Singapore court has sentenced a businessman to 15 months’ imprisonment for raising funds from investors in the form of a convertible loan without a prospectus.
District Judge Jasvender Kaur on Monday handed down the jail term to Tay Chee Ming, 54, after a nine-day trial and having found that the director of Brandz Group Pte Ltd had breached the Securities and Futures Act (SFA). The accused had raised S$6 million to S$8 million between 2006 and 2007 from the public in Singapore by signing a convertible loan agreement with each investor.
Through this agreement, investors extended loans to Tay or Brandz in return for contractual rights to convert the loans into equity in the company if it succeeded in listing on the Australian Stock Exchange. For the 25 proceeded charges, 16 different lenders loaned Tay or Brandz a total of S$2.825 million.
None of the investors recovered their money.
Prosecution sought an imprisonment of 18 months – the highest ever for an offence under the section of SFA that Tay had flouted. Deputy Public Prosecutor Kevin Yong said that if Brandz had issued a prospectus, a statement of indebtedness and risk factors would have been provided to potential investors. Investors would have known of the company’s debt level and risk factors, and would be in a position to make a more considered investment decision.
In his plea of mitigation, the accused had asked for a fine in the region of S$20,000 per charge. He claimed that Brandz, whose business was brand communication and advertising in Singapore and the region, had assets of S$11 million and annual revenue of S$9 million at the end of 2005.
The maximum prescribed punishment per charge is a fine of S$150,000 and a two-year imprisonment.
The accused has indicated that he would file an appeal, and he is out on bail pending appeal.
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