On 15 September 2015, the Singapore Exchange (“SGX”) announced that it has set up three independent Listing Committees – the Listings Advisory Committee (“LAC”), the Listings Disciplinary Committee (“LDC”) and the Listings Appeal Committee (“LApC”) – to strengthen the listing policy-making and review process as well as enhance the manner in which the SGX listing manual (“Listing Rules”) is enforced. The SGX has also strengthened the range of enforcement actions it can take against issuers, directors, executive officers, issue managers (including financial advisers advising on reverse takeover applications), sponsors or registered professionals for breaches of the Listing Rules.
Relevant amendments to the Listing Rules, for both primary and secondary listings, will take effect on 7 October 2015. Please refer here for the relevant amendments to the Listing Rules. These amendments originate from a set of consultations by the SGX in 2014: one on the “Review of Securities Market Structure and Practices” (“Securities Market Structure and Practices Consultation Paper”) (please refer here) and another on “Reinforcing the SGX Listings and Enforcement Framework” (“Listings and Enforcement Consultation Paper”) (please refer here). On 1 August 2014 and 15 September 2015, the SGX published its responses to the comments on the Securities Market Structure and Practices Consultation Paper and the Listings and Enforcement Consultation Paper respectively; these responses can be found here and here.
You may also wish to refer to our previous Updates relating to the Securities Market Structure and Practices Consultation Paper (available here) and the Listings and Enforcement Consultation Paper (available here).
This Update will look at some of the notable changes to the Listing Rules that will take effect on 7 October 2015.
Key Changes to the Listing Rules
Framework and processes of the LAC, LDC and LApC
The framework and processes of the LAC, LDC and LApC will be set out in the Listing Rules, including detailed procedures relating to disciplinary proceedings and hearings. One key new amendment following responses to the Listings and Enforcement Consultation Paper is that the Listing Rules will provide that quorum for disciplinary proceedings should comprise at least one member with legal experience.
Consolidation of SGX’s powers
The SGX’s administrative and enforcement powers will be consolidated and centralised under new Chapters in the Listing Rules.
In addition to the powers set out in the Listings and Enforcement Consultation Paper (which includes the power to offer composition sums, amongst others), the amendments to the Listing Rules also include the power to halt or suspend trading of listed securities of an issuer and/or remove an issuer from the Official List and, in relation to Catalist-listed issuers, the power to impose conditions on the authorisation of a sponsor or registration of a registered professional.
Prescribed undertakings from directors and executive officers
Issuers are required to procure, upon admission to Mainboard or Catalist and on a continuing basis, an undertaking from all directors and executive officers (in the form set out in new Appendix 7.7 (for Mainboard-listed issuers) and new Appendix 7H (for Catalist-listed issuers)) to comply with the Listing Rules.
Amended definition of “executive officer”
The definition of “executive officer” will be amended to refer to the issuer’s management team (excluding directors), including its chief executive officer, chief financial officer, chief operating officer and any other individual, regardless of title, who (a) performs or has the capacity to perform any function or responsibility equivalent to that of the foregoing persons or (b) is responsible for ensuring that the issuer complies with its obligations under the Listing Rules.
Submission of undertakings to SGX
New issuers will be required to submit the undertakings to SGX upon admission to Mainboard or Catalist. On a continuing basis, issuers are only required to submit the undertakings to the SGX upon the SGX’s request.
Confirmation of undertakings required in announcements of financial results and appointment of directors or executive officers
Issuers will be required to confirm that they have procured undertakings from all their directors and executive officers in their quarterly, half-year and full-year financial result announcements. They will also be required to provide an additional disclosure item upon the appointment of a new director or executive officer.
Relevant amendments will be made to the financial statements, dividend announcement template, and the announcement of appointment template in the Listing Rules.