OVERVIEW OF CAPITAL MARKETS
SECTION A. LEGISLATIVE AND INSTITUTIONAL FRAMEWORK: ...................................... 1
SECTION B. SECURITIES LISTED ON THE MAINBOARD .................................................... 3
SECTION C. SECURITIES LISTED ON CATALIST ................................................................. 8
SECTION D. PROSPECTUS REQUIREMENTS FOR OFFERINGS OF SECURITIES: ....... 11
SECTION E. RECENTLY DEVELOPED SECURITIES PRODUCTS: ................................... 13
SECTION F. PROPOSED AMENDMENTS TO LISTING RULES: ........................................ 17
SECTION A. LEGISLATIVE AND INSTITUTIONAL FRAMEWORK:
Singapore's capital market and securities industry is regulated by a number of agencies and
systems as prescribed in the following legislation, regulations and rulebooks:
• the Companies Act (Cap 50);
• the Securities and Futures Act (Cap 289) and the Securities and Futures Regulations;
• the Monetary Authority of Singapore Act (Cap 186);
• the Mainboard Listing Manual and the Listing Manual Section B: Rules of Catalist; and
• the Singapore Code on Takeovers and Mergers.
The responsibilities of capital market and securities regulation are divided as follows:
• the Companies Act is administered by the Accounting and Corporate Regulatory
Authority and lays down the legal nature of companies in Singapore, as well as the
framework for their corporate governance and administration;
• the Securities and Futures Act (“SFA”) and the accompanying regulations is
administered by the Monetary Authority of Singapore (“MAS”) and governs the creation,
sale and legal nature of all forms of securities products in Singapore;
• the Code on Takeovers and Mergers is administered by the Securities Industry Council
which, together with the MAS and the Singapore Exchange (“SGX”), has the
responsibility of overseeing fair dealing in the shares of public listed companies;
• the MAS is in charge of administering the civil penalty regime for insider trading under
the SFA; and
• the Commercial Affairs Department is in charge of investigating and prosecuting
corporate and securities offences.
SGX-ST and the Securities Exchange:
SGX owns and operates the only integrated securities exchange and derivatives exchange in
Singapore and their related clearing houses. Together, the two exchanges serve a wide array
of international and domestic investors and end users, including many of the world’s largest
financial institutions, and have been among the most innovative exchanges in the world in
technological and new product development.
SGX maintains two boards on which both Singapore and foreign companies may list their
shares, namely, the Mainboard and Catalist.
Settlement Cycle and Risk Management:
The settlement cycle adopted by the SGX is T+3 at 12 pm, on which all participants with
undelivered securities must ensure they have sufficient securities in their securities accounts.
While previously, SGX commenced buying-in of undelivered securities on T+4 at 11:30 am,
under the revised settlement process, buy-in now commences on T+3 at 3 pm.
Securities Products Provided by SGX:
SGX provides several securities products, including:
• equities listed on the Mainboard, SGX-ST’s primary listing platform, and on Catalist, its
sponsor-supervised secondary listing platform;
• debt securities, including bonds, debentures and loan stock;
• Real Estate Investment Trusts (“REIT”s);
• Business Trusts (including Shipping Trusts);
• Exchange Traded Funds (“ETF”s);
• Global Depository Receipts (“GDR”s); and
For the purposes of this overview, a brief discussion of the characteristics of equities, debt
securities, REITs, Business Trusts, and ETFs will be undertaken.
SECTION B. SECURITIES LISTED ON THE MAINBOARD
Mainboard Listed Equities
Mainboard Listing Requirements:
While the SGX adopts a disclosure based regime once securities are listed, there are stringent
requirements which must be met before a company’s equities may be listed.
General qualitative criteria for a Mainboard listing include the following:
• the company must be a going concern or the successor of a going concern1 and its
accounts must be audited;
• the company’s group must be in a healthy financial position with a positive cash flow2;
• all debts owing to the group by the company’s directors, substantial shareholders and
companies controlled by directors and substantial shareholders must be fully repaid3;
• the company must have a strong management team and continuity of management
throughout the relevant period. Directors and management should have appropriate
experience, expertise, or training,4 and possess good character and integrity5;
• the company’s board should have at least two non-executive independent directors6,
and independent directors should make up at least one-third of the board7;
• the company must resolve or eliminate any conflicts of interest and related party
transactions between the company, its directors, substantial shareholders and related
companies prior to listing8.
Over and above this, a company seeking to be listed must satisfy at least one of the following
• a cumulative consolidated pre-tax profit of at least SGD$7.5 million for the last three
years, and a minimum pre-tax profit of SGD$1 million for each of those three years.
The company must have been engaged in substantially the same business and have
been engaged under substantially the same management throughout the period for
which the relevant profit test applies10; or
• a cumulative consolidated pre-tax profit of at least SGD$10 million for the last one or
two years. The company must have been engaged in substantially the same business
Rule 203, Listing Manual.
Rule 210(4)(a), Listing Manual.
Rule 210(4)(b), Listing Manual.
Rule 210(5)(a), Listing Manual.
Rule 210(5)(b), Listing Manual.
Rule 210(5)(c), Listing Manual.
Paragraph 2.1, Code of Corporate Governance 2005.
Rule 223 Listing Manual.
There are currently proposed changes to the quantitative criteria. Please refer to Section F of this article for more
information on the proposed changes.
Rule 210(2)(a), Listing Manual.
and have been engaged under substantially the same management throughout the
period for which the relevant profit test applies11; or
• a market capitalization of at least SGD$80 million calculated based on the issue price
and post-invitation share capital12.
Certain post-invitation free float requirements also apply13:
• where market capitalization is less than SGD$300 million, there must be a free float of
at least 25%;
• where market capitalization is between SGD$300 million and SGD$400 million, there
must be a free float of at least 20%;
• where market capitalization is between SGD$400 million and SGD$1000 million, there
must be a free float of at least 15%; and
• where market capitalization is more than SGD$1000 million, there must be a free float
of at least 12%.
For a primary or secondary listing, an issuer must have at least 500 shareholders worldwide14.
For a secondary listing, where the SGX and the issuers’ primary home exchange do not have
an established framework or arrangement for the movement of shares between jurisdictions,
the issuer should have at least 500 shareholders in Singapore or 1,000 shareholders
Alternative Listing Requirements for Life Science Companies:
As per the amendments to the Mainboard Listing Manual introduced in March 2009, a life
science company which cannot meet the standard qualitative requirements may still be listed if
it fulfils all the following requirements16:
• the life science company has successfully raised funds from institutional investors and
credited investors not less than 6 months prior to the date of the listing application17;
• the life science company has a market capitalization of at least SGD$80 million
calculated based on the issue price and post-invitation issued share capital18;
• the primary purpose of the life science company’s listing is to use the proceeds of the
initial public offering (“IPO”) to bring identified products to commercialization19;
• the life science company demonstrates that it has a three-year record of operations in
laboratory research and development, and submits details of patents granted or in the
Rule 210(2)(b), Listing Manual.
Rule 210(2)(c), Listing Manual.
Rule 210(1), Listing Manual.
Rule 210(1)(a), Listing Manual.
Rule 210(1)(b), Listing Manual.
Rule 210(8), Listing Manual.
Rule 210(8)(a), Listing Manual.
Rule 210(8)(b), Listing Manual.
Rule 210(8)(c), Listing Manual.
progress of being patented, details of the successful testing of its products, as well as
details of key management and staff expertise20; and
• the life science company has working capital that is sufficient for its present
requirements and for at least 12 months after the listing21.
More Stringent Continuing Listing Disclosure Requirements
Life science companies which list pursuant to the alternative listing requirements will be subject
to more stringent disclosures, including quarterly announcements disclosing the use of funds
for that particular quarter, as well as projections on the use of funds for the next immediate
At present, debt securities may only be listed on the SGX-Mainboard, though it is probable that
provision will be made for them to be listed on Catalist.
Some of the requirements for listing debt include:
• for Singapore debt securities, having a principal amount of at least SGD$750,000 for an
issuer whose equity securities are already listed on the SGX23; and
• for foreign debt securities, having a credit rating of investment grade and above.24
Debt Securities Listed on SGX Generally Require a Trustee:
In general, a suitable trustee such as a trustee corporation must be appointed to holders of an
issuer’s debt securities listed on the SGX.25 The trustee must have no interests in relation to
the issuer which would conflict with its role as trustee.
The trust deed must include:
• a limitation on the amount the issuer/guarantor company may borrow26;
• a covenant that on request in writing by the trustee, the issuer will cause any wholly
owned subsidiary of the issuer to become a guarantor. The trust deed must also
provide that the right to request this will arise when the value of the security backing the
debt securities is believed to be inadequate27;
Rule 210(8)(d), Listing Manual.
Rule 210(e), Listing Manual.
Rule 705(6), Listing Manual.
Rule 303(1), Listing Manual.
Rule 304(3), Listing Manual.
Rule 308, Listing Manual.
Rule 309(1), Listing Manual.
Rule 309(2), Listing Manual.
• the requirement that the directors of the issuer must prepare a report each quarter,
signed by two directors, stating whether or not any of the terms of the trust have been
breached such that the trustee has the right to enforce the security28;
• the requirement that the directors of the issuer must notify the trustee when they are
aware that any condition of the Trust Deed cannot be fulfilled29; and
• a provision that a meeting of holders of debt securities must be called on a requisition in
writing signed by holders of at least 10% of the nominal amount of debt securities30;
Trustee Not Required for Debt Issues Offered Only to Sophisticated or Institutional Investors:
Trust deed requirements will not apply to a debt issue that is offered only to sophisticated or
institutional investors and is traded in a minimum board lot size of SGD$200,000 or its
equivalent in foreign exchange following listing.31 Such offers also do not require a
The directors of every borrowing and guaranteeing entity must provide a profit and loss account
of the entity to the trustee for the debenture holders twice a year.33
Applying Cash for the Stated Purposes of Loans in Prospectuses:
Where a prospectus is issued in connection with an offer of debentures, and a statement is
made as to a particular purpose for which moneys received pursuant to the offer are to be
applied, the borrowing entity shall from time to time make reports to the trustee as to the
progress that has been made towards achieving this purpose.34
Continuing Listing Obligations for Companies Listed on the Mainboard:
The Mainboard operates on a disclosure based system, based on the premise that informed
investors can protect themselves and that the market is better than regulators in deciding the
merits of securities. The principle of full, accurate and timely disclosure which runs through the
continuing listing obligations is meant to provide for a fair, orderly and efficient market.35 Some
of the continuing listing obligations Mainboard listed companies, REITs and Business Trusts
are subject to include those listed below.
Announcing Material Information:
An issuer must immediately announce information concerning it that would be likely to
materially affect the price or value of its securities.36
Rule 309(3), Listing Manual.
Rule 309(5), Listing Manual.
Rule 309(6), Listing Manual.
Rule 308(6)(b), Listing Manual.
ss 274 and 275, Securities and Futures Act (Cap 289).
s 268(6), Securities and Futures Act (Cap 289).
s 270(1), Securities and Futures Act (Cap 289).
Para 2.2, Practice Note 1.2, Listing Manual.
Rule 703(1), Listing Manual.
Regular Financial Reporting:
An issuer must issue quarterly reports, with the exception that companies are only required to
issue half-yearly reports if they are below SGD$75 million in market capitalization.37
Interested Person Transactions:
Generally, shareholders’ approval for interested person transactions must be obtained where
they breach certain quantitative thresholds. However, for recurrent transactions of a revenue or
trading nature or those necessary for daily operations, a general mandate may be sought to
obtain shareholder approval on a continual basis.38
The free float requirement for Mainboard listed companies is set at 10%39.
Rule 705(2), Listing Manual.
Rule 920, Listing Manual.
Rule 723, Listing Manual.
SECTION C. SECURITIES LISTED ON CATALIST
Listing on Catalist:
Presently, only equities may be listed on Catalist. However, it is likely that in future, other forms
of securities such as investment trusts and debt will also be eligible for listing on Catalist.
The key feature of Catalist is its "Sponsor-supervised" market model, under which companies
are brought to list by approved Sponsors. The SGX does not impose any quantitative entry
criteria on companies applying to be listed on Catalist; rather, Sponsors decide if the listing
applicant is suitable to be listed. Sponsors have to be approved by SGX and are answerable to
Companies must engage a Sponsor at all times in order to remain listed. Sponsors are to
advise listed companies on rule compliance, review their public documents, and whistle-blow to
SGX if there are affirmed or suspected rule breaches.
Catalist companies enjoy a faster and more certain time-to-market. The Offer Document for an
IPO need only be lodged on SGX’s website called "Catalodge", and need not be lodged with
the MAS. Post-listing, Catalist companies are also able to obtain larger mandates for
subsequent fund raising and need only seek shareholders approval when embarking on
significantly large acquisitions and disposals.
Listing on Catalist:
A company seeking a listing on Catalist must meet the following admission requirements.
• the listing applicant must be sponsored by an approved Sponsor40. Catalist companies
are listed based on the Sponsor's assessment that they are suitable. SGX does not set
any minimum quantitative entry criteria41; rather Sponsors will use their own selection
• a listing applicant must produce an "Offer Document". The Offer Document will still be
subject to the same disclosure requirements as a prospectus42;
• the Sponsor and directors of the company must include a working capital statement in
the Offer Document that in their reasonable opinion, the company has sufficient working
capital for the present requirements and for at least 12 months after IPO43; and
• the Catalist listed company must meet the Catalist free float requirement of 15% of
post-invitation share capital being in the hands of a minimum number of 200 public
Rule 402(1), Listing Manual Section B: Rules of Catalist.
Rule 406(2), Listing Manual Section B: Rules of Catalist.
Rule 406(10), Listing Manual Section B: Rules of Catalist.
Rule 407(2), Listing Manual Section B: Rules of Catalist.
Rule 406(1), Listing Manual Section B: Rules of Catalist.
Continuing Listing Obligations for Companies Listed on Catalist:
Companies that are admitted to Catalist will have to comply with various continuing listing
obligations. These are different from the Mainboard continuing listing obligations, and include
those listed below.
The Catalist listed company must retain a Sponsor for as long as it is listed45. A Catalist-listed
company without a Sponsor for more than three continuous months will face delisting46.
Announcing Material Information:
As with Mainboard listed companies, the Catalist listed company must immediately announce
information concerning it that would be likely to materially affect the price or value of its
Regular Financial Reporting:
The Catalist listed company must issue quarterly reports48, with the exception that companies
are only required to issue half-yearly reports if they are below SGD$75 million in market
Interested Person Transactions:
The Catalist listed company must disclose to shareholders, and seek shareholders’ approval for
interested person transactions when they breach certain quantitative thresholds. However, as
with Mainboard listed companies, for current transactions of a revenue or trading nature or
transactions necessary for daily operations, a general mandate may be sought to obtain
shareholder approval on a continual basis50.
At least 10% of the Catalist-listed company’s total number of issued shares must be held by the
public at all times51.
Transfers to Mainboard
A company that wishes to transfer from Catalist to Mainboard must meet the following criteria:-
• the Catalist-listed company must meet Mainboard profit entry criteria52;
• the Catalist-listed company must be listed on Catalist for at least two years53;
Rule 745(1), Listing Manual Section B: Rules of Catalist.
Rule 745(5), Listing Manual Section B: Rules of Catalist.
Rule 703(1), Listing Manual Section B: Rules of Catalist.
Rule 705(2), Listing Manual Section B: Rules of Catalist.
Rule 705(4), Listing Manual Section B: Rules of Catalist.
Rule 920, Listing Manual Section B: Rules of Catalist.
Rule 723, Listing Manual Section B: Rules of Catalist.
Rule 408(2), Listing Manual Section B: Rules of Catalist; Rule 212(2), Listing Manual.
• the Catalist-listed company must meet shareholder spread requirements54; and
• the Catalist-listed company must have obtained shareholder approval by special
Rule 408(1), Listing Manual Section B: Rules of Catalist; Rule 212(1), Listing Manual.
Rule 408(7), Listing Manual Section B: Rules of Catalist; Rule 213, Listing Manual.
Rule 408(5), Listing Manual Section B: Rules of Catalist.
SECTION D. PROSPECTUS REQUIREMENTS FOR OFFERINGS OF SECURITIES:
Offers of Securities Must Generally Be Accompanied by a Prospectus:
Generally, any offer of securities must be accompanied by a prospectus that has been
prepared in accordance with the Securities and Futures Act and lodged with the MAS56. Failure
to comply with prospectus requirements attracts penal sanctions.57 There are however, several
exemptions to prospectus requirements, including those listed below.
Offers Made to Existing Members or Debenture Holders:
Offers of shares or debentures made to existing members or debenture holders of an SGX-
listed company do not require a prospectus.58
Offers Made to Accredited Investors under s 275:
Under s 275 of the Securities and Futures Act, an offer of securities does not require a
prospectus where the offer is made to an accredited investor59. An accredited investor refers
• an individual whose net personal assets exceed SGD$2 million and whose income in
the preceding 12 months is not less than SGD$300,000; or
• a corporation with net assets exceeding SGD$10 million in value, as determined by the
most recent audited balance sheet of the company.
Offers Made to Institutional Investors under s 274:
Under s 274 of the Securities and Futures Act, an offer of securities does not require a
prospectus if it is made to an institutional investor. An institutional investor includes61:
• merchant banks;
• finance companies;
• insurance companies;
• trust companies; and
• collective investment schemes.
s 240(1), Securities and Futures Act (Cap 289).
s 240(7), Securities and Futures Act (Cap 289).
s 273(1)(ce), Securities and Futures Act (Cap 289).
s 275(2), Securities and Futures Act (Cap 289).
s 4A(a), Securities and Futures Act (Cap 289).
s 4A(c), Securities and Futures Act (Cap 289).
If securities are offered to no more than 50 persons within any period of 12 months, the offer
does not need to comply with prospectus requirements62.
Offer Made by Issuers Listed on the Mainboard or Catalist:
Where a company that is already listed on the Mainboard or Catalist issues new securities to
the public, it need not comply with prospectus requirements as long as it makes the offer with
an Offer Information Statement (“OIS”) prepared in accordance with the SFA63. For issuers
listed on the Mainboard, the OIS must be lodged with the MAS, while for issuers listed on
Catalist, the OIS need only be lodged on Catalodge64.
s 272B, Securities and Futures Act (Cap 289).
s 277, Securities and Futures Act (Cap 289).
Rule 864(1), Listing Manual Section B: Rules of Catalist.
SECTION E. RECENTLY DEVELOPED SECURITIES PRODUCTS:
A Real Estate Investment Trust raises capital to purchase primarily real estate assets with a
view to generating income for unit holders. REITs allow individual investors to access income-
yielding real property assets that would otherwise be too expensive for retail investors.
The underlying assets of a REIT can be relatively varied, and can include commercial, retail,
industrial and residential properties located specified countries or regions. REITs may also
invest in certain non-real estate related assets, including listed or unlisted debt securities and
listed shares of Singapore or foreign non-property companies, and securities issued on behalf
of the Singapore government or foreign governments, subject to the majority of a REIT’s assets
being made up of real estate or real estate-related assets.
REITs generally should not borrow more than 35% of the value of the fund’s deposited
property. However, where a credit rating from Fitch, Moody’s or S&Ps is obtained and
disclosed to the public, the aggregate leverage limit of the fund is increased to 60%.65
REITs are tax transparent as long as the REIT distributes at least 90% of its distributable
income to unit holders.66
Retail Investor Protection Through the Mainboard Listing Rules:
REITs are subject to the same stringent requirements as equity securities with regards to listing
requirements and continuing disclosure obligations.67 As of now, REITs can only be listed on
Besides the fiscal benefits of tax transparency, REITs unitize expensive real estate investments
and give investors direct, “clean” exposure to real estate which they would not otherwise be
able to afford.
Business Trusts are business enterprises set up as trusts instead of companies, and are hybrid
structures with elements of both companies and trusts. Like a company, a Business Trust
operates and runs a business, although it does not bear the legal personality that a company
does. Unlike a company however, the Business Trust is created by a trust deed under which
the trustee has legal ownership of the trust assets and manages the assets for the benefit of
the beneficiaries of the trust.
Paragraph 9.2, Appendix 2, MAS Code on Collective Investment Schemes (Last Updated 11 November 2009).
Paragraph 2, IRAS Circular, Income Tax Treatment of REITs dated 30 November 2006; Paragraph 2, IRAS Circular,
Income Tax Treatment of Approved Sub-trust of a REIT dated 14 May 2008.
Rule 404(8), Listing Manual.
Purchasers of units in the Business Trusts, being beneficiaries of the trust, hold beneficial
interest in the assets of the Business Trust. The Business Trust structure is suited to
businesses with stable growth and cash flow, such as infrastructure and utilities businesses,
and vehicle leases and charters.
Corporate Governance Structure:
Business Trusts are governed by the Business Trusts Act and are premised on a single
responsible entity, the Trustee-Manager.
Usually, the sponsor of the Business Trust owns the shares in the Trustee-Manager, and
sponsors the trust by injecting assets into it. The Trustee-Manager then raises funds from
public investors by issuing Business Trust units in an IPO. The proceeds from the IPO,
together with any borrowings, are then used to acquire the trust assets.
The Trustee-Manager has the dual responsibility of managing the Business Trust and
safeguarding the interests of unit holders.
To address any potential conflict of duties of the Trustee-Manager to the shareholders of the
Trustee-Manager and to the unit holders of the Business Trust, the Business Trust Act requires
a higher standard of independence from the Board of Directors, and imposes high requirements
of corporate governance.
Business Trusts have no gearing limit.
Business Trusts are subject to the Income Tax Act and are thus not tax-transparent. That said,
certain assets or businesses which enjoy tax benefits under the Income Tax Act will continue to
enjoy these benefits.
Retail Investor Protection Through the Mainboard Listing Rules:
Business Trusts are subject to the same stringent requirements as equity securities with
regards to listing requirements and continuing disclosure obligations. As of now, Business
Trusts can only be listed on the Mainboard.
While companies are restricted to paying dividends out of accounting profits, there are no such
restrictions on trusts. Business Trusts can therefore pay distributions to investors out of
operating cash flows and are not restricted to accounting profits. Business Trusts are thus
suited to businesses involving high initial capital expenditures with stable operating cash flows.
Business Trusts give investors direct exposure to cashflow-generating assets. Examples of
such assets include utilities, ships or aircraft which would otherwise be too expensive for retail
investors to access. The Business Trust structure does this by unitizing the assets into
affordable, liquid units which are traded on the SGX. This gives investors a new alternative to
existing yield plays.
In addition to maintaining the payout, the Trustee-Manager is also expected to actively manage
the business for growth through acquisitions and expansions to enhance returns to investors.
In view of this, the incentives of Trust-Managers are usually structured to align their interests
with unit holders.
The result of this hybrid security is that it combines positive characteristics of both debt and
equity, resulting in a higher yield than equities, lower price volatility, a stable but low growth,
and low Beta correlation.
A shipping trust is a Business Trust where the trustee manager buys and leases vessels for a
period of time in return for a steady flow of lease payments from the lessees, which are
shipping firms. Typically, the lease period is between eight and 10 years, during which the trust
will lock in fixed charter rates, providing cash flow visibility and stability to investors.
Over and above the benefits Business Trusts give to investors, such as unitizing expensive
assets and giving investors direct, “clean” exposure to these assets, the shipping industry in
Singapore enjoys substantial tax benefits, such as 100% tax exemptions for income derived
from the operation of Singapore ships.
In view of Singapore’s status as a global shipping hub, shipping trusts have a strong potential
for growth in Singapore.
Exchange Traded Funds
Exchange Traded Funds are investment funds traded live on the SGX. Currently, they can only
be listed on the Mainboard. Generally, ETFs aim to track indices. This provides investors with
an effective means of investing in the price movements of the component stocks in the
underlying indices. The entire portfolio of the component stocks is traded as a single security.
ETFs can be sold short as well as bought on margin.
ETFs provide investors with the opportunity to obtain cost efficient exposure to a diversified
portfolio of securities, without needing to be concerned about foreign direct investment or
securities ownership restrictions in the jurisdiction the securities are listed in.
Investing in ETFs also allows investors to practice indexing, or "passive management", which
involves investing in a group of securities that represent the composition of a broad stock
market, stock industry sector, international stock, or bond index. As index funds offer "market
level" performance, they aim to generally match the performance of a specific index. This
usually leads to lower management fees and operating expenses than actively managed funds.
Investing in ETFs is also much simpler than buying the component stocks of the index. ETFs
also provide for greater transparency and market efficiency as investors may monitor both the
live prices for the ETFs as well as the performance of the underlying stocks.
As investors are able to perform live trading on ETFs, they have the flexibility to implement their
own investment strategies and react rapidly to the market.
SECTION F. PROPOSED AMENDMENTS TO LISTING RULES:
Proposed Amendments to Listing Rules in Consultation Paper dated 9 December 2009:
On 9 December 2009, the SGX issued a consultation paper proposing a wide range of
amendments to the listing rules. In particular, the proposed amendments seek to strengthen
corporate governance. Some of the proposed amendments are summarized below:
• a listed company must have at least one independent director remaining in office at all
times. Further, if the principal subsidiaries of a listed company operate outside
Singapore, there should be at least one independent director who is resident in
Singapore sitting on the board of each of those subsidiaries;
• where a company is facing difficulties, such as where it continually fails to comply with
the listing rules, the SGX may require that its approval be obtained prior to the
appointment of the issuer’s directors, Chief Executive Officer and Chief Financial
• if a listed company’s principal operations and auditor are based outside Singapore, a
Singapore-based accounting firm should jointly sign-off on its audited reports;
• newly listed issuers will have to consider engaging, or may be required by the SGX to
engage, a corporate governance adviser for two years after listing successfully; and
• issue managers must be accredited by the SGX.
Proposed Amendments to Listing Criteria and Listing Rules in Consultation Paper dated
6 January 2010:
On 6 January 2010, the SGX issued a consultation paper proposing amendments to the listing
rules. The proposed amendments are summarized below.
Proposed Amendments to the Mainboard Listing Criteria:
The SGX proposes to amend the existing Mainboard listing quantitative criteria68 such that a
Mainboard listing aspirant will only have to satisfy one of the following two requirements:
• Criterion 1: the prospective issuer must be profitable in the latest financial year, have an
operating track record of three years and a market capitalisation of not less than S$150
million based on the issue price and post-invitation issued share capital; or
• Criterion 2: the prospective issuer must have generated operating revenue in the latest
financial year and a market capitalisation of not less than S$300 million based on the
issue price and post-invitation issued share capital.
Catalist companies seeking a transfer to the Mainboard will have to meet Criterion 1.
See Section B of this article for information on the existing Mainboard listing quantitative criteria.
There are no changes proposed to the qualitative criteria for listing on the Mainboard, such as
directors and management having appropriate experience, expertise, or training and
possessing good character and integrity.
The minimum issue price of equity securities offered in an IPO or reverse takeover is proposed
be raised from S$0.20 to S$0.50.
The new admission criteria is proposed to be implemented in the fourth quarter of 2010.
Special Purpose Acquisition Companies:
The SGX is also proposing to allow issuers with no prior operating history, or Special Purpose
Acquisition Companies (“SPACs”), to list for the purposes of entering into future undetermined
business combinations. Business combinations a SPAC may enter into include a merger,
share exchange, asset acquisition, share purchase or business reorganization. Simply put, a
SPAC is a cash pool seeking to acquire viable businesses through public funding.
Some of the proposed criteria a SPAC must comply with include the following:
• the SPAC must have a minimum market capitalisation of SGD$150 million based on the
IPO issue price and post-invitation issued share capital; and
• at least 25% of the total number of issued shares must be held by not less than 300
• a minimum of 95% of the IPO proceeds must be placed in an escrow account. The
SPAC must provide monthly valuations of its assets and utilisation of cash, and
quarterly updates of milestones in securing a business combination;
• the value of a business combination should amount to at least 80% of the net asset
value of a SPAC;
• the business combination must be approved by independent shareholders in a general
meeting. The founding shareholders will not be considered independent. Public
shareholders who vote against the business combination will have the right to redeem
their shares for a pro-rata share of the cash in escrow;
• the SPAC may set a threshold on the aggregate percentage of shares owned by
independent shareholders who exercise their conversion rights beyond which the issuer
will not proceed with the business combination. Such a threshold must be stated in the
prospectus and cannot exceed 40%;
• if the SPAC fails to complete a business combination in 3 years, it will be liquidated and
must return the cash to its shareholders.
Currently, there are no proposals to allow SPACs to list on Catalist.
Secondary Fund Raising:
SGX is also proposing to adopt certain secondary fund raising measures which were introduced
in early 2009 to help issuers deal with tough market conditions. These include the following:
• reducing the required notice period for books closure date from 10 market days to five
• allowing issuers to undertake non-renounceable rights issues subject to specific
shareholder approval; and
• removing the requirement for shareholders’ approval for scrip dividend schemes as long
as they have the option to choose a cash alternative.
The proposed codification of these secondary fund raising measures applies to both Mainboard
and Catalist listed companies.
Singapore has a stringent regulatory environment which has led to its having a culture of
transparency and accountability. Ultimately however, its capital markets are disclosure based,
and allow the market, and not regulators, to judge the merit and value of securities. With its
status as an international financial centre, the presence of established, home-grown sponsors,
and the SGX’s willingness and ability to adapt to an ever-changing market, Singapore capital
markets demonstrate great potential for even further growth and development in the near
29 January 2010
Soh Chun Bin
9 Raffles Place #32-00
Republic Plaza, Singapore 048619
Main: +(65) 6389 3000
Fax: +(65) 6389 3099