31 January 2018

On 11 January 2018, Singapore Exchange Limited (“SGX”) issued a consultation paper seeking feedback on whether the requirement for companies listed on SGX-ST (“issuers”) to conduct quarterly reporting (“QR”) should be retained or removed.

Currently, an issuer with a market capitalisation exceeding S$75 million is required to conduct QR and announce the financial statements for each of the first three quarters of its financial year not later than 45 days after the end of that quarter. The issuer is required to continue conducting QR even if its market capitalisation subsequently decreases below S$75 million.

If QR is retained, SGX proposes to refine the QR framework to address concerns raised by issuers about compliance costs and investors’ preference for adjustments to the QR framework. The proposed changes relate broadly to recalibrating the market capitalisation threshold for issuers that are required to conduct QR and obtaining shareholders’ mandate to discontinue QR.

The consultation closes on 9 February 2018.

Increase in market capitalisation threshold from S$75 million to S$150 million with option of additional SGX requirement of shareholder holding 15% of shares

SGX proposes increasing the market capitalisation threshold from S$75 million to S$150 million, based on the company’s average daily market capitalisation for the six-month period ending 31 December each year.

SGX further proposes to allow an issuer whose average daily market capitalisation subsequently falls below S$150 million for two consecutive six-month periods from 1 July to 31 December to apply to SGX-ST to cease conducting QR for so long as it does not subsequently meet the market capitalisation threshold.

There will be no change to the one-year grace period currently given to issuers to set up the necessary infrastructure to start QR upon meeting the market capitalisation threshold.

As an alternative option, in addition to recalibrating the market capitalisation threshold to S$150 million, SGX proposes that an issuer should be required to conduct QR if at least one shareholder of the issuer holds a direct or indirect interest in 15% or more of the total number of the issued shares (excluding treasury shares and subsidiary holdings) as at 31 December each year.

Simplifying content of first and third quarter reports

SGX proposes to reduce the contents of the first and third quarter reports by requiring issuers to disclose only their balance sheet, income statement, cashflow statement and commentary of significant trends and competitive conditions, and provide the negative assurance from their board of directors. The remaining items which are unlikely to fluctuate on a quarterly basis are proposed to be removed. It is also proposed that the contents of the second quarter report remain unchanged.

Obtaining shareholders’ approval to discontinue conducting QR

SGX proposes to allow an issuer to seek approval from its shareholders to discontinue conducting QR. The approval may be obtained as follows:

  • Before listing;
  • By an ordinary resolution passed at the meeting convened to approve a reverse takeover; or
  • By an ordinary resolution passed at an annual general meeting (“AGM”) of the issuer.

For the purpose of the ordinary resolution, controlling shareholders, directors, CEOs and their associates must not vote on the resolution, nor accept appointments as proxies unless specific instructions as to voting are given.

The shareholder approval obtained may remain in force until the third AGM of the issuer following the passing of the resolution, and may be renewed thereafter. The approval may be revoked by ordinary resolution of the shareholders in general meeting.

SGX-ST may exercise administrative power to require QR in certain circumstances

Pursuant to its administrative power to require issuers to make specified disclosures for the purpose of ensuring a fair, orderly and transparent market, SGX-ST may require an issuer to perform QR if deemed appropriate even if the issuer is not currently performing QR. In exercising its power, SGX-ST gives due regard to the time and effort required for issuers to put in place a reporting process. SGX seeks feedback on other considerations that should be taken into account when requiring such issuers to conduct QR.

Implementation timeline and transition period

If the proposed changes are adopted, SGX expects to implement the changes to the QR requirement in the second half of 2018.

Reference materials

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


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