Discussion Questions

1. In cases of companies where there are controlling shareholders, explain why the interest of
controlling and minority shareholders may diverge, using the CK Tang case as an example.

Judging from the example of case C. K. Tang, sometimes there is a misuse of control from majority
shareholder against minority shareholders. This can happen because there are personal political
interests of some of the majority shareholders (agents) that are detrimental minority shareholders
(principal). In the case of C.K. Tang, majority shareholder represented by the board of directors, decided
to privatize the company with how to buy all existing shares (buyout). Controversy arises when there is
one asset company, namely Tangs Plaza, which is considered to be too low by some holders of minority
stock. This of course is detrimental to the shareholders. From the results of the analysis PwC, Tangs
Plaza is worth $ 340 million. This price is far below the price of other buildings surrounding.

Which is also considered by minority shareholders is potential the rebuilding of Tangs Plaza is predicted
to reach a very high value. However, the legal board of directors said that there was no need for an
assessment of development return assets in the future. This of course caused disappointment for the
shareholder's minority stock.

2. Should independent directors be primarily concerned with the interests of the minority shareholders?

Interests between majority shareholders and minority shareholders in a limited liability company often
conflict with each other. Minority shareholders are not infrequently used only as a complement in a
company. In the decision-making mechanism in the company can be ascertained minority shareholders
will always lose compared to majority shareholders, because the decision-making pattern is based on
the percentage of shares owned. Situation this will be even worse if the majority of shareholders use the
opportunity this is to control the company based on its interests and not heed it the interests of
minority shareholders. In this case, the independent director has a role that is very important to protect
and be accountable to shareholders minority. To the shareholders, the independent director must
provide transparency concerning disclosure of company performance and upholding justice in resolving
conflicts that may occur.

3. Evaluate the independence of C.K. Tang’s board during the third privatization attempt. Do you think
this affected the actions of the board during the privatization process?

There is an issue that the executive C.K. Tangs are not independent, because of the CEO this company,
Foo Tiang Sooi has a personal relationship with Tang Wee Sung, the holder majority share of this
company. Foo worked for Tang from 1999 to 2006 and both are friends at school. On the other hand Foo
added that he too has a relationship with the shareholders who present the facts. Had been it is proven
that the two facts are not relevant. So in our opinion independence, C.K Tangs's executive ranks on the
third attempt of privatization were not influenced by the second that fact. The legal consultant and chief
shareholder also decided to refuse the objection. So that the voting is still being done and proven
through company privatization agreement with 96.25% of the vote.
4. Do you believe that the basis of valuation was fair? Explain.

In our opinion, the basis for valuing Tangs Plaza property is unfair for shareholders minority. That is
because, property valuation reports have considered value Tang Plaza's potential redevelopment makes
the property value to $ 340 far from other properties in the same environment and also quite far from
the results of the valuation of the property conducted by a minority shareholder of $ 400. Council legal
counsel, Yeo Wee Kiong, also said that putting the valuation of rebuilding the property in the report
assessment is not required by law. Of course the basis for the assessment will be detrimental to minority
shareholders.

5. With regards to the privatization episode, suggest improvements that would help protect minority
shareholders in the future.

According to the Organization for Economic Co-operation and Development (OEDC) there are five
important elements in Corporate Governance, namely transparency, independence, accountability,
responsibility and fairness. Corporate Governance Principles developed by OEDC intends to help
members and non-members in the effort to assess and improve the legal, institutional and regulatory
framework for Corporate Governance in their countries, and provide instructions and proposals for
capital markets, investors, corporations, and other parties who have a role in developing GCG (Good
Corporate Governance).

One of the principles according to the OECD cited by Iman S. Tunggal and Amin W. Tunggal (2002: 9),
which relates to the majority shareholder is (equitable treatment of shareholders). Principle fairness
(equality) is the equality of treatment of companies against parties who interested in the criteria and
proportions that should be. In this case it is emphasized so that the parties concerned with the company
are protected from fraud as well as abuse of authority by insiders. This principle regulates that a
company must establish company rules to be able to protect the interests rather than shareholders,
especially minority shareholders, and this principle also requires the establishment of policies so that
they are protected from fraud committed by insiders or originating from within (self-dealing).

Therefore the roles and responsibilities of commissioners and management are very necessary and this
principle also puts forward the fairness in any information that is material and full disclosure. Fairness
includes the clarity of rights shareholders to protect the interests of shareholders. The company's
performance will be more stable because shareholders know in detail all company information, both
regarding the GMS (General Management System), the Board of Commissioners and Directors, the
company's capital structure, dividend Policy Company, and others. Therefore, to protect minority
shareholders in the future ahead, companies must apply the principles of corporate governance
properly, especially fairness. The company will always try to improve and evaluate performance, thus
investors will not hesitate to invest their capital and can take the necessary attitude, especially for
minority shareholders.
6. C.K. Tang used three different privatization methods. Explain how these different methods work and
the pros and cons of these different methods from the viewpoints of the shareholder(s) wanting to take
a company private versus minority shareholders who may prefer that the company remain listed.

C.K. Tang used three different methods of privatization, namely:

1. Efforts to privatize the first business method: Scheme of Arrangement

In the first privatization attempt, C.K Tang used a regulatory scheme. At the date of October 29, 2003,
Tang Wee Sung was offered a minority shareholder of S $ 0.42 per share. This is a premium price of
around 35% above the closing average price for 5 last trading days. This price also means a 19.2%
discount on tangible net assets company on September 30, 2002. However, there are cons of
privatization efforts first of these, namely the resolution of the company failed to be achieved. As a
shareholder want to take a private company (privatization), they feel that price offered too low and
want more information about prospects the company they are going to privatize.

2. Efforts to privatize the second business method: Unconditional Cash Offer

In the second privatization effort, C.K Tang used an unconditional cash offer In December 2006, Tang
Wee Sung and his sister Tang Wee Kit, offered holders shares of S $ 0.65 per share through Kerith
Holding. This second attempt is in the form of an offer cash without conditions. S $ 0.65 share offers
16.1% price premium to the price C.K. cover Tang at that time. It also represents a 9.4% premium for the
net asset value company, based on annual reports for the financial year ending March 31 2006.

The cons that occur in the second privatization attempt is when the deadline for bids ended, inadequate
acceptance was received. The reason, they undervalue Tangs Plaza commercial property. As a result, the
company continues to be listed on SGX (Singapore Exchange Commerce, Stock Market, Business). On
July 15, 2008, at the Annual General Meeting, minority shareholders question the board about the
company's financial losses, as well as plans for company registration of SGX. The Council states that
privatization exercises are solely the decision of the majority shareholder. The council said it owed a lien
to shareholders, which is protecting the company's business. An attempt to vote against standard
resolutions, such as advances for payment of directors' fees being refused, because majority ownership
of the Tang family.

3. Efforts to privatize the third business method: Voluntary Delisting

In the third privatization effort, C.K Tang used voluntary delisting. The Tang brothers made their third
attempt at privatization through the holding investment method, Tang Unity Three, which submitted a
delisting proposal to the company. Other shareholders offered S $ 0.83 per share, representing a 22%
premium and 21% discount for net assets as at 31 December 2008. The Board recommends that
minority shareholders accept the offer, based on an evaluation of the offer provided by PwC.
The counter that occurred during the third privatization effort was at the General Meeting outside
Ordinary held on July 31, 2009, minority shareholders questioned if the offer is reasonable, given that
the stock has been closed at the price above offered. Even so, the board still recommends these shares.
Though on Previous statement, Tangs said that the offer of privatization was for allows shareholders to
monetize the value of their investments at prices the premium exceeds the historical trading price.

As a result of the emergence of this counter, shareholders denounced the directors for failing to clarify
with Tangs about the rebuilding plan for Tangs Plaza after privatization. They expressed their
disappointment with the independent director, said that they did not analyze the issue enough. Doubt
increases regarding the independence and neutrality of the company's CEO at the time, Foo Tiang Sooi,
because of him personally related to Tang Wee Sung. However, he rejects this fact as a matter related.

Other shareholders called for a motion of no confidence in the chairman of the board. After consulted
with legal advisors, the council rejected the motion, with the chairman saying that the action was an
attempt to derail the meeting. As shareholders, they tried to investigate further, but the chairman had
called for the voice taken. Resolution to privatize the company was passed with 96.25% of the votes
support the privatization proposal.