Singapore Exchange Amends Listing Rules Following Changes to the Companies Act

April 03, 2017

The Singapore Exchange has introduced amendments to the Mainboard and Catalist listing rules—including in relation to the electronic transmission of documents to shareholders, exemptions for insurance coverage and indemnities for directors as interested person transactions, disclosure of court restraints on the exercise of voting rights, and treatment of shares held by a subsidiary in an issuer.

Following the passage of the Companies (Amendment) Bill 2014 by the Singapore Parliament in October 2014, legislative changes to the Singapore Companies Act were effected in two phases on 1 July 2015 and 3 January 2016.

On 11 January 2016, the Singapore Exchange (SGX) introduced a consultation paper proposing amendments to the Mainboard and Catalist listing rules (Listing Rules) for alignment with the amendments to the Companies Act. On 22 March 2017, the SGX revealed the amendments in its response to comments on the consultation paper. The new Listing Rules will take effect on 31 March 2017.

This LawFlash provides a summary of the amendments.

Insurance Coverage and Indemnities for Directors and CEOs

The provision of insurance coverage and indemnities for directors as well as chief executive officers will be exempted from being considered interested persons transactions under the Listing Rules. In addition, defence funding extended to directors and chief executive officers (i.e., loans provided by the issuer to meet expenditures incurred in defending any proceedings) will also be exempted, provided that the funding is repaid in the manner stipulated under the new Listing Rules.

Electronic Transmission of Documents

Under the new rules, an issuer may send documents to shareholders (including notices, circulars, and annual reports) using electronic communications if the issuer has obtained consent from such shareholders for electronic transmission. Consent may be express, implied, or deemed:

  • Express consent is obtained when both the issuer and the shareholder agree in writing that e-communication will be used.
  • Implied consent is obtained when the constitution of the issuer provides for the use of e-communication and that the shareholder shall agree to such a mode, without the right to elect otherwise.
  • Deemed consent is obtained when the constitution of the issuer provides for a deemed consent regime, the issuer has given the shareholder the opportunity to choose whether to receive electronic or physical copies of documents, and the shareholder fails to make such an election.

Where deemed or implied consent is relied upon, the following additional safeguards apply:

  • Issuers that provide documents to shareholders via their websites should send a physical notification to shareholders, which should include details such as the address of the website and how to access the relevant documents. This is consistent with the approach taken in the United Kingdom and in Hong Kong.
  • The issuer should inform shareholders as soon as practicable on how to obtain physical copies of the document from the issuer.
  • The following documents may not be sent electronically:
    • The physical notifications referred to above
    • Forms and acceptance letters that shareholders may be required to complete
    • Notices of meetings
    • Notices and documents relating to takeovers and rights issues

Treatment of Shares Held by a Subsidiary in Its Holding Company

For a Singapore-incorporated company, while a subsidiary cannot subsequently become a shareholder of its holding company, a subsidiary cansubject to certain conditionscontinue to be a shareholder of the holding company if it already holds shares in the holding company at the time it becomes a subsidiary. As these subsidiary holdings are to be treated like treasury shares of the holding company, the new Listing Rules will provide that such shares

  • will be excluded from the calculation of issued share capital where it relates to voting rights (including in the calculation of the limits for share buybacks and share issue mandates, and in the definition of “controlling shareholder”); but
  • will not be excluded from the (i) calculation of issued share capital where it does not relate to voting rights and (ii) calculation of market capitalisation.

Disclosure of Court Order Restraining Exercise of Voting Rights

The new Listing Rules require the issuer to include an appropriate statement if a person is required to abstain from voting pursuant to a court order, and the issuer will disregard any such votes where the court order is served on the issuer.

Issuance of Financial Statements

Currently, the Listing Rules permit an issuerregardless of whether the issuer is a company, real estate investment trust, or a business trustto issue a summary financial statement in accordance with the Companies Act. However, the Companies Act may not be the correct legislation to apply to real estate investment trusts or business trusts. The Listing Rules have been amended to more accurately reflect the different legislation, subsidiary legislation, or code which may apply to the relevant entity involved.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the author, Bernard Lui, a solicitor of Morgan Lewis Stamford LLC, a Singapore law corporation affiliated ‎with Morgan Lewis & Bockius LLP.