Initial Public Offerings

Singapore Exchange Is Looking to Change Its Listing Rules

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The Singapore Exchange (SGX) has recently been gathering public opinion on plans to alter its listing rules. These proposals specifically include potential alterations it would make to the rules relevant to mainboard and Catalist listings.

Electronic Documents

These proposed changes include proposals as to whether companies will be allowed to send notices or documents electronically to their shareholders (with the implication that said shareholders agree with in principle with this transfer), for example, documents such as important company circulars and annual reports which would be of interest to their shareholders.

The ‘implied consent’ from shareholders, attached to the circulation of these documents signifies that a given company’s articles of association – i.e. their written statutes – provide or allow for electronic communication, such as suggested by the SGX. As such, if the proposed changes go ahead, shareholders will no longer be given the option of having paper copies of these documents sent to them. These proposed changes which are particularly relevant to company directors, shareholders and equity are being used to try to bring the SGX listing rules into line with recent changes to the Companies Act (passed in October 2014). But the SGX is aware that some of its investors may have concerns if they are no longer able to receive physical copies of such material (which instead will now available electronically) – hence why it wants feedback on the proposed changes.

Other Changes up for Debate

It is not just changes to the sending of documents which are up for debate. The SGX also wants feedback on the safeguards that are to be adopted when companies send these documents electronically, as well as feedback on other recent statutory changes it has made or suggested.

One proposed change it may make is that it will no longer see ‘insurance coverage’ or ‘indemnity for a director’ as a transaction which involves a conflict of interests – that is, if these factors are themselves officially allowed according to the Companies Act. This change to its listing rules would be relevant to companies listed on the SGX, whether they are in or outside of Singapore. But, importantly, given Singapore’s status as a world-leading center for commerce and investment (something which came about after the massive business exodus from Hong Kong after it parted from Britain) in future, foreign-based companies must also comply with their own company laws, as well as the SGX listing rules.

In addition to the above proposals, the SGX is also considering changes to the guidelines concerning the clamp-down on voting rights, as well as the way it treats shares which are held by a subsidiary in a holding company.

These proposals remained up for feedback from the public until February 12th, when the contact lines were closed. We must now wait and see whether these changes go ahead or not, as they have the potential to alter the investments made by international and national companies on the SGX.

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