Singapore’s Amended Listing Rules: Risk-Based Approach to Quarterly Reporting, Continuous Disclosures

February 06, 2020

With effect from February 7, the Mainboard Rules and Catalist Rules of the Singapore Exchange Securities Trading Limited will be revised to adopt a risk-based approach to quarterly reporting and to enhance the continuous disclosure requirements relating to, among others, interested person transactions, secondary fundraising, provision of significant financial assistance to third parties, and significant disposals of assets.

The Singapore Exchange Regulation (SGX RegCo) announced changes to its regulatory regime on January 9. A summary of the key amendments to the Mainboard Rules and Catalist Rules (collectively, the Listing Rules) taking effect on February 7 follows.

Risk-Based Approach to Quarterly Reporting

Currently, an issuer on the Singapore Exchange Securities Trading Limited (SGX-ST) with market capitalization in excess of S$75 million is required to undertake quarterly reporting of its financial statements for each of the first three quarters of its financial year, and to publish the financial statements no later than 45 days after the quarter end.

As of February 7, the SGX-ST will be removing this market capitalization threshold for quarterly reporting and adopting a risk-based approach. This follows from the public consultation exercise on Review of the Quarterly Reporting Framework conducted by the SGX-ST, which concluded February 9, 2018.

Pursuant to the new risk-based approach, an issuer is required to undertake quarterly reporting if

  • it has received an adverse opinion, qualified opinion or disclaimer of opinion from its auditors on the issuer’s latest financial statements; or
  • its auditors have expressed a material uncertainty relating to going concern on the issuer’s latest financial statements (together, the Revised Quarterly Reporting Requirement).

An issuer has a one-year grace period to comply with the Revised Quarterly Reporting Requirement. In addition, the SGX-ST may exercise its administrative powers to require an issuer to undertake quarterly reporting where SGX RegCo has regulatory concerns with the issuer; for example, if it has had material disclosure breaches or where it faces issues that have material financial impact.

Issuers that are not subject to the Revised Quarterly Reporting Requirement will be required to report their financial results for the first half of the year and the full year. Nonetheless, such issuers may provide voluntary business updates to shareholders in between their half-yearly financial reports, and should consider their investors’ expectations, their competitive environment, and their long-term business strategy when deciding whether to provide these voluntary updates.

Enhanced Continuous Disclosure Requirements

SGX RegCo is also strengthening its continuous disclosure requirements in certain areas that are of high investor interest, including the following.

Interested Person Transactions (IPTs)

Retention of the De Minimis Threshold

Having considered industry feedback, the SGX-ST will not proceed with its proposal to remove the current Listing Rules, which provide that IPTs below S$100,000 are exempted from complying with Chapter 9 of the Listing Rules.

Countering Potential Abuse of the De Minimis Threshold

To address the potential abuse of the de minimis threshold whereby issuers may structure their IPTs into multiple transactions with individual values below S$100,000 (so as to avoid the regulatory ambit of Chapter 9 of the Listing Rules), the Listing Rules will be revised to expressly provide that the SGX-ST has the power to aggregate separate IPTs entered into during the same financial year and treat them as if they were one transaction. The SGX-ST will have regard to the objective of Chapter 9 of the Listing Rules and the economic and commercial substance of the IPT in exercising this power. Such aggregation may include IPTs below S$100,000. Issuers are reminded that they should have the relevant processes to track all IPTs, including those below S$100,000.

The Listing Rules will also be amended to expressly include that the SGX-ST will have the power to deem a person or entity as an “interested person” if the person or entity has entered into, or proposes to enter into, a transaction with an entity at risk and an agreement or arrangement with an interested person in connection with the transaction.

Identifying Interested Persons Covered by IPT Mandate on Named Basis

Another key amendment is that an issuer will be required to identify any interested person covered by an IPT mandate on a named basis. The SGX-ST further clarified that in the event there are any changes relating to, for example, an associate of a director or a controlling shareholder of the issuer, the IPT mandate will survive vis-à-vis the remaining named interested persons in the IPT mandate.

Should the issuer seek to, for example, include a new associate of a director or controlling shareholder of the issuer (either to replace an existing named interested person or otherwise) within the ambit of its IPT mandate, the issuer should appoint an independent financial adviser. This is because of a potential change in the risk profile brought on by the new interested person.

Disclosure of Nature of Relationship with Interested Person in Annual Report

Issuers will also be required to additionally disclose the nature of the known relationship of the issuer with the interested person in its annual report.

Disclosure Requirements for Offerings

Disclosures on Proceeds Used for Working Capital

Where IPO proceeds and/or any proceeds arising from any offerings pursuant to Chapter 8 of the Listing Rules are used for general working capital purposes, the issuer must announce a breakdown with specific details on the use of the proceeds for working capital. This codifies existing market practice.

Additional Disclosure Requirements for Rights Issues

In addition to the current requirements set out under Rule 814 of the Listing Rules, an issuer that intends to make a rights issue must also announce, inter alia, the following information:

  • The price, discount (specifying benchmarks and periods), allotment ratio, use of proceeds, and purpose of issue in the prescribed format.
  • Where the issue is proposed to be used mainly for general working capital purposes, the issuer must provide reasons for such use taking into account its working capital position.
  • Whether the issuer’s directors are of the opinion that, after taking into consideration
  • the group’s present bank facilities, the working capital available to the group is sufficient to meet its present requirements and if so, the directors must provide reasons for the issue; and
  • the group’s present bank facilities and the net proceeds of the issue, the working capital available to the group is sufficient to meet its present requirements, unless the directors have opined as stated in subparagraph (c)(i) above.
  • A statement from the issuer’s directors on why the issue is in the interest of the issuer and their basis for forming such views including the factors taken into consideration in arriving at any discount.
  • If the issuer undertakes the issue within 12 months from its previous equity fundraising, the issuer must provide certain prescribed details of each fundraising exercise undertaken in the last 12 months, including a description of equity funds raised, the date of issue of new securities, the amount raised (both gross and net), the amount utilized and breakdown on use of proceeds, and the amount not utilized and how it is intended to be used. The issuer should make a negative statement if there is no such previous equity fundraising.

Provision of Significant Financial Assistance to Third Parties

The scope of Chapter 10 of the Listing Rules will be extended to cover the provision of financial assistance, save where such a transaction is in, or in connection with, the issuer’s ordinary course of business. Further, financial assistance provided by an issuer or its subsidiary that is not listed on the SGX-ST or an approved exchange (the Chapter 10 Group) to the issuer, or its subsidiary or associated company, will be excluded from the ambit of Chapter 10. Transactions described in the Listing Rules relating to the provision of insurance coverage and indemnity as well as defense funding will also be excluded.

However, the exclusion will not extend to joint venture entities (that are not also the issuer’s subsidiaries or associated companies), and in the event that an entity within the Chapter 10 Group proposes to provide significant financial assistance to such a joint venture company, details relating to such financial assistance should be disclosed to shareholders (and shareholders’ approval, if required, should be sought).

Significant Disposal of Assets

With regard to significant disposals of assets (i.e., where any of the relative figures as computed on the bases set out in Rule 1006 exceeds 75%), an issuer must appoint a competent and independent valuer to value the assets to be disposed.

Further, where an acquisition or disposal of assets other than shares constitutes a major transaction under Chapter 10 of the Listing Rules and no valuation is available, the issuer would be required to provide an explanation on why the issuer did not commission a valuation.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers, who are solicitors of Morgan Lewis Stamford LLC, a Singapore law corporation affiliated ‎with Morgan, Lewis & Bockius LLP:

Wai Ming Yap
Kristian Lee