City Developments Limited (CDL) witnessed a substantial increase in its shares by more than 4% following the surprising announcement made by executive chairman Kwek Leng Beng regarding his decision to drop the lawsuit against his son, Sherman Kwek, and a group of directors.
The stock surged by 4.25% or S$0.21 to reach S$5.15 by midday, coming close to its intra-day peak of S$5.16, with approximately 3.4 million shares valued at S$17.6 million traded hands, demonstrating a positive market response to the news.
Kwek Leng Beng’s reversal of the legal action against his son was disclosed in a statement released late Wednesday, emphasizing his commitment to continue serving as the executive chairman of CDL while confirming Sherman Kwek’s continuous tenure as the group CEO.
The senior Kwek also affirmed that all current directors would retain their positions on the CDL board, reinforcing stability within the company’s leadership structure. He further underlined unity among the board members, stating that they have reached a consensus to set aside their differences for the collective benefit of the company and its stakeholders.
In a show of resolution to address the recent family discord that emerged into the public domain on February 26, Kwek Leng Beng openly accused his son of orchestrating a boardroom “coup”. A contentious issue at the heart of the conflict revolved around the appointment of two new independent non-executive directors, Jennifer Duong Young and Wong Su-Yen, which Kwek Leng Beng criticized as being hastily executed without the required vetting process through CDL’s nomination committee.
The dispute caused turmoil within the property giant, prompting a trading halt on February 26 as CDL’s shares plummeted over 6% to their lowest point in 16 years upon the resumption of trading on March 3, though they subsequently recovered throughout the week.
Nevertheless, market analysts adjusted their target prices for CDL’s shares in response to the turbulent events, reflecting broader concerns over corporate governance and business stability within the company. The controversy also prompted the Securities Investors Association (Singapore) to question CDL on its board appointments and the role of former advisor Dr. Catherine Wu, whose involvement was cited by Sherman Kwek as a key driver of the public fallout with his father.
This tumultuous episode within CDL’s corporate landscape bears witness to the complexities of familial dynamics within a business setting and underscores the delicate balance that must be maintained to ensure the continuity and success of a company.
The quick resolution and apparent reconciliation between the key stakeholders present a positive outlook for CDL’s future, although the underlying issues that sparked the feud may continue to linger within the company’s internal workings.
