26 July 2018

With effect from 26 June 2018, an issuer may be listed on the Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST Mainboard”) by way of primary listing with a dual class share structure (“DCS structure”) if it can establish that it is suitable for listing with a DCS structure. A DCS structure gives certain shareholders of an issuer voting rights disproportionate to their shareholding. For instance, such shareholders may hold shares that carry multiple votes each (“MV shares”) while shares in another class carry only one vote.

Background information

The Singapore Exchange (“SGX”) conducted two rounds of public consultation to gather feedback on implementing a DCS listing framework on SGX-ST. In February 2017, SGX issued a concept consultation paper and sought feedback on broad policy considerations on whether to introduce the DCS listing framework, and if so, the appropriate safeguards for addressing potential risks associated with issuers with DCS structures (“2017 Policy Consultation”). In March 2018, SGX shared that a majority of the respondents to the 2017 Policy Consultation from different constituent groups are supportive of the introduction of the DCS listing framework.

With this conclusion, in March 2018, SGX issued the second consultation paper on “Proposed Listing Framework for Dual Class Share Structures” (“2018 Consultation Paper”) that sets out the proposed amendments to the SGX-ST Mainboard Rules to implement the DCS listing framework. On 26 June 2018, SGX issued its Responses to comments received from the 2018 Consultation Paper and amended the SGX-ST Mainboard Rules to implement the DCS listing framework.

A summary of the key features of the new SGX DCS listing framework is set out below.

Issuers suitable for listing with a DCS structure

An issuer with a DCS structure must fulfil the existing admission criteria set out in Chapter 2 of the SGX-ST Mainboard Rules. In addition, the issuer and the issue manager must establish that the issuer is suitable for listing with a DCS structure. SGX will undertake a holistic assessment of the suitability of an issuer for listing with a DCS structure with reference to a list of suitability factors. SGX intends to publish guidance on the suitability factors as contemplated in precedent cases.

An issuer with a DCS structure must specify the holders of the MV shares at IPO. A holder of MV shares must be appointed as a director of the issuer who is subject to fiduciary duties (“Responsible Director”).

Moratorium on holders of MV shares

Holders of MV shares are required to give contractual undertakings to the issue manager to observe a moratorium on the transfer or disposal of their entire shareholdings in the issuer, in respect of their interests in both MV shares and ordinary voting shares (“OV shares”), at the time of listing for at least 12 months after listing. 

Safeguards against entrenchment risks

The SGX-ST Mainboard Rules prescribe the following safeguards against risks of the holders of MV shares of a DCS issuer entrenching control of the issuer:

  • Maximum voting differential: Voting rights attaching to MV shares must be capped at 10 votes per share. An issuer must specify the number of votes at IPO, and may not increase such number subsequently; 
  • Minimum control by holders of OV shares: In any general meeting, the number of votes that may be cast by holders of OV shares, who are not also holders of MV shares, must be at least 10% of the total voting rights of the issuer;
  • Rights of holders of OV shares to convene general meeting: To ensure that holders of OV shares are not disenfranchised, holders of OV shares holding at least 10% of the total voting rights on a one-share-one-vote basis must be able to convene a general meeting; 
  • Restriction on issuance of MV shares post-listing: The issuer will not be allowed to undertake equity fundraising by issuing MV shares post-listing except in the event of a rights issue, bonus issue, scrip dividend scheme or consolidation or subdivision of shares, in each case in conjunction with the issuance of OV shares; 
  • Automatic conversion of MV shares: An issuer with a DCS structure must have in its constituent documents event-based sunset clauses which require a MV share to be automatically converted into an OV share on a one-for-one basis once: 
    • a Responsible Director ceases service as a director; or 
    • the MV share is sold or transferred to any person, or to a person who is not in the permitted holder group (where applicable), unless waiver of such automatic conversions is obtained by specific shareholders’ approval at a general meeting where one MV share is limited to only one vote (“Enhanced Voting Process”). 
  • Incorporating safeguards in issuer’s constituent documents: The above requirements/safeguards relating to an issuer with a DCS structure that are prescribed in the SGX-ST Mainboard Rules and the rights of the MV and OV shares must be set out in the issuer’s constituent documents.

Safeguards against expropriation risks

To address expropriation risks, an issuer with a DCS structure must ensure, as part of its continuing listing obligations, that certain prescribed key matters must be approved by the shareholders through the Enhanced Voting Process. Such key matters relate to, among other things, variation of rights attached to any class of shares, appointment and removal of independent directors, reverse takeover of the issuer and delisting of the issuer.

An issuer with a DCS structure must ensure that the majority of its Audit Committee, Nominating Committee and Remuneration Committee is made up of independent directors. The respective chairmen of these Committees must also be independent.

Clear disclosure to investors and shareholders

The SGX-ST Mainboard Rules require an issuer with a DCS structure to include prominent statements in its prospectus, offering memorandum, introductory document and shareholders’ circular, and as a continuing listing obligation, in its announcements, shareholders’ circulars and annual reports that, among other things, it is a company with a DCS structure, details relating to the DCS structure and the identities of and prescribed details for each holder of MV shares.

Reference materials

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


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