The Singapore Exchange has reprimanded Jurong Cement (JCL) for making false and misleading statements which relate to the reasons for the resignations of the directors, who are nominees of YTL Cement Berhad, from the board of JCL. The directors on the board at the time of the announcements were Paul Hugentobler, Gerard Letellier, Francis Xavier and Tay Joo Soon.

On Nov 12, JCL had announced that 5 of its directors had resigned following extensive discussions on the need to reduce cost in the company and it was concluded that this should extend to rationalisation of the board. Two of the directors who had resigned were nominees of YTL. YTL was a substantial shareholder of JCL.

On Nov 30, SGX said it received information that the YTL directors who had resigned did not receive any fees or monetary rewards from JCL. The Exchange then sought clarifications from JCL on this matter on the same day.

On Dec 4, JCL stated in its announcement that the YTL directors did not receive any fees. The announcement stated that a more important reason for the resignation was “to address an ongoing conflict of interest issue”. The announcement further stated that “there is also the issue of possible breaches of the Competition Act 2004, whereby the use of information from the board meetings may be used by one of the market participants resulting in an adverse effect on competition in the Singapore market” and “the board of the Company in all of its deliberations ran the constant risk of breaching the Competition Act, by discussing competition sensitive information in the presence of the directors representing a direct competitor, the YTL Group”.

On Feb 18, JCL stated yet again in an announcement, that “the reason stated in the Company’s earlier announcements dated Nov 12 and Dec 4 that five directors of the company had resigned in November 2009 to facilitate cost cutting measures of the company is not wholly applicable in the case of the resignation of the YTL Directors” and that “the company was in no way suggesting that the YTL Directors had either acted in breach of their fiduciary duties or had breached the Competition Act 2004”.

Based on the various announcements made by JCL, SGX is of the view that JCL had on Nov 12 and Nov 13, made false and misleading statements where it cited the need to reduce cost in the company as the reasons for the resignations of the YTL Directors. It later became clear on 4 December 2009 that the YTL directors did not receive any fees and JCL acknowledged the reasons as being ‘not wholly applicable in the case of the resignation of the YTL directors’ on 18 February 2010; and

SGX said JCL also made potentially misleading statements on Dec 4 when the company said that the Board ran the constant risk of breaching the Competition Act. It also said that there was the issue of possible breaches of the Competition Act. This prompted the need for the company to make further clarifications on 18 February 2010.