In March 2015, the Monetary Authority of Singapore (“MAS”) and Singapore Exchange (“SGX”) jointly signed a Memorandum of Understanding (“MOU”) with the Securities Commission Malaysia (“SC”) and the Securities and Exchange Commission Thailand (“SEC”) to establish a Streamlined Review Framework for the ASEAN Common Prospectus (“Framework”). The Framework, which is an initiative under the ASEAN Capital Markets Forum Implementation Plan endorsed by the ASEAN Finance Ministers, will facilitate cross-border offerings of equity securities and plain debt securities in ASEAN, and enhance ASEAN's attractiveness as a fund-raising centre.
On 4 September 2015, MAS and SGX announced the issuance of a handbook together with the SC and the SEC to implement the Framework, which provides detailed guidance on the operational aspects of the Framework, including criteria for issuers, application procedures and the review timeline (“Handbook”).
Streamlined Review Framework for the ASEAN Common Prospectus
Under the Framework, issuers planning a multi-jurisdictional offering of equity securities or plain debt securities (“ASEAN Securities”) can expect a shorter time-to-market, and faster access to capital across signatory countries through a streamlined review process. Both Home and Host Authorities will have to complete the review process for the prospectus (which must be prepared in accordance with the ASEAN Disclosure Standards) at the same time, within three to four months from the date of submission.
In relation to an issuer, the Home Authority and the Host Authority are the authorities who signed the MOU from the home jurisdiction and the host jurisdiction respectively. The home jurisdiction of the issuer is determined as follows :
- where an issuer is or will be primary-listed only in one signatory jurisdiction, that signatory jurisdiction is the home jurisdiction of the issuer;
- where an issuer is or will be primary-listed on more than one signatory jurisdiction, the home jurisdiction will be (if the issuer is incorporated in one of the jurisdictions in which it is or will be primary-listed) the signatory jurisdiction in which it is incorporated and (if the issuer is not incorporated in any signatory jurisdiction in which it is or will be primary-listed) the signatory jurisdiction chosen by the issuer to be the home jurisdiction for the purposes of the Framework.
The host jurisdiction is the jurisdiction other than the home jurisdiction of the issuer, in which the issuer seeks to list or make an offer of ASEAN Securities and to seek approval, recognition or registration, as the case may be, of its prospectus to be issued in relation to such offer.
The current signatory jurisdictions are Singapore, Malaysia and Thailand.
There will be a single point of contact with respect to applications under the Framework, in relation to the review of the prospectus for the issuer and its advisers in the form of the Home Authority, who will coordinate the review process with the Host Authorities and issue consolidated disclosure-related comments to the issuer and its advisers in the home jurisdiction. Other non-disclosure related comments will be communicated by the relevant authority. An issuer still has to deal separately with each authority to obtain listing and offer approvals. Exemption applications from prospectus requirements and listing rules should be submitted concurrently with, or prior to the applications to the Home and Host Authorities (as applicable) and will be considered in tandem with the applications.
The Framework allows an issuer wishing to offer ASEAN Securities in one or more signatory jurisdictions to issue one prospectus based on the ASEAN Disclosure Standards and to benefit from a streamlined review process. It does not replace the national regulations regarding the approval process of the various signatory jurisdictions and the issuer will still have to comply with the national regulations of the signatory jurisdictions.
The highlights of the Handbook are as follows :
1. Criteria for Issuers
The issuer must :
- be incorporated in a signatory jurisdiction;
- have sufficient connection with one or more signatory jurisdictions (that is, the majority of the issuer’s non-independent directors must be ordinarily resident in one or more signatory jurisdictions and either (i) an individual / individuals who ultimately hold the majority of the voting rights of the issuer’s shares, must be ordinarily resident in one or more signatory jurisdictions or (ii) the issuer’s main operations must be located in one or more signatory jurisdictions); and
- (i) in relation to an offer of equity securities, the issuer’s equity securities must or will be primary-listed on the main board of at least one stock exchange situated in any signatory jurisdiction (and if the primary listing is on the main board of two or more stock exchanges of different signatory jurisdictions, the issuer must consult with the authorities of those jurisdictions in which the offer will be made as to whether it can use the Framework); and (ii) in relation to an offer of plain debt securities, (1) the issuer’s equity securities must already be primary-listed on the main board of at least one stock exchange situated in any signatory jurisdiction (and if the primary listing is on the main board of two or more stock exchanges of different signatory jurisdictions, the issuer must consult with the authorities of those jurisdictions in which the offer will be made), (2) the plain debt securities must have been rated by S&P, Moody’s or Fitch and (3) the issuer will be making the offer of plain debt securities in its Home Jurisdiction.
2. Simultaneous Applications to Home and Host Authorities
The issuer must submit its applications to the Home and Host Authorities concurrently, or in the case of submission to the Host Authorities, within one business day of submission to the Home Authorities. The documents to be submitted are the duly completed ASEAN Securities Application Form, the prospectus (prepared in accordance with the ASEAN Disclosure Standards) and all other forms and documents as may be required by the laws and regulations of the jurisdiction of that authority to be submitted to that authority in relation to the application to that authority as set out in the Handbook.
3. Translation of the Prospectus
The prospectus for ASEAN Securities submitted to the Home and Host Authorities and made available to investors must be in English. A Host Authority may require the prospectus to be translated into the official language(s) of the Host jurisdiction.
4. Medium for Submitting Applications to Home and Host Authorities
Home and Host Authorities may accept multiple mediums for receiving applications (e.g. by mail or hand or electronically) and if an electronic submission is made, hard copies may still be required at the request of the Home and / or Host Authorities.
5. Listing Rules
An issuer may also apply for a listing of its ASEAN securities on an exchange in a signatory jurisdiction as part of the cross-border offering of ASEAN Securities in two or more signatory jurisdictions. An issuer whose equity securities are primary-listed on an exchange in a signatory jurisdiction must comply with the listing rules and continuing obligations imposed by that exchange and/or the relevant authority, as the case may be. The exchange on which the issuer’s equity securities are secondary-listed and the relevant authority may also impose additional regulatory requirements as necessary on the issuer as well. Where a dual primary listing is sought, the issuer will have to consult the Home and Host Authorities in advance on whether it can use the Framework. Listing rules will also apply where the issuer’s plain debt securities are listed on an exchange in a signatory jurisdiction.
6. Differences in the Laws and Regulations of the Signatory Jurisdictions
Issuers and their advisers must familiarise themselves with the laws and regulations of the signatory jurisdictions in which they intend to offer ASEAN Securities as there are differences in the laws and regulations governing the offering of securities amongst the signatory jurisdictions.