In one of our earlier issues, we had provided a summary of the provisions of the Securities and Futures (Amendment) Act 2009 that came into effect on 1 October 2012, and which resulted in several changes to the Securities and Futures Act (SFA).
As a follow on to our earlier issue, we set out below a summary of the new disclosure regime on shareholding interests under the SFA which came into force on 19 November 2012. The following are the key changes:
- Consolidation of disclosure requirements under the SFA
Under the old disclosure regime: (a) directors and substantial shareholders of a listed company were required to report their interests (and changes in such interests) to the listed company under the Companies Act and to the SGX under the SFA; and (ii) the reporting requirements for business trusts (BTs) and real estate investment trusts (REITs) were found in the Business Trusts Act and the SFA respectively. In addition, the listed entity was required to announce such information to the market under the SGX listing rules.
Under the new regime, such notification requirements in respect of interests in listed entities (which include corporations, BTs and REITs) have been streamlined and consolidated under the SFA.
- Simplification of the notification process for directors and substantial shareholders
Directors and substantial shareholders are no longer required to separately report their interests (and changes in such interests) to the SGX, thus simplifying the notification process and reducing the compliance burden on such persons.
- Extension of disclosure obligations to CEOs
Under the new regime, the disclosure obligations applicable to directors have been extended to CEOs (who are not directors). The MAS has stated that although the CEO is not a director, he is a key decision-maker in respect of the listed entity’s operating and financial policies, and hence, information on his dealings in the listed entity’s securities is relevant to investors.
- Extension of disclosure requirements in respect of foreign companies with a primary listing on the SGX
Previously, the legal obligations for directors and substantial shareholders to report their interests (or changes in interests) applied only to Singapore-incorporated listed companies. Under the new regime, such disclosure requirements have been extended to foreign-incorporated companies with a primary listing on the SGX.
- Extension of disclosure requirements in respect of BTs and REITs
Under the new regime, a shareholder of the trustee-manager or the REIT manager has to give notification when his shareholdings in the trustee-manager or the REIT manager (as the case may be) reaches, crosses or falls below 15%, 30%, 50% or 75%. In addition, trustee-managers and REIT managers are to disclose information on their interests (or changes in interests) in the BT or the REIT.
- Timeline for listed entities to disseminate disclosure of interests
Upon receipt of the disclosure of interest notifications, listed entities are now required to announce the information as soon as possible and no later than the end of the following business day.
- Stiffer penalties for flagrant breaches
The MAS has introduced a stiffer penalty of up to S$250,000 and/or imprisonment for a term not exceeding 2 years for material contraventions which are committed intentionally or recklessly. Civil penalties may also be imposed for such flagrant breaches.
- Introduction of notification forms
The MAS has prescribed specific notification forms for use in respect of the disclosure of interests, and which are available on the MAS website.