The proposed changes serve to promote investor confidence and attract more quality issuers and intermediaries. This will in turn foster the growth and development of the market.
"The global landscape is evolving and we have to continually review our value proposition to ensure we stay relevant and competitive. The focus for our Mainboard will be size and quality. As for SESDAQ, we are proposing a transformation – a sponsor-supervised board that will best cater to the growth market," said Mr Hsieh Fu Hua, CEO of SGX. "These changes will enable us to advance our Asian Gateway position, with clearly differentiated markets, focus on quality standards and a scalable model for growth."
The proposed changes to the Mainboard and SESDAQ include the following:
MAINBOARD
- Review minimum entry size of companies to provide guidance to intermediaries and issuers.
- Introduction of minimum continuing listing criteria based on financial performance and size. Having continuing standards will enhance the value of a listing and the premium that investors accord to listed companies.
SESDAQ
- Transformation of the current regime into a sponsor-supervision model. Issuers must continue to comply with SGX rules, but the supervisory role will be undertaken by approved intermediaries (Sponsors). SGX will maintain market quality by regulating Sponsors directly via strict admission and continuing obligation rules. In addition, key issuer rules and safeguards will be retained.
- The Sponsor will decide on the suitability of the company for listing on the new board and review IPO admission. There will be no prescribed financial entry criteria.
- Listing applicants must produce an Offer Document instead of a prospectus. SGX will apply for an exemption from prospectus requirements under the law, such that the Offer Document will not need to be registered with the Monetary Authority of Singapore (MAS). However, we expect that prospectus liabilities will continue to apply. SGX will not review the admission, shortening the IPO application process.
- The IPO market capitalisation of companies will be restricted to a maximum of S$150 million. This will delineate the two boards clearly at the start, while the market adapts to the new regime.
- Companies on the new board must retain a Sponsor at all times. Sponsors are responsible for assisting the company's rule compliance, including the review of companies' circulars.
- The annual limit on the issue of additional shares, and thresholds for acquisitions and disposals of assets that do not require shareholders' approval, will be raised. This is to facilitate the development of growth companies.
- There will be no change to the current process for the trading and clearing of securities.
Please refer to Appendix 1 for a summary of the proposed changes.
SESDAQ companies will be given at least two years to engage Sponsors and comply with the new rules. To ease the transition, SGX will waive listing fees for three years from the time SESDAQ companies adopt the new rules.
"SESDAQ was introduced to meet the capital raising needs of local small to medium enterprises. While it has largely served its developmental role, to achieve further growth and sustained performance over the longer term, a transformation is required. The introduction of the new board is supported by findings from a survey of market participants and review of various second boards," said Mr Lawrence Wong, Executive Vice President and Head of Listings.
The proposed changes are set out in detail in the consultation papers and will be made available on SGX website at www.sgx.com from 23 May 2007 to 20 June 2007. Market participants and members of the public can forward their feedback by 20 June 2007 via email and either by post/courier or fax:
- Email: rules@sgx.com
Post/Courier: Singapore Exchange Limited
2 Shenton Way, SGX Centre 1, #19-00
Singapore 068804
Attn: Lily Chia - Vice President, Listings
- End -
Issue date: 23 May 2007
APPENDIX 1
MAINBOARD RULES – PROPOSED WATCH-LIST CRITERIA
Proposed Watch-list Criteria | Current Initial Listing Criteria (quantitative) |
Must maintain the following combined standards ("minimum standards"), if not it will be included in a "Watch-list" for 2 years:
An issuer may be removed from the Watch-list if:
If not, it will face delisting. We propose that companies being delisted offer a reasonable exit alternative to their shareholders, in the same manner as companies who voluntarily seek to delist. | Must meet one of the following:
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Note: To view the full details of the proposal, please refer to the consultation paper "Proposed Introduction Of A Watch-List And Listing Rule Amendment Relating To Exit Offer In A Directed Delisting" at www.sgx.com
SUMMARY OF DIFFERENCES BETWEEN NEW BOARD & SESDAQ
Admission | Existing SESDAQ Requirements | New Board Requirements | |
1 | IPO Document | Must produce a Prospectus
| Must produce an Offer Document
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2 | Sponsor requirement |
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3 | Shareholding spread |
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4 | Quantitative criteria |
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5 | Directors |
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6 | Restriction on Promoters' Sale of Shares |
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7 | Lock-up periods |
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Continuing | Existing SESDAQ Requirements | New Board Requirements | |
8 | Disclosure & Reporting |
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9 | Changes in capital |
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10 | Interested Person Transactions |
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11 | Debt Securities |
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12 | Acquisitions and Realisations |
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13 | Exchange approvals |
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Note: To view the full details of the proposal, please refer to the consultation paper "Listing Manual – Rules for New Board" at www.sgx.com