29 April 2020

On 22 April 2020, Singapore Exchange Regulation (“SGX RegCo”) announced in a news release that, in consultation with the Monetary Authority of Singapore (“MAS”), it will grant an automatic two-month extension to issuers with a 29 February 2020 or 31 March 2020 financial year end, and a one-month extension to issuers with a 30 April 2020 financial year end, to release their full-year unaudited results (“Waiver”).

SGX RegCo also posted on its Regulator’s Column on 22 April 2020 what it expects of issuers’ disclosures during Covid-19 to underscore the importance of complying with the continuous disclosure obligations during the time of heightened business, economic and market uncertainty brought forth by the Covid-19 situation.

In addition, on 27 April 2020, the “Additional Guidance on the Conduct of General Meetings During Elevated Safe Distancing Period” (“Guidance”) jointly issued by the Accounting and Corporate Regulatory Authority (“ACRA”), MAS and SGX RegCo was updated to provide that the prescribed alternative arrangements to personal attendance will apply to meetings held during the period from 27 March 2020 to 30 September 2020. This follows the earlier issuance of the Covid-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) (Amendment No. 2) Order 2020 (“Amendment Order”) by the Ministry of Law on 24 April 2020.

Extension of time to release unaudited financial results

While recognising the importance of issuers announcing their unaudited full-year financial statements in a timely manner as doing so keeps the market apprised of issuers’ financial performance ahead of the issuance of the annual report and shareholder approval of the audited financial statements at the annual general meeting (“AGM”), SGX RegCo has also noted the practical difficulties in the preparation of the unaudited full-year financial statements due to the implementation of elevated safe distancing measures from 7 April 2020 until 4 May 2020 (inclusive) as a circuit breaker to address local transmission of Covid-19 (“Circuit Breaker Period”), which has now been extended until 1 June 2020 (inclusive) (“Revised Circuit Breaker Period”).

As all non-essential businesses must stop operations at their workplace during the Revised Circuit Breaker Period and remote access to accounting and financial records may not always be feasible, issuers whose full year ended just before the start of or during the Revised Circuit Breaker Period would have difficulty meeting their reporting timeline which then falls within or shortly after the Revised Circuit Breaker Period.

In view of this, SGX RegCo decided to grant the Waiver. 

Revised timeline to release full-year unaudited results

To balance the operation of a fair, orderly and transparent market and the challenges faced by issuers, the Singapore Exchange will grant issuers with a 29 February 2020, 31 March 2020 and 30 April 2020 financial year end an extension of time to give them two months to prepare their unaudited full-year financial statements outside of the Revised Circuit Breaker Period. The revised deadlines for these issuers to announce their unaudited full-year financial statements are as follows:

Financial year end

Original due date to announce unaudited financial statements

New due date to announce unaudited financial statements

29 February 2020

29 April 2020

29 June 2020

31 March 2020

30 May 2020

30 July 2020

30 April 2020

29 June 2020

29 July 2020

Notification and announcement requirements

Issuers will need to notify SGX RegCo by e-mail to automaticfswaivers@sgx.com of, and announce via SGXNet, the following:

  1. their relevant financial year end and the indicative timeline to release their full-year unaudited financial statements;
  2. the board of directors’ confirmation that the time extension will not be in contravention of any laws and regulations governing the issuer and its constitution (or the equivalent in the issuer’s country of incorporation); and
  3. ensuring adherence to the issuer’s internal policies with regard to dealing by the issuer and its officers in its securities, including not dealing in the issuer’s securities while in possession of any material information.

No response will be required from SGX RegCo.

SGX RegCo has reminded issuers that it is absolutely necessary and crucial for them to provide timely disclosures to shareholders via SGXNet on their results immediately after the figures are available as well as on the impact of the latest advisories and measures amid Covid-19 on business and any other material aspects.

SGX RegCo’s expectations on issuers’ disclosure obligations during Covid-19

SGX RegCo has highlighted that the current business and economic uncertainty and market volatility make it absolutely necessary for shareholders to have up-to-date information concerning material changes in issuers’ business and operations. Accordingly, issuers are reminded that reliance on broad-stroke explanations pinned on a decline in general economic activity to explain away their outlook would be deemed inadequate and of little utility to their shareholders. Where companies have shut stores, outlets, plants and offices and curtailed business activities, the impact of these decisions, if quantifiable, should be disclosed, such as the proportion of retail units in a mall that are shut due to Covid-19 measures or the capacity at which plants are operating. At the very least, companies must be transparent about such decisions including providing data on operations that have been suspended or curtailed.  

Making disclosures in uncertain times

SGX RegCo recognises that it is difficult for issuers to react to the unpredictability in the rapidly evolving situation and update shareholders, who need timely and accurate information. While the Listing Rules provide exceptions to disclosure if the information in question comprises matters of supposition or is insufficiently definite to warrant disclosure, there are specific scenarios where SGX RegCo explicitly requires material information to be disclosed.

In February 2020, the Listing Rules were enhanced to make explicit that immediate disclosure is required for material changes to an issuer’s near-term earnings prospects caused by general trading trends or by specific events or developments. The Listing Rules also provide guidance to issuers on what to do where there are ongoing developments, or where there is insufficient information for the issuer to disclose financial impact with certainty.

For ongoing developments, where matters are still developing or undergoing further assessment and where issuers are not able to quantify the impact, issuers are still required to make disclosures which would reflect its current state of affairs and outlook. Such disclosures include assessment of the strategy or steps taken to address the effects of Covid-19 and how its operating and financial conditions may change. This will help investors understand the potential impact on the issuer’s prospects. The issuer can provide updates when there are subsequent material developments.

When issuers are unable to disclose the financial impact with certainty due to insufficient information, issuers should nevertheless provide a detailed explanation of the non-disclosure and sufficient information to enable investors to independently assess the financial impact after taking into consideration the variables disclosed. Issuers should avoid giving generic statements on the current economic environment that do not give any clarity of the specific areas of impact on their operations and financial situation. For example, issuers should not publish a generic statement that they expect their financial results to be materially impacted due to Covid-19 without providing a detailed assessment on how their operations or financial situation would be affected.

Board oversight

Issuers’ boards should keep in mind whether plans to deal with the wide-ranging effects of Covid-19 on their businesses will give rise to material information that must be disclosed.

Boards and auditors should have heightened vigilance on the possible effects of global developments on the issuer’s financial. Boards and auditors should review the effectiveness of internal controls, including close scrutiny on high-risk areas such as cash balances and accounts receivables. Boards should also ensure that robust systems are put in place to promptly alert them to changes to the issuer’s business and financial condition amid the rapidly evolving situation.

Questions to consider when determining if disclosure required

Developments surrounding Covid-19 are likely to be considered material for investors to make informed decisions. As a guide, issuers should consider the following in determining if disclosure is required:

  • Impact of Covid-19 on the issuers’ operations: Has there been material disruption to the issuer’s supply chains and/or a material impact to demand for the issuer’s goods and services? Are there material operational constraints and has the issuer put in place measures to overcome these challenges?
  • Compliance with Covid-19 restrictions: Has the issuer been in breach of any Covid-19 restrictions which may lead to penalties by the relevant authorities?
  • Impact of Covid-19 on the issuer’s earning prospects: Does the issuer expect material change to previous prospect statements, or significant improvement or deterioration to its near-term financial results? Has the issuer revised its prospects statement in view of the highly uncertain situation? If so, the issuer must provide detailed explanations as to the reasons for revising its prospects statement and explain how Covid-19 has impacted the relevant quarter or half yearly performance. Given the heightened volatility, the issuer should with greater regularity review if its prospects statement remains relevant. SGX RegCo has recently observed issuers starting to withdraw their previous earnings guidance (i.e. profit estimates or projections). Issuers must provide detailed explanations on the reasons and impact to performance for the relevant period leading to the withdrawal.
  • Impact of Covid-19 on issuers’ liquidity: Is there any material uncertainty concerning the issuer’s ability to fulfil its near-term obligations? Is there any material adverse impact on the issuer’s sources of cash or liquidity (e.g. deferral of a significant payment from a major customer)? Is there material uncertainty on the issuer’s ability to meet its debt covenants or to service its debt obligations? Does the issuer plan to take any material action to raise funds or conserve its liquidity? Is the issuer making any changes to its dividend policy?
  • Impact of Covid-19 on issuers’ balance sheet: Does the issuer expect material impairments to its assets? How is the issuer safeguarding its key assets and value drivers? Are there material changes to capital expenditure previously planned for? Are there changes in accounting estimates or assumptions that would materially affect previously disclosed forecast or estimates as well as financial results?
  • Impact of Covid-19 on issuers’ contractual obligations: Has the issuer or any of its counter-parties exercised temporary relief, force majeure clauses or termination of contractual obligations for material contracts? Are there any threats to the issuer’s contractual rights or ability to fulfil its obligations for material contracts? Are there material contractual terms that have been waived or newly imposed?
  • Threats to viability: Are there significant threats to the issuer’s ability to operate as a going concern? Does the issuer anticipate making significant changes to its business plans in order to manage its near-term costs?
  • Impact of governmental measures: How have the issuer’s key businesses been affected by national and/or international measures taken by countries to address the impact of Covid-19?  Do budgetary support measures have an impact on the operations and business plans of the issuer?

The above list of key areas is not exhaustive and issuers should consider the necessary disclosures that are relevant for their industry and circumstances.

Business updates

With the extension of time granted to publish issuers’ annual reports, issuers should take steps to minimise information gaps regarding their state of affairs. In this regard, SGX RegCo urges issuers to publish regular business updates during this period to provide the market with prompt updates on their performance. Such business updates can contain key operating metrics or top-line financials.

These financial and non-financial indicators would allow issuers to communicate with investors the impact of Covid-19 on the issuers’ current performance and future plans, as well as mitigating measures to manage emerging threats arising from the Covid-19 situation.

Importance of timely disclosures

SGX RegCo reminds issues that providing prompt and high-quality information will not only benefit investors, but will also benefit issuers during this period. Timely disclosures help manage investors’ expectations and avoid shocks when financial results are released. They also demonstrate sound governance and management, strengthening investors’ confidence in an issuer and its business strategy and facilitate fundraising from the market should the need arise in the future.

SGX RegCo also reminds issuers to put in place arrangements to ensure that they will be able to release announcements on SGXNet.

Revision of period during which alternative arrangements to personal attendance applies

The Covid-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020 (“Order”) sets out the alternative arrangements to personal attendance in respect of certain classes of meetings, including general meetings of companies. The Order, which came into operation retrospectively on 27 March 2020, was gazetted on 13 April 2020. Also on 13 April 2020, SGX RegCo issued the Guidance, which includes a checklist providing further guidance on the Order for both listed and non-listed entities. More information can also be found in our previous article titled “Holding meetings amid Covid-19: Order for alternative arrangements issued, guidance and checklist provided by ACRA, MAS and SGX RegCo”.

On 24 April 2020, the Amendment Order was issued by the Ministry of Law and it came into operation retrospectively on 27 March 2020.

Previous applicable period

Prior to the Amendment Order, the prescribed alternative arrangements applied to the following meetings:

  • meetings convened, held, conducted or deferred during the control period;
  • meetings convened, held, conducted or deferred during a period of 30 days after the end of the control period, where notice of the meeting was given during the control period.

The term “control period” meant the period starting on 27 March 2020 and ending on 4 May 2020.

Revised applicable period

With the Amendment Order, the Order has been revised to provide that the alternative arrangements apply for the period starting on 27 March 2020 and ending on 30 September 2020 (“Applicable Period”).

On 27 April 2020, SGX RegCo updated the Guidance to reflect the revised Applicable Period, and also to clarify that the alternative arrangements will not apply to meetings that are further adjourned to a date falling after the Applicable Period.

The extension of the application of the alternative arrangements until the end of September 2020 will benefit companies with a 31 March financial year end. As there is no certainty that there will be a further extension of the Applicable Period beyond 30 September 2020, companies with a 30 June financial year end will have to review whether they can marshal their resources quickly to hold their AGMs by 30 September 2020 so as to enjoy the benefit of the Amendment Order and updated Guidance.

Reference materials

The following materials are available on the SGX website www.sgx.com:

The following materials are available on the Singapore Statutes Online website sso.agc.gov.sg:

Further information

Allen & Gledhill has a Covid-19 Resource Centre on our website www.allenandgledhill.com that contains knowhow and materials on legal and regulatory aspects of the Covid-19 crisis.

In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at covid19taskforce@allenandgledhill.com.


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