr Ho is on SGX&rsquo s directors&rsquo and key officers&rsquo watchlist. This followed an SGX reprimand in October 2011 directed at Scorpio East, Mr Ho and several other individuals. Mr Ho was CEO and executive director at Scorpio East. The reprimand cited several breaches in listing rules. It said that he had &ldquo not demonstrated the qualities expected of directors and management of SGX-listed companies&rdquo and failed to act in the interests of shareholders as a whole. The special auditors&rsquo findings pointed to possible breaches of the law, and SGX said that it would refer the case to the relevant authorities.

The announcement of Ms Lian' s appointment states: " Ms Lian was an executive director of Scorpio East Holdings Ltd. (" Scorpio East" ) from March 2003 to March 2011 and was re-designated as a non-executive director from March 2011 to June 2011. Certain disciplinary actions were taken by SGX-ST against Scorpio East and certain of its directors (which did not include Ms Lian) in October 2011."

The announcement also said: " The members  of the Nominating Committee had (i) reviewed Ms Lian' s curriculum vitae and conducted an interview with Ms Lian (ii) taken into account her experience, expertise and knowledge in the business of media and entertainment, are satisfied that she possesses the relevant experience, expertise, qualification, character and integrity to perform the role as the Deputy Chief Executive Officer of the Group, and (iii) assessed that Mr Lian acts independently and does not act under the direction, control or influence of any party, including Mr John Ho, a substantial shareholder of the Company and is further, not a nominee of any party, including Mr John Ho. The Nominating Committee thus recommended the appointment of Ms Lian as Deputy Chief Executive Officer of the Group to the Board of Directors for approval. The Board of the Company, having reviewed Ms Lian' s curriculum vitae, and taking into consideration the recommendation of the members of the Nominating Committee, is satisfied that she possesses the relevant experience, expertise, qualification, character and integrity to perform the role as the Deputy Chief Executive Officer of the Group" .

How did the Nominating Committee assess that Ms Lian " acts independently and does not act under the direction, control or influence of any party, including Mr John Ho (her spouse)?" Have the nominating committee and board considered and taken steps to put in place procedures, controls and monitoring to ensure that this is the case, both at work and outside of work? Can the nominating committee and board explain what these are?

On page 243 of the prospectus, GHYCM said: " Mr John Ho has provided an undertaking to our Company that he will not, and will not procure any of his nominees, to be appointed as a director or executive officer of any entities in our Group for so long as he is named in the directors' and executive officers' watchlist of the SGX-ST" . It goes on to say: " Our Nominating Committee will also ensure that none of Mr John Ho and/or his nominees will be appointed as a director or executive officer of any entities in our Group for so long as Mr. John Ho is named in the directors' and executive officers' watchlist of the SGX-ST. In the event that any associate of Mr. John Ho proposes to be a Director or Executive Officer of our Company or our Group, our Nominating Committee will assess that such relevant associate possesses the relevant experience, expertise, qualification, character and integrity to perform the proposed role as a Director or Executive Officer and will ensure that an announcement is made on the SGXNET, the web-based platform of the SGX-ST, on the proposed appointment of such relevant associate and our Nominating Committee' s views (including bases), in a timely manner" .

Mr John Ho (Ho Ah Huat) is still on the directors and executive officers watchlist: https://www.sgx.com/regulation/directors-and-executive-officers-watchlist. It would appear that the appointment of his spouse as an executive officer of GHYCM is deemed to be compliant with the undertaking by Mr Ho and the assurance by the Nominating Committee in the prospectus because Ms Lian is not considered as a nominee of Mr Ho, even though she is his spouse. Further, even though Ms Lian is an associate of Mr Ho as an immediate family member, the Nominating Committee is deemed to have complied with the prospectus having assessed that she has the " relevant experience, expertise, qualification, character and integrity" .

Is this in the spirit of the undertaking and assurance given in the prospectus by Mr Ho and the Nominating Committee? Given the appointment of Ms Lian just five months after the listing, was it already the plan that she will be appointed soon after the listing when the company applied to list? Were the statements in page 243 mentioned above written with this in mind?

Ms Lian was an executive director of G.H.Y. Culture & Media (Singapore) Pte. Ltd, a wholly-owned subsidiary of GHYCM, from September 2017 to June 2018 and from November 2019 to March 2020. It appears that she stepped down as a director of the subsidiary as GHYCM was preparing for its listing. If the company had appointed Ms Lian as group deputy CEO when the company applied to list, would SGX have raised any concerns?

Unfortunately, while SGX has some leverage over the appointment of directors and key officers prior to listing, this leverage largely evaporates after a company has been listed.