20 December 2018
On 29 November 2018, Singapore Exchange Regulation (“SGX RegCo”) released a consultation paper seeking feedback on proposed changes to the regulation of issue managers and the non-referral process to the Listings Advisory Committee (“LAC”) in respect of applications to list on the Mainboard of Singapore Exchange Securities Trading Limited (“SGX-ST”). The consultation closes on 28 December 2018.
Responsibilities of issue managers
SGX RegCo is proposing further enhancements to the SGX-ST Listing Rules (Mainboard) (“Mainboard Rules”) governing the roles and responsibilities of issue managers. These include the requirements that an issue manager must:
- discharge its obligations with due care, diligence and skill;
- conduct due diligence, including, at a minimum, complying with the due diligence guidelines issued by The Association of Banks in Singapore (where applicable) or such other satisfactory and no less strict due diligence guidelines or processes;
- provide to SGX-ST, as soon as practicable, any information or confirmation that SGX-ST may require for the purposes of ensuring that the Mainboard Rules are complied with by the issue manager, the applicant and its directors and executive officers. Such information or confirmation shall be provided to SGX-ST in such form and within such time as SGX-ST may require; and
- inform SGX-ST of all matters that should be brought to SGX-ST’s attention in a timely manner.
Independence of issue managers
To address the issue of potential conflicts arising from issue managers’ other relationships with a listing applicant (e.g. ongoing banking relationships or having interests in the listing applicant’s equity securities), SGX RegCo proposes to amend the Mainboard Rules to set out the requirement that an issue manager be independent of a listing applicant. Where joint issue managers are appointed, at least one must be independent of the listing applicant. SGX-ST would retain the discretion to deem an issue manager to be independent or otherwise.
A new Practice Note (“Practice Note”) will provide guidance on SGX-ST’s assessment of the factors affecting an issue manager’s independence. The Practice Note will state the circumstances and the relevant thresholds in assessing whether an issue manager is considered independent and may therefore act solely for a listing applicant.
Responsibilities of an issuer’s directors and executive officers for information submitted to SGX-ST
SGX RegCo also proposes to clarify that the obligations of the directors and executive officers of a listing applicant or of an issuer following admission to the Mainboard to ensure that information submitted to SGX-ST is complete, accurate and not misleading, would apply to all applications and SGXNet announcements.
It is also proposed that each person who is, and who has consented to be, named in the prospectus, introductory document or circular to shareholders (in the case of a reverse takeover) as a director, executive officer, proposed director or proposed executive officer of the applicant or the enlarged group (in the case of a reverse takeover) is responsible for ensuring that information submitted to SGX-ST in listing applications or in pre-consultation applications is complete, accurate and not misleading.
Revisions to the non-referral process
Currently, a specific listing application may be referred to the LAC if novel or unprecedented issues are involved, specialist expertise is required, matters of public interest are involved, or SGX-ST is of the view that a referral is appropriate (“referral criteria”). All other applications are provided to the LAC for information. The LAC still has discretion to convene an LAC meeting for any specific listing application which was not referred to it if the LAC is of the view that a referral criterion is satisfied (“non-referral process”).
Following feedback that the non-referral process may have affected the time-to-market for listing applicants and given rise to uncertainty in the listing process, SGX RegCo proposes that information on listing applications which SGX RegCo has assessed to be non-referrals will still be submitted to the LAC, but after the issuance of the eligibility-to-list (“ETL”) letter rather than before. If the LAC decides that a particular matter should have been referred for the LAC’s deliberation, the intention is to apply the LAC’s advice for future similar matters on a prospective basis. Accordingly, any advice or views rendered by the LAC on a non-referral listing application would not affect the existing case for which ETL has been granted.
If implemented, the amendments to the Mainboard Rules will take effect in the first quarter of 2019.
The following materials are available on the SGX website www.sgx.com:
- Media release: SGX RegCo proposes changes to listings review process and regulation of issue managers
- Consultation Paper: Regulation of Issue Managers and Changes to Listings Review Process