|
Mr Yap Koon Hong
Forum Editor
The Straits Times
Dear Mr Yap
SGX Listing Rules Aim to Protect Investors
We refer to the Straits Times letter, “Why SGX should review its rules”, by Mr Mak Yuen Teen, on 26 June 2012.
As a market operator, SGX sets high admission standards and listing requirements. As with all other international exchanges, SGX has the right to delist companies that are unable or unwilling to meet these requirements. This is necessary to maintain the quality and standards of listed companies in the market. In administering these rules, SGX aims to protect shareholders’ interests by according these companies a reasonable period of time to be in compliance with listing standards. For example, watch list companies have 2 years to exit the watch list and are required to regularly keep investors updated and informed during this period.
In 2007, SGX introduced the requirement for companies and controlling shareholders to make an exit offer to shareholders when the company is involuntarily delisted, in order to raise the level of investor protection. This establishes a benchmark for how listed companies and controlling shareholders conduct themselves in such situations. Without the requirement for an exit offer, there is no expectation for companies and controlling shareholders to provide an exit alternative, which is the position adopted by most jurisdictions.
We recognise that there are practical limitations to making an exit offer when the companies are insolvent and the controlling shareholders are constrained by their financial situation to make an exit offer acceptable to shareholders. But without the exit offer provision and efforts to administer the requirement, there may be no exit offers forthcoming.
There has been a total of 19 involuntary delistings since January 2010. Of the 12 companies that did not make an exit offer, 11 were insolvent. The boards of these insolvent companies have disclosed their situations to their respective shareholders. This may also explain the absence of external offers for the company. Of the remaining 7 companies which made exit offers, 3 were rejected by shareholders.
SGX will continue to review its listing rules, including the rule on exit offer, having regard to the need to balance the objectives of maintaining market quality, benchmarking against international standards and investor protection.
We would appreciate it if the Straits Times could publish our reply. Please feel free to contact me or my colleague from Corporate Communications, Joan Lew, at Tel: 6236 8658 if you need further clarification.
Thank you.
Mohamed Nasser Ismail
Head of Issuer Regulation
|
.jpg)
