Market overviewSize of market
What is the size of the market for initial public offerings (IPOs) in your jurisdiction?
In 2020, there were 11 IPOs of equity securities on Singapore Exchange Securities Trading Limited (SGX-ST) raising a total of approximately S$1.4 billion, with five new listings on the Mainboard raising S$1.37 billion and six new listings on the Catalist raising S$43.1 million. This includes two real estate investment trusts (REITs) that were listed on the Mainboard in 2020, raising a combined S$681.5 million. In 2021, there were eight IPOs of equity securities on the SGX-ST raising a total of approximately S$1.7 billion, with three new listings on the Mainboard raising S$1.60 billion and five new listings on the Catalist raising S$59.3 million. This includes two REITs that were listed on the Mainboard in 2021, raising a total of approximately S$1.3 billion.Issuers
Who are the issuers in the IPO market? Do domestic companies tend to list at home or overseas? Do overseas companies list in your market?
The SGX-ST has high international representation, with 456 issuers listed on the Mainboard and 217 issuers listed on the Catalist, of which 442 are Singapore issuers and 231 are overseas issuers, as at the end of 2021. Foreign issuers that are incorporated or otherwise established outside Singapore may list on the Mainboard of the SGX-ST and the listing may be a primary or secondary listing.
In particular, the SGX-ST is one of Asia's largest REIT and property trust markets, with 44 listed REITs and property trusts as at the end of 2021 with a combined market capitalisation of more than S$100 billion, of which over 80 per cent have exposure to overseas properties.
The SGX-ST, with the support of the China Securities Regulatory Commission, also offers a platform for companies incorporated in China to seek a direct listing on the Mainboard under the direct listing framework.
In addition, the SGX-ST offers issuers the option to list and trade shares in two currencies within a single pool with full fungibility between the two currencies. This enables issuers to offer flexibility and to reach a wider investor base through a single listing. Foreign currencies available for dual currency trading include EUR, HKD, USD, AUD and CNY.Primary exchanges
What are the primary exchanges for IPOs? How do they differ?
SGX-ST, a wholly owned subsidiary of the Singapore Exchange Limited, is the primary stock exchange for IPOs in Singapore. The SGX-ST maintains two boards, the Mainboard and the Catalist. The Mainboard caters to the needs of established enterprises, whereas the Catalist is a sponsor-supervised platform and caters to the needs of fast-growing enterprises.
Types of listings
Equity securities can be listed on the Mainboard in the form of shares or global depository receipts, whereas equity securities can only be listed in the form of shares on the Catalist. Furthermore REITs, business trusts (BTs) and secondary listings can only be listed on the Mainboard.
The Mainboard has quantitative and qualitative thresholds (including minimum operating track record period, minimum profit or market capitalisation) for listing applicants, which are comparable to the main markets of international exchanges. In contrast, there are no quantitative financial requirements to be met for entry on to the Catalist. Instead, companies seeking a primary listing on the Catalist must be brought to list by authorised full sponsors via an IPO or a reverse takeover.
Approval and supervisory regime
A listing application on the Mainboard is subject to review and approval by Singapore Exchange Regulation Pte Ltd (SGX RegCo), whereas a listing application on the Catalist is made to the appointed full sponsor who determines the suitability of a company for listing and supervises the listed company’s compliance with their continuing listing obligations.
Subject to meeting prescribed quantitative requirements, a Catalist issuer can transfer its listing to the Mainboard after its been listed on the Catalist for two years.
Which bodies are responsible for rulemaking and enforcing the rules on IPOs?
The Monetary Authority of Singapore (MAS) regulates the securities and futures markets in Singapore. The MAS has powers under the Securities and Futures Act 2001 of Singapore (SFA) to make regulations and issue directions if the MAS thinks it necessary or expedient for ensuring the fair, orderly and transparent operation of any organised market, ensuring the integrity and stability of the capital markets or the financial system, or in the interests of the public or for the protection of investors. The SFA is the primary legislation governing offers of securities and securities-based derivatives contracts in Singapore along with applicable subsidiary legislation.
The Singapore Exchange Securities Trading Limited (SGX-ST) operates the Mainboard and the Catalist in accordance with the SGX-ST Listing Manual and Catalist Rules, respectively, which set out the requirements that apply to issuers, the manner in which securities are to be offered and the continuing obligations of issuers, with a view to promoting a fair, orderly and transparent market. The listing rules are interpreted, administered and enforced by the Singapore Exchange Regulation Pte Ltd (SGX RegCo) and the decisions and requirements of the SGX RegCo are conclusive and binding on an issuer.
The SGX RegCo will issue practice notes, decisions and guidance from time to time to regulate the interpretation of listing rules and requirements, including on the listing procedure and related matters, as well as case studies setting out decisions on listing applications for market professionals to understand aspects that are of key concern to the SGX-ST. The MAS will also issue guidelines, notices and practice notes from time to time on matters including prospectus requirements, and the requirements and procedures for offer of investments and securities.
Due diligence undertaken on and in connection with listing applications is expected to be thorough and comprehensive. In this regard, the SGX RegCo has enhanced the listing rules from January 2020 to incorporate issue managers independence requirements and the SGX RegCo will also have regard to the due diligence guidelines issued by the Association of Banks in Singapore (the Listings Due Diligence Guidelines), which were revised in collaboration with the SGX RegCo with effect from 13 November 2020. The Listings Due Diligence Guidelines serve as a reference point for expected industry standards and provides the broad framework and principles that issue managers should consider when conducting due diligence work. Key updates in the revised guidelines include:
- an increased focus on the assessment of the adequacy and effectiveness of the issuer’s internal controls to meet its business needs and challenges as a listed company;
- the assessment of the sustainability and viability of the issuer’s business, taking into consideration, in particular, the challenges posed by the prevailing economic climate; and
- targeted guidelines for due diligence on issuers operating in specialised, restricted or niche industries, or in higher risk jurisdictions.
Must issuers seek authorisation for a listing? What information must issuers provide to the listing authority and how is it assessed?
Singapore operates a predominantly disclosure-based regime for capital markets. An issuer seeking a listing is required to prepare a prospectus in accordance with the SFA. During the review process for both Mainboard and Catalist listings, the SGX RegCo may also raise queries on key issues or provide comments on prospectus disclosures.
For a Mainboard listing application, the listing admissions framework entails a two-stage submission process. Stage 1 requires the issue manager to submit section (A) of the Listing Admissions Pack (LAP), which sets out general information of the issuer and highlights key issues for the SGX RegCo’s attention. Upon completion of the SGX RegCo’s review of the matters set out in the section (A) submission, the SGX RegCo will then inform the issue manager of the outcome of their review and whether it can proceed with Stage 2. Stage 2 requires the issue manager to submit section (B) of the LAP to the SGX RegCo, together with the full listing application, including the draft prospectus. Concurrently with the section (B) submission, a pre-lodgement submission can also be made to the MAS for concurrent review of the draft prospectus.
For a Mainboard listing application for a special purpose acquisition company (SPAC), the listing admissions framework also entails a two-stage submission process, with section (A) of the SPAC LAP to be submitted together with the listing application and section (B) of the SPAC LAP to be submitted together with the de-SPAC application.
For a Catalist listing application, the full sponsor is required to submit the pre-admission notification to the SGX RegCo, together with the supporting documents required for the application, and the draft offer document. Upon approval, the sponsor is then required to submit the listing confirmations in the form prescribed under the listing rules, for the purposes of lodgement with, and registration of the offer document by, the SGX-ST (as agent for the MAS).Prospectus
What information must be made available to prospective investors and how must it be presented?
A prospectus for an offer of securities is required to contain all the information that investors and their professional advisers would reasonably be required to make an informed assessment of the matters specified under the SFA and the matters prescribed by the SGX RegCo and the MAS. The information in the prospectus should be presented in plain English and in a clear, comprehensive and well-organised manner, avoiding legal and technical jargon.
The particulars to be included in a prospectus include:
- an overview of the issuer’s business and organisational structure;
- risks to the issuer’s business and its prospects;
- audited historical financial information (for three full financial years and any interim period); operating and financial review;
- regulatory overview;
- offering statistics and timetable;
- plan of distribution;
- use of proceeds;
- substantial shareholders, directors and key executives;
- interested person transactions and conflict of interests;
- constitutive documents;
- expert reports (eg, an industry report or valuation report); and
- other statutorily required information.
For real estate investment trusts (REITs), information on the manager, the trustee, the property portfolio and the structure of the collective investment scheme and its objectives, focus and approach must also be disclosed. The listing rules also prescribe additional disclosures required for issuers in the mineral, oil and gas sector and the life sciences sector.Publicity and marketing
What restrictions on publicity and marketing apply during the IPO process?
There is a general prohibition against publicity of the IPO prior to the registration of the prospectus. This includes the publication of any statement referring directly or indirectly to the IPO, or that is reasonably likely to induce persons to subscribe for or purchase the shares, unless authorised by the SFA.
Regard needs to be had to whether the statement forms part of the normal advertising of the issuer’s products or services and is genuinely directed at maintaining its existing customers or attracting new customers (which is an exception to the general rule), communicates information that materially deals with the affairs of the issuer, or is likely to encourage investment decisions being made on the basis of the statement rather than on the basis of information contained in the prospectus.
A research report about the securities that are the subject of the IPO may be published and delivered to an institutional investor (as defined under the SFA) no later than 14 days prior to the date of lodgement of the prospectus.
Marketing to institutional investors should only commence after the lodgement of the preliminary prospectus, while marketing to retail investors should only commence after the registration of the final prospectus.Enforcement
What sanctions can public enforcers impose for breach of IPO rules? On whom?
The SFA prescribes both civil and criminal liability for false and misleading statements in relation to an offer of securities. Under the SFA, where an offer of securities is made in or accompanied by a prospectus and a false or misleading statement is contained in the prospectus or any application form for the securities, or if there is an omission to state any information required to be included in the prospectus under the SFA or a new circumstance that has arisen since the prospectus was lodged with the MAS (and would have been required to be included in the prospectus under the SFA if it had arisen before such lodgement), the persons prescribed under the SFA would be guilty of an offence even if such persons, unless otherwise specified, were not involved in the making of the false or misleading statement or the omission.
Persons guilty of the offence as prescribed under the SFA include, but are not limited to: the person making the offer (where the person making the offer is an entity) each director or equivalent person of the entity; and an issue manager and underwriter (but not a sub-underwriter) to the issue or sale of securities who has consented to be named in the prospectus if he or she intentionally or recklessly makes the false or misleading statement or omits to state the information or circumstance, or knowing that the statement is false or misleading or that the information or circumstance has been omitted, he or she fails to take such remedial action as is appropriate in the circumstances without delay, or he or she is reckless as to whether the statement is false or misleading or whether the information or circumstance has been included.
The MAS also has the power to serve a stop order to prevent offers under a deficient prospectus where no supplementary or replacement document to rectify the deficiency is issued. Where a final stop order is issued, the issuer is required under the SFA to return monies received for the subscription or purchase of the securities under the deficient prospectus. Where a registered prospectus is found to be deficient after the securities have been issued and trading has commenced, the MAS will not issue a stop order but the issuer, its directors, the issue manager and underwriter for the offer could still be liable under the SFA for false or misleading information in the prospectus if they are found to be responsible for the deficiency.
Additionally, the SGX-ST imposes obligations on issue managers and full sponsors under the listing rules. These include the obligation to discharge its obligations with due care, diligence and skill. The SGX RegCo may also exercise investigative and enforcement powers for the purposes of enforcing the listing rules, including the powers to initiate and conduct investigations, initiate disciplinary proceedings or take enforcement actions against issuers, their directors, issue managers and sponsors. If, upon the conclusion of its investigations, the SGX RegCo is of the opinion that the issuer has contravened the listing rules, it may provide an offer of composition to an issuer, which may include payment of a specified sum to the SGX and fulfilment of any accompanying terms, or initiate disciplinary proceedings against a relevant person. In addition, where the Disciplinary Committee of the SGX-ST makes a finding that the proceeded charges are made out, it may impose sanctions such as issuing a private warning or a public reprimand, imposing fines payable, issuing an order for the suspension of trading of an issuer’s securities or for the removal of an issuer from the Official List, or requiring the resignation of the director or executive officer.