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“By broadening the range of listings, as well as strengthening corporate governance and disclosure requirements, the Exchange aims to enhance market efficiency and keep pace with the developments of the marketplace. We will continue to engage market participants in the review of rules and processes to meet the needs of the industry,” Ms Yeo Lian Sim, Senior Executive Vice President and Head of Risk Management and Regulation, SGX.
Some of the key new listing rules and requirements are as follows:-
Diversity in Capital Market
1. Listing Rules for Life Science Companies
SGX is introducing new admission rules and continuing listing requirements for Life Science Companies (“LSC”) without financial track record. Among other things, LSC on the Mainboard will be required to demonstrate adequate working capital for its present requirements and for at least 12 months after listing.
Enhanced Efficiency of Fund Raising Exercises
2. Revised IPO Distribution Requirements
The IPO distribution provision is revised to require primary listings on the Mainboard to have at least 500 public shareholders. The same number of shareholders will apply to secondary listed companies where SGX and the primary home exchange have an established arrangement to facilitate the movement of shares. In the case of a secondary listing where such an arrangement is absent, the company shall be required to have at least either 500 shareholders in Singapore or 1,000 shareholders worldwide. These revisions will provide issuers with greater flexibility to target their investor groups.
3. Removal of Limit on Capital Structure
The limit on the number of new shares from the exercise/conversion of outstanding convertibles will be removed to allow issuers greater flexibility in determining their capital structure. Issuers will seek specific shareholders’ approval if it exceeds the limit of their general mandate and in addition, disclose the recommendations of the Board of Directors on the issue of company warrants or convertible securities.
Strengthening of Corporate Governance and Enhanced Transparency
4. Disclosure of Details Relating to Profit Guarantees or Profit Forecasts
The Exchange and market participants are of the view that increased transparency and accountability are beneficial to issuers and their shareholders in relation to the acquisition of assets or businesses where profit guarantees or profit forecasts are provided. Issuers are also required to make immediate disclosure when the guaranteed profit level has, or has not, been met including material variations to the terms of agreement. With heightened disclosure, investors are empowered to make informed decisions.
5. Improved transparency and enhanced disclosures of changes in capital
Issuers intending to issue shares, company warrants or other convertible securities for cash are required to promptly disclose the terms and purpose of the issue, including the following :-
- (a) the identity of the placement agent;
(b) the amount of proceeds proposed to be raised from the issue; and
(c) the intended use of proceeds on a percentage allocation basis.
Where no placement agent has been appointed, the issuer will have to provide the identities of the placees and number of shares placed to each of them, how the placees are identified and the rationale for placing to them. In addition, the restrictions imposed by the issuer regarding the identities of and allocation to the placees, if any.
6. Disclosure of Use of Proceeds
Issuers shall immediately announce the use of proceeds from fund raising exercises as and when they are materially disbursed, and whether the use is in accordance with what was previously announced. Where there is any material deviation, the issuer must announce the reasons for such deviation. Issuers will also have to disclose such information in their annual reports.
7. Fundamental Change of Principal Business Subject to the Exchange’s Approval
- Where there is a material change in the scope and nature of an issuer’s principal business, SGX reserves the right to subject such changes to the Exchange’s approval if they affect the integrity of the market or it is in the interests of the public to do so.
8. Disqualification of Directors
- To maintain good corporate governance practice among the listed companies, the revised listing rule 720 requires a director who has been disqualified from acting as a director in other jurisdictions to resign from his directorships in Singapore.
Further Review:-
Following the consultation, further reviews and consideration will be given to some of the proposed listing rules changes. We will implement the proposed investment fund rules after the revised rules are finalised.
