What are the eligibility criteria of private sector candidates for Singapore’s Presidential Election and does George Goh qualify?

SINGAPORE, June 15 — Now that businessman George Goh has thrown his hat into the ring as a potential candidate for the upcoming Presidential Election, attention has turned to the eligibility criteria for candidates.

Singapore’s Constitution sets out fairly detailed criteria for would-be candidates, including some relatively straightforward ones such as requiring the person to be a Singapore citizen who is aged at least 45.

The person must also satisfy the Presidential Elections Commission (PEC) that he or she is “a person of integrity, good character and reputation”.

The Constitution also differentiates, in terms of the eligibility criteria, between candidates with a background in the public sector and those from the private sector.

The other declared candidate, Senior Minister Tharman Shanmugaratnam, is seeking to run under the public service criteria after being a political office holder for over two decades.

As a self-made businessman, Goh, 63, will have to measure up to the private sector criteria to be granted the right to run.

TODAY takes a closer look at those criteria and what experts say about whether Goh is likely to meet them.

What are the private sector criteria?

In 2016, Parliament passed amendments to the Constitution, which included tightening the eligibility criteria for prospective Presidential election candidates from the private sector.

Under the previous requirements that took effect when Singapore introduced the Elected Presidency in 1991, candidates must have served as chairman or chief executive officer (CEO) of a company with at least S$100 million (RM345 million) in paid-up capital.

With the 2016 change, prospective candidates now must have served as the CEO of one company, or be the most senior executive running the firm, for at least three years.

In addition, the company must have at least S$500 million in shareholders’ equity during the person’s most recent three-year period as CEO and have been profitable after tax for the entire time that the candidate served as CEO.

The change in criteria from paid-up capital to shareholders’ equity was because paid-up capital may not provide an accurate measure of a company’s current size, or the value and complexity of its operations.

In particular, it might not reflect the depletion or accumulation of the company’s assets and earnings over time. Using shareholders’ equity, on the other hand, reflects the company’s current recorded worth.

The increase in the threshold amount is to account for Singapore’s economic growth since 1991 and the increased scale and complexity of the President’s responsibilities.

On what basis is George Goh seeking to run for president and does he make the cut?

With more stringent eligibility criteria in place, it raises the question whether Goh fulfils them.

The question has drawn even closer attention after Goh’s assertion that the value of his companies has “a collective market capitalisation value of S$3.15 billion”.

He was referring to the 100-odd companies he has owned over the last four decades, including five he listed on the stock exchanges of Singapore and the United Kingdom and another two which he acquired which were also publicly listed.

Corporate governance expert Mak Yuen Teen, a professor (practice) of accounting at the National University of Singapore (NUS) Business School, said that a company’s market capitalisation value refers to the total value of its shares of stock on the market.

It is a common measure of the value of a listed company.

Shareholders’ equity is different from market capitalisation value, and it refers to a company’s net accumulated profits, contributions from shareholders, and other reserves, said Mak.

Unlike market capitalisation, shareholders’ equity does not fluctuate based on the stock price.

TODAY’s checks of publicly available information at the Accounting and Corporate Regulatory Authority (Acra) found that Goh has a total of 82 current and past positions, including those of director, CEO and shareholder.

Out of these, 25 are formerly-held positions, while 57 are current positions.

Two companies out of the 82 are publicly listed on the Singapore Exchange.

The first company is footwear, sports and fashion retailer Ossia International, where he is currently executive chairman and co-founder.

According to its financial statements for financial year ending in March 2023, it has S$54.9 million in shareholders’ equity.

The second company is Hatten Land, which has a total of RM328.9 million, or about S$95.5 million, in shareholders’ equity, as of the third quarter of last year.

Acra records show that he was a director of the real estate developer from March 1993 to June 2000, and from May 2002 to Jan 2017.

Neither of these companies meets the S$500 million minimum shareholders’ equity requirement. Even their combined total does not meet the criterion.

Associate Professor of law at the Singapore Management University Eugene Tan said that a prospective candidate cannot add the total shareholders’ equity across more than one company in order to meet the S$500 million threshold spelt out under clause 4(a) of Article 19 in the Constitution.

“Based on Goh’s own press statement and public remarks, it would appear that he does not automatically qualify under the private sector service requirement,” Tan said.

But is there another way to qualify?

Experts said that clause 4(b) of Article 19 in the Constitution provides some discretion for the PEC to assess a candidate’s suitability to run for President under what is called the “deliberative track”.

Under this track or clause, a prospective candidate must have served for at least three years in a private sector organisation.

The PEC must be satisfied that the prospective candidate has the experience and ability that is comparable to that of someone who has served as CEO of a profitable company with at least S$500 million in shareholders’ equity for three years.

This will be assessed based on the nature of the prospective candidate’s office, the size and complexity of the private sector organisation and their performance in the office, among other factors.

In addition, the PEC must also be satisfied that the person has the experience and ability to effectively carry out the functions and duties of the office of President.

However, the experts said that clause 4(b) of Article 19 in the Constitution can be open to different interpretations and it is unclear if a person’s leadership across different companies will be taken into consideration.

“Goh is probably going to rely on the private sector ‘deliberative track’ to secure eligibility,” Tan said.

“On the deliberative track, Goh is requesting the PEC to exercise its discretion and grant him a certificate of eligibility. This will hinge on whether the PEC is satisfied in the manner as described above.

“So, there is uncertainty if he will be on the ballot, until the PEC decides.”

However, constitutional law expert Kevin Tan disagreed that the criteria did not allow prospective candidates to submit the total shareholders’ equity across more than one company, of which they have been the CEO or its most senior executive.

Referring to the same clause 4(b), the NUS adjunct professor said: “The Constitution doesn’t require you to focus on one company alone.

“If you look at Article 19(4)(b), Goh can put together a group of companies, and if the shareholders’ equity of all of them combined meets the S$500 million, then he would qualify,” he said.

“This is assuming that he has been the CEO of the companies for at least three years.”

He added: “The phraseology is complex. If the PEC is satisfied that the agglomeration of companies under Mr Goh’s management is equivalent in shareholder value to S$500 million, and he satisfied the PEC that he is a person of good character, he will be eligible to run.”

NUS law professor Thio Li-Ann also said that the PEC has “some discretion” to assess Goh’s eligibility.

She added: “The key question is whether a candidate has the experience to assess public finances and the prudence to assess the wisdom of drawing down on past reserves.

“It would appear from first glance that Goh has the requisite financial expertise and experience for this aspect of the office.”

Thio also said that the companies that Goh runs “seem to go beyond the S$500 million mark”.

This makes him different from the previous presidential hopefuls — Second Chance Properties CEO Mohamed Salleh Marican and marine services provider Bourbon Offshore Asia Pacific chairman Farid Khan — who were rejected from contesting in the 2017 Presidential Election.

“With Marican and Farid, the PEC took a very literalist approach — rejecting them on the basis that their companies were valued under S$500 million in shareholders’ equity,” she said.

Goh’s exact role and duration in the companies which he said he owned is also another matter for consideration, said the experts.

Tan said Mr Goh would have to prove that he is the CEO or the top executive running those companies, regardless of the title.

“We don’t have enough information to make the assessment whether Mr Goh served as the CEO or the most senior executive of these companies, and served these roles for at least three years,” said Assoc Prof Tan.

“The main issue is that he hasn’t unequivocally shown that he served as the top executive of a company that is valued at S$500 million shareholder equity. In other words, if we assume he is the top executive, we don’t know if the company in question is profitable and worth S$500 million in shareholder equity.” — TODAY