Singapore Exchange Limited (SGX), in consultation with the Monetary Authority of Singapore (MAS), introduces further measures to accelerate and facilitate listed issuers’ fund raising efforts.
The following new measures will take effect on 20 February 2009:-
A) Allow up to 100% Renounceable Pro-Rata Share IssuanceSGX Listing Rules allow a listed issuer to seek a general mandate from shareholders for issuance of new shares on a pro-rata basis amounting to not more than 50% of issued share capital. The Exchange received feedback that the 50% limit may not meet market needs in the current volatile market and tight credit conditions. The time needed to obtain shareholders’ approval to issue shares above the 50% threshold subjects issuers and underwriters to prolonged market exposure and compromises fund raising efforts.
SGX has decided to increase the limit to allow issuers to issue up to 100% of its issued share capital via a pro-rata renounceable rights issue. This measure is subject to the condition that the issuer makes periodic announcements on the use of the proceeds as and when the funds are materially disbursed and provides a status report on the use of proceeds in the annual report.
Companies and business trusts may utilise this new measure subject to compliance with (i) applicable legal requirements such as provisions in the Companies Act and the Business Trusts Act requiring issuers to seek shareholders’ approval; and (ii) the limitations in any existing mandate from shareholders. REITs can make use of this measure subject to compliance with provisions of trust deeds, applicable legal requirements and any limitations in existing mandate from shareholders.
SGX is mindful that any measure to grant greater flexibility to issuers should not be at the expense of shareholders’ interest and good corporate governance practices. Concerns over dilution of minority shareholders’ interests are mitigated in a pro-rata renounceable rights issue as all shareholders have equal opportunities to participate and can dispose of their entitlements through trading of nil-paid rights if they do not wish to subscribe for their rights shares.
MAS will be consulting on a proposed requirement for REITs to hold Annual General Meetings to promote good corporate governance and to be in line with the practices for listed companies and business trusts.
B) Increase Discount Limit for Placement Exercise
The industry provided feedback that the 10% maximum discount for share placement undertaken using general share issue mandate impacts the attractiveness and viability of placement exercises. Taking into account the increased market volatility and difficult market conditions, SGX will allow listed issuers to undertake placements of new shares priced at discounts of up to 20% subject to the conditions that:
a) the issuer seeks shareholders’ approval in a separate resolution (“Resolution”) at a general meeting to issue new shares on a non pro-rata basis at a discount exceeding 10% but not more than 20%; and
b) the resolution seeking a general mandate from shareholders for issuance of new shares on a non pro-rata basis is not conditional on this Resolution.C) Scrip Dividend Schemes
Subject to compliance with the Companies Act and other statutory requirements, an issuer will not be required to seek shareholders’ approval for Scrip Dividend Schemes as long as shareholders are provided with the option to elect for their distributions to be paid in cash. With the availability of a cash option, concerns over shareholders’ interest being adversely affected are mitigated.
The new measures in (A)-(C) above will be in effect until 31 December 2010. The effectiveness of these measures will be reviewed at the end of the period.
D) Allow Placements to Certain Substantial Shareholders without Specific Shareholders’ Approval
The Exchange has gathered public feedback on the proposal to allow placements to substantial shareholders without shareholders’ approval if such arrangements have the following safeguards in place:-
a) The substantial shareholder:-(i) does not have representation (whether directly or indirectly through anominee) on the board of the issuer;b) The placement is effected through an independent process such as bookbuilding;
(ii) does not have control or influence over the issuer in connection with the day-to-day affairs of the issuer and the terms of the placement;
c) The placement is made to more than one placee; and
d) The proportion of issued shares of the issuer held by the substantial shareholder immediately after the placement is not more than the proportion of issued shares of the issuer held by it immediately before such a placement.Respondents are supportive of the proposal and the Exchange will implement this measure immediately.
E) Allow Underwriters to include Non-Major Shareholders of the Issuer as Sub- Underwriters
Following the announcement on 12 January 2009 to allow sub-underwriting for major shareholders, we wish to clarify that the same arrangement may be extended to other shareholders. Issuers who wish to adopt the more extensive sub-underwriting arrangements will be required to inform CDP immediately upon announcement of the issue and provide an offer window of at least 5 days from the start of the rights offer period for these other shareholders to subscribe for their entitlements.
F) Introduction of “When-Issued” Trading for Rights Issue
To further shorten the market exposure period for participants of rights issues, the Exchange will allow “when-issued” trading of the rights shares to commence on the next business day after the close of the rights offer. Issuers who wish to adopt “when-issued” trading should inform CDP immediately upon announcement of the issue.
SGX will continue to engage market participants on changes and proposals that will facilitate fund raising efforts in our marketplace.
