Minister for Culture, Community and Youth Edwin Tong addressed recent concerns regarding the corporatisation of NTUC Income in 2022 amidst the ongoing debate over the sale of a majority stake in the insurance company to German MNC Allianz Europe B.V.

In a Facebook post on Sunday, Mr Tong emphasized that the Registry of Co-operative Societies (RCS) under the Ministry of Culture, Community and Youth (MCCY) is satisfied that due process was followed during the corporatisation exercise.

Mr Tong’s statement came as a response to the criticisms raised by former NTUC Income CEO, Mr Tan Suee Chieh, who had expressed concerns about the corporatisation process and subsequent sale to Allianz.

In his open letter to the Monetary Authority of Singapore (MAS), Mr Tan highlighted issues such as the dilution of minority shareholders’ stakes and the commitment by NTUC Enterprise to maintain a majority shareholding post-corporatisation.

In his Facebook post, Mr Tong reiterated the importance of financial sustainability for co-operatives to effectively serve their social missions.

He noted that the MCCY oversees the governance and functions of co-operatives, which play a crucial role in building a caring and inclusive community in Singapore.

“Questions have recently surfaced about the corporatisation of Income in 2022. This matter was raised previously to the Registry of Co-operative Societies (RCS) under MCCY. The RCS had then advised all parties that this was a matter for NTUC Income and its members to collectively determine and resolve. What was important was the need to be transparent about the arrangements and to allow Income’s members to decide whether or not to proceed with corporatisation,” Mr Tong stated.

He emphasized that NTUC Income had conducted consultations with its members, provided necessary disclosures, and given ample opportunities for members to seek clarification on the corporatisation plans. Ultimately, members voted overwhelmingly in favour of corporatisation.

“From a regulatory perspective, therefore, RCS is satisfied that due process was followed in that corporatisation exercise,” Mr Tong concluded.

Missing Commitment on Majority Shares

Mr Tong’s statement, while affirming the regulatory approval of the corporatisation process, did not address the specific commitment made by NTUC Enterprise to hold a majority shareholding post-corporatisation.

In the NTUC Income’s 2022 AGM, it was said:

“Addressing the first concern, the CEO [Andrew Yeo] said that Income will remain a social enterprise within NTUC Enterprise’s network of organisations, even after it becomes a corporate entity. Post-corporatisation, NTUC Enterprise will continue to be the majority shareholder of the new company, Income Insurance Limited.”

This commitment was a crucial assurance provided to NTUC Income’s members and stakeholders to safeguard the cooperative’s social mission.

The promise that NTUC Enterprise would retain a majority shareholding was highlighted by Mr Tan in his objections to the sale of the majority stake to Allianz. He argued that the sale contradicted this assurance, raising concerns about the future prioritization of NTUC Income’s social mission over commercial interests.

Germany’s Allianz announced on 17 July that it planned to buy a majority stake in Income Insurance for about US$1.6 billion. Allianz offered S$40.58 per share, valuing the transaction at S$2.2 billion (US$1.66 billion) for a 51% stake in Income Insurance.

NTUC Enterprise currently holds a 72.8% stake in Income and will remain a substantial shareholder if the sale proceeds.

The joint statement from NTUC Enterprise and Income Insurance aimed to rebut Mr Tan’s claims by emphasizing the necessity of capital injections at par value and asserting their continued commitment to NTUC Income’s social mission. However, the statement did not fully address Mr Tan’s core concern of the dilution of minority shareholders’ stakes and the assurance of maintaining majority ownership.

Mr Tong noted that several parliamentary questions have been raised regarding the proposed deal between Income and Allianz. He assured that these questions would be addressed when Parliament meets later this week, providing an opportunity for further clarification and discussion on the matter.