Amendments Proposed to SGX Listing Rules to Support Company Restructuring

The Singapore Exchange Regulation (SGX RegCo) recently launched a public consultation on its proposed enhancements to Singapore’s corporate restructuring and trading resumption frameworks. Proposed changes to the Mainboard Rules and Catalist Rules (collectively, the Listing Rules) include inclusion of a practice note to provide guidance to issuers with listed securities suspended from trading on the expectations of SGX RegCo and amendments to streamline the application process for resumption of trading for suspended issuers.

Currently, the Listing Rules are primarily premised on an issuer operating as a going concern, and this may not necessarily be facilitative in situations where a financially distressed issuer [1] (FDI) is undergoing restructuring. The amendments are therefore proposed to align the Listing Rules with legislative changes, clarify the expectations of SGX RegCo to allow for the resumption of trading, and support the maintenance of a fair, orderly, and transparent market.

Key Proposed Amendments

Some of the key proposed amendments as set out in the consultation paper include the following:

• The requirement for immediate announcements is extended to include an issuer undergoing a court-supervised moratorium proceeding involving a compromise or arrangement between an FDI (or any of its subsidiaries) and its creditors. Currently, immediate announcements are required for applications to wind up or to place the issuer under judicial management or for the appointment of a receiver, judicial manager, or liquidator of the issuer.
• To ease administrative burdens on FDIs, SGX RegCo proposes changing the frequency of periodic updates from monthly [2] to quarterly.
• SGX RegCo also intends to extend the requirement to announce first-half financial statements instead of quarterly financial statements to FDIs under a moratorium and not just those under judicial management.
• As judicial managers are officers of the court and their duties are statutorily enshrined, it may not be practicable for judicial managers to seek shareholders’ approval for disposals that are classified as major transactions under Chapter 10 of the Listing Rules. SGX RegCo proposes that the requirement to seek shareholders’ approval for disposals need not apply to an issuer under judicial management so long as the judicial manager is appointed under the Insolvency, Restructuring and Dissolution Act 2018 of Singapore (IRDA). However, issuers should note that announcement relating to disclosable transactions [3] would still be required for the information of shareholders. In connection with the above, SGX RegCo also proposes to extend this to apply to “significant subsidiaries” [4] or, in the alternative, that the ambit of the non-applicability should instead extend to the disposal of an asset by a Chapter 10 subsidiary.
• SGX RegCo proposes to expand the events wherein SGX RegCo may suspend trading of the listed securities of an issuer to include where FDIs are under a moratorium and the alternative process introduced by the IRDA that allows a company to be placed under judicial management by resolution of creditors through an “out of court” process.
• To facilitate restructuring, SGX RegCo proposes that FDIs may write in to SGX RegCo to seek a waiver from a trading suspension prior to filing its application with the Singapore Court. Such exemptions may be considered in exceptional circumstances where an FDI is of the view that a trading suspension is not required as there is certainty as to the completion of the issuer’s restructuring process, and shareholders’ approval is not required. This would be less disruptive to the FDI’s operations and may encourage stakeholders’ confidence in the restructuring.
• SGX RegCo also proposes a more consistent process for the submission of resumption proposals. This proposal will require issuers to comply with Rule 1304 (regarding the submission and implementation of resumption proposals) of the Listing Rules if their trading has been suspended for any reason.

These proposed amendments for FDIs will help enhance transparency, efficiency, and flexibility during the restructuring process, which will in turn benefit stakeholders by safeguarding their interests and bolstering market confidence.

The amendments will aid FDIs in their restructuring process by giving them breathing space in their compliance with the Listing Rules’ requirements. However, it is important to acknowledge that other FDIs (which are not under a moratorium) may not have the same benefits, and this should be taken into consideration during their restructuring efforts.

The consultation period will run from 23 February 2024 to 22 March 2024.