Richard Seow’s voting agreement with Fortis Healthcare Ltd denies him independent director status
The nominating committee of Singapore-based healthcare provider Parkway Holdings has said vice-chairman Richard Seow cannot be considered as an independent director due to his voting agreement with Parkway’s largest shareholder, Fortis Healthcare Ltd.
The decision was taken by four of the six-member nominating committee. Seow, himself a member of the committee, was not part of the meeting. Fortis’ nominee, Sunil Godhwani, was also absent.
Three Parkway board members, its chief executive officer, executive vice-chairman and vice-chairman, who have a voting agreement with Fortis, had earlier argued the agreement did not prevent them from taking independent decisions in the interest of Parkway.
In a response to the Singapore Exchange (SGX) Securities Trading Ltd today, the nominating committee chairman Chang See Hiang said the committee voted 3:1 against Seow. The SGX Securities Trading wanted to know if the disclosures of the directors about the voting agreement they have with Fortis will come in the way of their decision making as independent directors.
The three executives have said they will only vote in favour of Fortis if the decision was in the Indian’s company’s interest. In all other cases, interests of Parkway will take precedence. Seow and the others had a similar arrangement with TPG, whose stake was acquired by Fortis.
The committee said they were not aware of the dealings the directors had with Fortis until it was publicly disclosed after Malaysian government’s investment firm Khazanah Nasional Berhad – the second biggest stakeholder in Parkway – announced a partial offer to acquire a majority stake in Parkway. Fortis has come up with a counter-offer and has expressed willingness to pick up all shares that it does not own for a marginally higher price.
Following the Khazanah offer, Morgan Stanley, the independent advisor to Parkway’s directors, in its report had said that of the 17 directors of the company, 12 directors, including the three persons who made their clarifications to SGX, have not been considered as independent directors due to their stated voting positions.
Morgan Stanley had also disclosed that the agreement Fortis had with the three directors included voting agreements, and economic benefits if Fortis sold more than 10 per cent of the shares it holds in Parkway during the agreement period. In return, the directors had agreed not to dispose or transfer any part of their shareholding during the term of agreement.
Based on the disclosure, Singapore’s security watchdog – Securities Exchange Commission – had exempted these directors from making a recommendation on the partial stake purchase offer made by Khazanah.
After the disclosure, the three directors had said their shareholding or voting agreements will not prevent them from taking independent decisions in the best interests of Parkway shareholders.
