The Singapore Exchange (SGX) and the China Securities Regulatory Commission (CSRC) announced on 25 November 2013 that they will be establishing a direct listing framework which will allow for Chinese companies to list in Singapore.

WHAT DOES THIS MEAN?

Under the new direct listing framework, Chinese companies incorporated in China which have obtained the approval of the CSRC will be able to seek a listing on the SGX.

FRAMEWORK REQUIREMENTS

According to the SGX news release, the framework will include the following requirements:

  •  A potential issuer must first file its application with the CSRC and the SGX. The CSRC will then review such application before granting an administrative licensing approval for the potential issuer’s listing in Singapore. The SGX will thereafter issue an eligibility-to-list after its satisfactory review.
  • An applicant must comply with the relevant laws and regulations in China, as well as the requirements and regulatory standards of Singapore and the SGX.
  • The financial statements of an applicant must be audited by certified public accountants in accordance with either the Singapore Standards on Auditing, the International Standards on Auditing, or the US Generally Accepted Auditing Standards.

HOW COULD THIS BENEFIT YOU?

The CSRC has stated that it will strengthen cooperation with the SGX on Chinese domestic enterprises seeking a direct listing in Singapore, providing them with better understanding of the requirements of listing, and a more efficient procedure and platform to list on the SGX. The SGX has also stated that the new framework will enable such Chinese companies to more efficiently tap the capital markets in Singapore and reach out to its global investor base, offering the latter more choices and access to the growing Chinese economy.