On 17 September 2014, the Singapore Exchange (the “SGX”) issued a consultation paper on details of the operational requirements for the implementation of the minimum trading price (“MTP”) proposal and its interaction with the requirements relating to the watch-list for issuers listed on the Mainboard of the SGX. The SGX also seeks feedback on its proposal to retain and codify into the listing rules the notification process and privy list requirements for specific transactions that were implemented on 3 March 2014 for issuers listed on the Mainboard and Catalist.
Also on 17 September 2014, the SGX issued a separate consultation paper on the proposed establishment of the independent Listings Advisory, Listings Disciplinary and Listings Appeals Committees. The SGX also seeks feedback on the proposed widening of its enforcement powers against breaches of the listing rules to further deter offenders.
These consultation papers follow the joint consultation by the Monetary Authority of Singapore (the “MAS”) and the SGX in February 2014 on proposals to enhance Singapore’s securities market.
The consultation period for both consultation papers closed on 16 October 2014.
Minimum trading price of S$0.20 and changes to existing watch-list
An issuer that is not able to record a six-month volume-weighted average price (“VWAP”) of S$0.20 or above at each of the quarterly watch-list review dates will be placed on the watch-list. An issuer can exit the watch-list if it has been on the watch-list for at least six months and records a VWAP of at least S$0.20 over the last six months since its entry into the watch-list.
The SGX targets to introduce amendments to the Mainboard Listing Rules to introduce the MTP requirement and adjust the existing watch-list requirement by 2015 and for the rule amendments to take effect from March 2016.
Codifying requirement to provide notification of specific transactions and privy list
Since 3 March 2014, issuers listed on the Mainboard or Catalist must observe the following notification and privy list requirements:
- An issuer and/or its controlling shareholders must notify the SGX of discussions or negotiations that its board of directors (the “Board”) is aware of and which is “likely to result” in the takeover of, reverse takeover of or a very substantial acquisition by that issuer.
- When its Board is aware of discussions or negotiations that are “likely to result” in the takeover of, reverse takeover of or a very substantial acquisition by the issuer, the issuer and/or controlling shareholders must concurrently maintain a list of persons privy to such potential transactions (the “privy list”).
The SGX proposes codifying the notification and privy list requirements into the listing rules in order to enhance the enforceability of the requirements and clarify how and when the requirements are applied.
In principle, the SGX regards discussions or negotiations as being “likely to result” in a transaction thereby warranting the required notification when: (i) the transaction has progressed to the due diligence stage; or (ii) external professionals are engaged to provide specific advice on the terms of the transaction (including the preparation of any submission to the regulatory authorities). The SGX proposes to amend the Mainboard Listing Rules and Catalist Listing Rules to include helpful illustrations of the application of the notification requirements.
The amendments to the listing rules to implement the notification and privy list requirements are slated to be introduced and take effect from March 2015.
Strengthening SGX’s administrative and enforcement powers
The SGX also seeks feedback on proposals to widen its enforcement powers against listing rule breaches to further deter offenders. For example, the SGX proposes to widen its range of enforcement powers against issuers, which will include requiring issuers to obtain prior SGX approval, for a period not exceeding three years, for the appointments of directors or executive officers in specified circumstances. The SGX also proposes enhancing its enforcement powers against regulated persons such as directors and executive officers, issue managers, financial advisers and sponsors and registered professionals advising Catalist issuers.
The SGX targets to implement the proposed amendments to the listing rules by the first quarter of 2015.
The two consultation papers issued by the SGX on 17 September 2014 are available from the SGX website www.sgx.com: