Wednesday, January 18, 2012

Singapore Exchange Withdraws Suit against China Sky

The Singapore Exchange (SGX) has dropped its suit against China Sky Chemical Fibre and four of its Chinese directors in a closely watched case since late last year.
SGX’s suit sought to compel the company to comply with the exchange’s directive to appoint a special auditor under the listing rules.
While the High Court hearing was originally scheduled for Monday, SGX issued a brief statement late last night saying it has withdrawn the suit.
A separate SGX statement on Monday said the exchange’s lawyers and China Sky’s lawyer met the same day, with the latter seeking further instructions from his client in light of the company’s earlier announcement that it would “continue to communicate with SGX to resolve the impasse expediently”.
The case would have been the first of its kind for SGX, if the exchange had proceeded with the suit to enforce its listing rules after China Sky ignored its deadline to appoint a special auditor.
China Sky’s shares have been suspended from trading since November 17 last year.
“This saga has exposed structural issues that SGX may have in the sense that shareholders based in Singapore might have limited protection from the existing legal framework. This is something similar to a product that is sold without a warranty,” Tan Han Meng, a DMG & Partners analyst, was quoted by Reuters as saying.
The SGX directive earlier sought to address various issues pertaining to interested party transactions between the company and the audit committee chairman, the aborted acquisition and development of land in China, and repair and maintenance costs.

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