On 2 March 2015, the SGX imposed a new requirement for all issuers listed on the SGX Mainboard (including REITs and Business Trusts) to meet a minimum trading price of S$0.20 (“MTP”). Issuers who failed to do so would be placed on the SGX’s Watch-List. The MTP requirement was introduced with the aim of improving the overall quality of Singapore’s stock market and reducing the risk of excessive speculation following the extreme volatility of low-capitalisation stocks in October 2013. Please see our previous updates about the MTP requirement “SGX Issues Two New Consultation Papers” and LawWatch Corporate Governance Issue 1 of 2015.
The relevant amendments to the SGX Mainboard listing rules will come into effect on 1 March 2016, which is the first date of review for compliance with the MTP requirement (SGX will perform reviews on every 1st business day of March, June, September and December).
This Update will look at those amendments.
Amendments to the SGX Mainboard Listing Rules
The assessment of whether an issuer has met the MTP of S$0.20 will be based on the issuer’s volume weighted average price (“VWAP”) of their shares on the SGX for the six months preceding the relevant date of review. An issuer who is placed on the SGX Watch-List for failing to meet the MTP requirement will be given a 36-month period (from the time of entry) to exit from the SGX Watch-List. Issuers who fail to exit from the SGX Watch-List may be subject to delisting in accordance with the SGX Mainboard listing rules. The six-month VWAP will be published on www.sgx.com starting from 1 March 2016.
In its news release on 3 December 2015, the SGX gave issuers who have carried out a share consolidation exercise prior to 1 March 2016 a six-month extension of time, such that their first date of review will be on 1 September 2016 instead of 1 March 2016. SGX has explained that the extension was granted on account of the impact of current global market developments on companies’ share price performance as well as feedback from investors and companies. Issuers who have carried out corporate actions such as mergers and acquisitions or reverse takeovers prior to 1 March 2016 can also engage with the SGX for similar consideration for an extension, which may be granted on a case- by-case basis.
An issuer who is placed on the SGX Watch-List must provide quarterly updates to the market on its efforts and the progress made in meeting the exit criteria of the SGX Watch-List including, where applicable, its financial situation, its future direction, or any other material development that may have a significant impact on its financial position. If any material development occurs between the quarterly updates, this must also be announced immediately.
In addition to undertaking a share consolidation, an issuer who is unable to meet the MTP requirement may also consider transferring to the SGX Catalist board, or undertaking other corporate exercises to improve its share price, such as business restructuring, a reverse takeover, or a recapitalisation exercise.
For more information on the SGX’s MTP requirement, please refer to the following resources from the SGX:
- A Guide to the Minimum Trading Price Requirement for Mainboard Issuers: http://www.sgx.com/wps/wcm/connect/6403fa3a-acbf-4daa- 9d81-cfc1a2090034/A+Guide+to+MTP+-+SGX+9+Feb+2015.pdf?MOD=AJPERES
- Frequently Asked Questions: http://www.sgx.com/wps/portal/sgxweb/home/faqs#Minimum- Trading-Price