GMS is concerned about Origin Sin.................. or should it be Original Sin?
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Origin SIN of NTUC Income saga
NTUC Income has become a private corporation in 2023 and it should have its full rights as a private profit oriented business entity.
Apart from following the rule and meeting all the regulatory obligations, it is free to decide its own fate and operation needs.
Just like other companies, both private and listed ones, it could carry out capital reduction as it deems fit, as long as it meets all regulatory requirements.
Corporate raiding is legitimate although it may be regarded as "unethical" or "immoral" by some people when companies were broken up, workers retrenched while the capitalistic raiders just sold off all valuable assets to make big bucks.
NTUC Income and Allianz, both private business entities, are free to to strike any deals about stripping NTUC Income's assets and distributing them to the shareholders.
The only problem arises is MCCY has made an exemption for Income which basically given Income a HUGE amount of $2B which was supposed to be transferred to public accounts without formal legal binding terms and conditions except some "promise" made by Income to spend $100m over 10 years aka $10million per year for social cause, apart from the promise of continue to pursue its "social mission".
For Income to claim that nothing will change fundamentally in its social mission except that it will be a private corporation instead of a co-operative is ingeniously misleading.
In terms of shareholding, there is fundamental difference. $2B surplus in the original Co-operative DOES NOT belong to the shareholders and these monies cannot be distributed or allocated to all shareholders. These surplus $2B are just in custody of the co-opt while the share price for the shareholders stay put at par value.
This is why when there is a liquidation of the co-opt, these surplus money are supposed to be transferred to public accounts for further social causes instead of being distributed to shareholders.
By exemption of such transfer of $2B by Income to public accounts when it converted into a corporation, it changes the nature of ownership of this $2B aka now these $2B are technically transfered and owned by the shareholders!
Once Income relinquished its "Co-opt" status, it will no longer be binded by the rules and regulations of MCCY or the laws embedded for cooperatives.
It would be utterly naive for MCCY to think that it could make Income to abide by its rules and regulations of cooperative when Income is no longer one!
What MCCY should have done is to turn this $2B surplus into perpetual loans to Income with certain interests it could utilize for social cause. In such way, this $2B will not be regarded as assets owned by the shareholders which will inflat their share value but instead become just a loan liability.
By doing so, no matter who take over Income, it will be obliged to pay interests for this $2B loan instead of having the rights to strip it off and redistribute these money to themselves as shareholders!
Thus, in my view, the Origin Sin of this whole NTUC Income saga is the Grave mistake made by MCCY to grant such exemption to Income when it did the conversion!
$2B is not a small amount of money. $2 billions is equals to 2000 millions! Requesting Income to use $10million per year for social cause amount to a mere 0.5% of 2000 millions! Not even 1%!
Whoever made the decision for such exemption should take full responsibility of such mistake.