On 5 September 2013, the Singapore Exchange Securities Trading Limited (SGX-ST) announced new Mainboard admission rules and continuing listing obligations for mineral, oil and gas (MOG) companies. These rules aim to safeguard investors’ interests, given the technical and specialised nature of the MOG industry, and came into effect on 27 September 2013.
The new rules pertain primarily to the following areas:
Admission Requirements for MOG Listing Aspirants that are Not in Production
A MOG listing aspirant that is not in production must satisfy the following conditions:
- have a market capitalisation of not less than S$300 million based on the issue price and post-invitation issued share capital; and
- disclose its plans, milestones and capital expenditure to advance to production stage.
Admission Requirementsfor All MOG Companies
All MOG listing applicants, whether in production or otherwise, will have to:
- have achieved at least indicated resources (for minerals) or contingent resources (for oil and gas);
- have available working capital that is sufficient for its present requirements and for at least 18 months after listing;
- have at least 1 independent director with appropriate industry experience and expertise; and
- appoint an audit firm with the relevant industry experience.
Requirements of Prospectuses / Offering Memorandums / Introductory Documents
In addition to the standard requirements under Chapter 6 of the Listing Manual, a MOG company will need to include in its prospectus, offering memorandum or introductory document, inter alia, the following information:
- the basis upon which the existence of any minerals, oil or gas in a defined area where the listing applicant has exploration and exploitation rights is asserted;
- the directors’ reasonable opinion that the working capital available to the listing applicant is sufficient for the present requirements and for at least 18 months after listing;
- a statement by the listing applicant that no material changes have occurred since the effective date of the qualified person’s report;
- the listing applicant’s policies and practices in relation to operating in a sustainable manner; and
- in relation to a listing applicant whose principal activities consist of exploration for mineral, oil or gas, a clear and prominent statement on the front cover highlighting that fact, that the listing applicant may not progress to the next stage of development or to a stage where it is able to generate revenue.
Continuing Listing Obligations
In addition to the continuing obligations applicable to all companies in general, a MOG company will have to, inter alia:
make an immediate announcement involving any material changes to the reserves or resources, including:
- the basis upon which the MOG company asserts the existence of any new material reserves or resources that has not been previously disclosed, where applicable;
- a qualified person’s report which must be prepared in accordance with a Standard 1 ; and
- make an immediate announcement of any change in the Standard adopted by the MOG company, including the reasons for the change and the impact, if any, on its existing stated level of reserves and resources.
Acquisitions and Realisations
Where the transaction is a major one relating to an acquisition or disposal of mineral, oil or gas assets of an MOG company, the MOG company will have to issue a circular to shareholders containing:
- a qualified person’s report that is prepared by an independent qualified person; and
- a statement that no material changes have occurred since the effective date of the qualified person’s report.
In the case of a major acquisition, the circular to shareholders must:
- contain a valuation report prepared by an independent qualified person in accordance with the VALMIN Code, SPEPRMS or an equivalent standard that is acceptable by the SGXST; and
- not have a valuation report the effective date of which is more than 6 months from the date of publishing of the circular.
Requirements for Circulars and Annual Reports
The annual reports of MOG companies should contain the following details:
- a qualified person’s report;
- details of exploration, development and/or production activities undertaken by the MOG company and a summary of the expenditure incurred on those activities for the year;
- a summary of reserves and resources at the end of the MOG company’s financial year, supported by a qualified person’s report; and
policies and practices in relation to operating in a sustainable manner, including:
- the MOG company’s policy with regards to environmental and social issues;
- impact of the MOG company’s business practices on the environment and the communities in which it operates; and
- environmental and social risks faced by the MOG company.
These new rules are a culmination of the feedback and suggestions the SGX-ST received from the public consultation which concluded in July 2012. It is envisaged that the new rules will enable more offshore MOG companies to tap into Asia’s vast pool of liquidity, via the SGX-ST.