30 August 2018
The Singapore Exchange Securities Trading Limited (“SGX-ST”) Listing Rules (Mainboard) (“Mainboard Rules”) and the SGX-ST Listing Rules (Catalist) (“Catalist Rules”) (together, “Listing Rules”) in relation to mineral, oil and gas (“MOG”) companies have been amended with effect from 23 August 2018. The amendments facilitate the listing of MOG companies that are at an earlier stage of development. The Mainboard will continue to be for businesses that are more mature than those on Catalist, based on both asset development and size.
By way of background, on 31 January 2018, SGX released a consultation paper titled “Mineral, Oil and Gas Listing Rules Amendments” and sought feedback on proposed amendments to the Listing Rules for MOG companies with the aim of aligning them with industry developments. The consultation closed on 28 February 2018. On 23 July 2018, SGX published its Response to the feedback received, together with the amendments to the Listing Rules.
Requiring Mainboard MOG companies to establish “reserves”, and allowing mineral companies with only “inferred resources” to be eligible for listing on Catalist
SGX has proceeded with the amendments to require Mainboard MOG listing aspirants to establish “reserves”, and to allow mineral companies with only “inferred resources” to be eligible for listing on Catalist. SGX is of the view that establishing different listing criteria for Mainboard and Catalist would strengthen the profile and proposition of both Mainboard and Catalist.
Requiring Mainboard MOG companies to have a meaningful portfolio of “reserves”
SGX had proposed requiring an MOG company seeking to list on the Mainboard to (i) have a meaningful portfolio of “reserves”, and (ii) that its “reserves” should not be disproportionately smaller than its “resources” (“Proportion Requirement”). Following feedback about the difficulties with the Proportion Requirement, MOG companies listing on the Mainboard would not be subjected to the Proportion Requirement but would be required to establish a meaningful portfolio of “reserves” as initially proposed. An MOG company would be deemed to have a meaningful portfolio if the quantity of “reserves” is able to generate sufficient production revenue to sustain its development of resources.
Requiring MOG companies to demonstrate plans to proceed to development
SGX had proposed removing the requirement for MOG companies to have exploitation rights. In its place, SGX proposed that all MOG companies must demonstrate plans to obtain the necessary approvals required to proceed with development, with the qualified person providing the basis for expecting that all required approvals will be granted and the company’s intention to proceed with development within a reasonable time frame.
The Listing Rules have been be amended to require that the qualified person must provide the basis for expecting that all required approvals will be granted, and the qualified person should highlight and discuss any material unresolved matter that is dependent on a third party on which extraction is contingent.
Following feedback that the qualified person is not in a position to determine the company’s intention to proceed with development within a reasonable time frame, the Listing Rules have been amended to require the directors of the company to provide evidence of the company’s intention to proceed with development within a reasonable time frame.
Streamlining and simplifying the contents of the qualified person’s report
The Listing Rules have been amended to change the contents of the qualified person’s report (“QPR”) to streamline the disclosure requirements.
SGX has also introduced a summary report, containing key information relating to updates of the company’s “resources” and “reserves” (“Summary QPR”) which would be used in place of the QPR in certain circumstances.
For the purpose of annual reporting under Rule 1207(21) of the Mainboard Rules and Rule 1204(23) of the Catalist Rules, the MOG company is required to produce the Summary of Reserves and Resources (as set out in Appendix 7.5 of the Mainboard Rules and Appendix 7D of the Catalist Rules) instead of a Summary QPR. However, a Summary QPR is still required if there is a material change to the “reserves” and “resources”.
Farm-in and farm-out transactions
Under Rule 750 of the Mainboard Rules and Rule 704(35) of the Catalist Rules, an MOG company must immediately announce any material changes to the “reserves” and “resources” (“materiality rule”). SGX has proceeded with its proposal that the materiality rule should not apply to farm-in or farm-out transactions that only alter the company’s beneficial interest (i.e. acquisitions and sales of partial interest of assets). However, if the new net entitlement of the company is material, it should be disclosed pursuant to Rule 703 of the Mainboard Rules and Rule 703 of the Catalist Rules.
The following materials are available on the SGX website www.sgx.com:
- Media release
- Response to Consultation Paper on Mineral, Oil and Gas Listing Rules Amendments
- Amendments to Mainboard Rules - Mineral, Oil and Gas Companies
- Amendments to Catalist Rules - Mineral, Oil and Gas Companies