Capital Markets

The Securities and Futures Act 2001 governs the offering of shares and units in Singapore, in conjunction with the following principal regulations (together, ‘the Securities and Futures Regulations’):

• the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018; and
• the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005.

For issuers intending to list on the Mainboard or Catalist, the Listing Rules set out in the Singapore Exchange Securities Trading Limited (SGX-ST) Listing Manual or the Catalist Listing Manual, respectively, will apply.

No.

The Monetary Authority of Singapore (MAS):

• serves as the primary regulatory body responsible for authorising the public offering of shares/units within Singapore; and
• oversees the Securities and Futures Act and Securities and Futures Regulations.

The MAS has authority under the Securities and Futures Act to establish regulations and provide directions if it deems this necessary or expedient to:

• ensure the fair, orderly and transparent operation of organised markets;
• maintain the integrity and stability of capital markets and the financial system; and
• safeguard the interests of the public and investors.

The SGX-ST is responsible for the day-to-day regulation of the securities market. The SGX-ST administers various rulebooks, including those governing the listing of securities on the SGX-ST, to promote a market that is fair, orderly and transparent. The interpretation, administration and enforcement of these Listing Rules fall under the purview of the SGX RegCo. The decisions and requirements established by SGX RegCo are binding for issuers.

Furthermore, both SGX RegCo and the MAS issue guidelines, decisions and practice notes periodically to regulate various aspects, such as:

• prospectus requirements;
• the interpretation of Listing Rules; and
• requirements pertaining to offers of investments and securities.

Penalties under the Listing Rules: Where an issuer is either unable or unwilling to comply with, or contravenes, its obligations as outlined in the Listing Rules, the SGX-ST may:

• suspend trading of the issuer’s securities; or
• delist the issuer from the Official List of SGX-ST, even without the issuer’s consent.

Additionally, the SGX-ST may exercise investigative and enforcement powers for the purpose of upholding these Listing Rules. These include the authority to initiate disciplinary proceedings or undertake enforcement measures against those that breach the Listing Rules.

Enforcement under the Securities and Futures Act: Upon application by entities such as the MAS or the SGX-ST, the court can issue an order compelling a person to comply with, observe, enforce or give effect to the Listing Rules.

The Singapore Exchange Securities Trading Limited (SGX-ST) is the primary securities and derivatives exchange in Singapore. It provides a platform for the trading of a wide range of financial instruments, including:

• equities;
• fixed-income securities;
• derivatives; and
• exchange-traded funds.

The Central Depository (CDP) is the central securities depository in Singapore, responsible for the clearing, settlement and safekeeping of securities traded on the SGX. It ensures the efficient transfer of securities between buyers and sellers. Apart from the SGX and the CDP, there are various market participants – including broker-dealers, investment banks, fund managers and custodian banks – that facilitate the trading, clearing and settlement of securities.

The SGX-ST is currently the only approved securities exchange in Singapore.

The SGX-ST maintains two boards: the Mainboard and Catalist. The Mainboard

caters to the needs of established enterprises, with more stringent entry and listing requirements (eg, minimum profit and market capitalisation levels). A Mainboard listing can be a primary or secondary listing. For foreign issuers seeking dual primary listings both in Singapore and on their home exchange, it is imperative to ensure full compliance with the Listing Rules of both the SGX-ST and the respective home exchange.

Catalist caters to the needs of smaller or fast-growing issuers and has a different model, where approved sponsors evaluate whether an issuer is suitable for listing. A listing on Catalist must be a primary listing and there are no minimum quantitative entry criteria for a Catalist listing.

Securities that can be listed on the SGX-ST include:

• shares of a company; and
• in the case of Mainboard listings:
• • global depository receipts;
  • units of a business trust;
  • shares/units of an investment fund; and
  • units of a real estate investment trust.

Yes.

Yes.

A person that raises funds through a crowdfunding platform may be subject to the requirements under the Securities and Futures Act if it involves an offer of securities, securities-based derivatives contracts or units in a collective investment scheme (CIS) to investors in Singapore. Under the Securities and Futures Act, an offer of securities, securities-based derivatives contracts or units in a CIS to investors in Singapore, made through a crowdfunding platform or otherwise, will need to be accompanied by a prospectus (in respect of the offer) that is registered with the Monetary Authority of Singapore, unless an exemption applies. Depending on its business model, the operator of a crowdfunding platform may also be subject to additional requirements in the Securities and Futures Act if it engages in other regulated activities – for example:

• dealing in capital markets products classified as securities, securities-based derivatives contracts or units in a CIS;
• providing advice related to corporate finance; or
• operating an organised market.

The instruments issued and traded on the SGX-ST can be found on its website at www.sgx.com.

Singapore provides a well-developed and robust trading market infrastructure for a wide range of financial instruments and asset classes. Some of the key aspects of Singapore's trading market infrastructure include:

1. Stock Market: The Singapore Exchange (SGX) is the primary stock exchange in the country. It offers a platform for trading in equities, real estate investment trusts (REITs), and business trusts.
2. Derivatives Market: SGX also operates a derivatives market where investors can trade a variety of derivatives, including equity derivatives, interest rate derivatives, commodity derivatives, and foreign exchange futures and options.
3. Fixed Income and Bond Market: Singapore has a growing fixed income market where government bonds, corporate bonds, and other debt instruments are traded. The Singapore Government Securities (SGS) market is one of the most prominent in this category.
4. Foreign Exchange (Forex) Market: Singapore is one of the world's major forex trading hubs. It hosts a significant portion of global forex trading, making it a crucial hub for currency trading in the Asia-Pacific region.
5. Commodity Market: Singapore offers a marketplace for trading commodities, including energy products, metals, and agricultural commodities. SGX operates commodity futures and options contracts.
6. Real Estate Investment Trusts (REITs): Singapore is a hub for REITs and real estate investment. The SGX has a REITs market where investors can buy and sell shares of real estate investment trusts.
7. Digital Asset and Cryptocurrency Market: Singapore has been proactive in regulating the digital asset and cryptocurrency market. It provides a well-regulated environment for trading digital assets and cryptocurrencies.
8. Private Equity and Venture Capital: Singapore has a growing ecosystem for private equity and venture capital investments. It provides a platform for fundraising and trading private equity and venture capital stakes.
9. Regulatory Environment: Singapore is known for its strong regulatory framework and investor protection measures. The MAS is the country's central bank and financial regulator, responsible for maintaining the stability and integrity of the financial markets.
10. Technological Infrastructure: Singapore is highly developed in terms of technological infrastructure. It offers low-latency and high-speed trading systems and connectivity, making it attractive for algorithmic and high-frequency trading.
11. Tax Benefits: Singapore offers certain tax benefits for traders and investors, including exemptions from capital gains tax.
12. Global Connectivity: Singapore is strategically located and well-connected to major financial markets in the Asia-Pacific region, making it a preferred choice for international investors.

Some key aspects of the regulatory landscape in Singapore regarding liquidity flows across execution venues:

1. Systematic Internalisers (SIs): In Singapore, Systematic Internalisers are regulated entities that are required to offer quotes and execute orders in certain financial instruments on a frequent and systematic basis, meeting specific criteria. The SIs play a role in providing liquidity in the market. The regulatory framework for SIs in Singapore is designed to enhance market transparency and trading efficiency.
2. Trading Obligations: The MAS may impose trading obligations on certain classes of financial instruments, ensuring that trading takes place on regulated trading platforms and venues to promote market integrity and investor protection. The specifics of trading obligations can vary based on the instrument, and it's essential to refer to the latest regulatory guidelines for precise details.
3. Multilateral Trading Facilities (MTFs): In the context of electronic trading venues, Singapore allows Multilateral Trading Facilities (MTFs) to operate and offer trading services in various financial instruments. MTFs are regulated by the MAS and must comply with specific rules and requirements.
4. Dark Pools: Singapore has regulations in place for dark pools and non-displayed trading. These are venues that offer trading in a less transparent manner than traditional exchanges. Regulatory requirements aim to strike a balance between market transparency and the need for liquidity.
5. Market Abuse and Manipulation: Singapore has robust regulations to prevent market abuse, including insider trading and market manipulation. These rules help maintain market integrity and protect investors.
6. Crossing Networks: Crossing networks or facilities that match buy and sell orders internally are subject to regulations in Singapore. These facilities must ensure fairness and transparency in matching orders.
7. Market Surveillance and Reporting: Market participants are often required to report their trading activities to regulatory authorities. Regulatory bodies, including the MAS, have surveillance mechanisms to monitor trading activities for any irregularities or potential market manipulation.
8. Best Execution: Broker-dealers and trading platforms in Singapore are expected to adhere to best execution principles. This means they must execute client orders at the best available terms, considering factors such as price, speed, and likelihood of execution.
9. MiFID II/MiFIR: While Singapore is not part of the European Union, it may adopt certain principles and standards from the EU's MiFID II/MiFIR regulations, especially concerning transparency, trading venues, and systematic internalisers, to align its regulatory framework with international best practices.

1. Light Markets:
   
   • Light markets typically refer to transparent and visible trading venues, where order book information is readily available to the public. Traditional stock exchanges and electronic trading platforms that display order book data fall into this category.
   • In Singapore, light markets are subject to regulations that promote transparency, fair trading, and investor protection.
   • The Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) regulate light markets to ensure compliance with rules related to disclosure, reporting, and fair trading practices.
   • Best execution requirements apply to light markets, meaning that brokers and trading venues must execute client orders at the best available terms.
2. Dark Markets:
   
   • Dark markets, also known as dark pools or non-displayed trading venues, are less transparent and do not publicly display order book information. They are used by institutional investors for large block trades and other transactions that require a level of anonymity.
   • Singapore has regulations governing dark markets to strike a balance between the need for anonymity and market transparency. Dark pools are subject to specific rules to mitigate market manipulation risks.
   • Market participants operating dark pools in Singapore must adhere to regulatory requirements, including reporting and pre-trade transparency obligations.
   • Dark pool operators must also have mechanisms in place to prevent market abuse, such as insider trading or price manipulation.
3. MiFID II/MiFIR Considerations:
   
   • Singapore, while not part of the European Union (EU), may align certain aspects of its regulatory framework with the EU's MiFID II/MiFIR regulations to maintain international best practices in areas like transparency, trading venues, and systematic internalisers.
   • This alignment may have implications for dark trading practices, as MiFID II introduced rules to promote transparency and regulate dark trading in EU markets.

MAS has finalised its best execution regulatory regime on 3 September 2020 requiring holders of capital markets services licence, banks, merchant banks, and finance companies dealing in capital markets products, fund management and/or real estate investment trust management under the Securities and Futures Act to establish and implement written policies and procedures that are commensurate with the nature, scale and complexity of its business to place and/or execute customers’ orders on the best available terms, and comparable customers’ orders in accordance with the time of receipt. The regime will take effect on 3 March 2022.

Yes, Singapore has adopted the concept of a "target market" in its regulatory framework, particularly in the context of the marketing and distribution of financial products and services. The target market concept is designed to ensure that financial products are distributed to the appropriate investors or target audiences, taking into account their risk profiles, investment objectives, and other relevant factors. The target market concept helps enhance investor protection and ensure that products are suitable for their intended audience.

An overview of how securities settlement works in Singapore:

1. Trade Execution: The securities settlement process begins after a trade is executed. This could occur on a stock exchange like the Singapore Exchange (SGX) or through other trading platforms.
2. Trade Confirmation: Once a trade is executed, both the buyer and the seller receive trade confirmations that detail the terms of the trade, including the security traded, the quantity, the price, and the settlement date.
3. T+2 Settlement Cycle: Singapore operates on a T+2 settlement cycle, which means that securities and funds are settled two business days after the trade date. This allows time for various administrative and logistical processes to take place.
4. Clearing: After trade confirmation, the clearing process begins. The Central Depository (CDP), which is a subsidiary of the Singapore Exchange (SGX), acts as the central clearinghouse for securities traded in Singapore. The CDP ensures that both the buyer and the seller have the necessary securities and funds to complete the trade.
5. Securities Transfer: The CDP facilitates the transfer of securities from the seller's CDP account to the buyer's CDP account. The buyer becomes the legal owner of the securities, and the seller's account is debited.
6. Payment Settlement: Concurrently, the funds required for the trade are transferred from the buyer's bank to the seller's bank through the Singapore Clearing House (SCH). This ensures that the seller receives the payment for the securities sold.
7. Custodian Banks: Many market participants use custodian banks to hold and manage their securities. Custodian banks play a crucial role in the settlement process, assisting clients in the safekeeping of their securities and managing settlement-related activities.
8. Delivery and Receipt: After the securities and funds have been transferred, the buyer receives the securities in their CDP account, and the seller receives the payment in their bank account.
9. Statement of Account: Both the buyer and seller receive a statement of account detailing the completed transaction, confirming that the securities have been delivered and the payment received.
10. Post-Trade Services: Market participants may also utilize various post-trade services, including corporate actions processing (e.g., dividends, rights issues), securities lending and borrowing, and other value-added services offered by custodian banks and financial institutions.
11. Regulatory Oversight: The Monetary Authority of Singapore (MAS) regulates and oversees the securities settlement process, ensuring that it operates smoothly and that market participants adhere to regulatory requirements.

Main requirements: The requirements stipulated in the Securities and Futures Act and the underlying regulations and the Listing Rules of the Singapore Exchange Securities Trading Limited (SGX-ST) typically apply to all issuers seeking an initial public offering (IPO) and listing on the SGX-ST unless specific waivers have been granted by the Monetary Authority of Singapore (MAS) and/or SGX-ST, although certain Listing Rules do not apply to issuers seeking a secondary listing.

Issue manager and sponsor: An issuer seeking a Mainboard listing must appoint an accredited issue manager, which will be responsible for preparing the issuer for listing and must ensure that the issuer:

• is suitable for listing on the Mainboard;
• satisfies the admission requirements;
• has the necessary infrastructure in place to comply with the continuing listing obligations; and
• has directors who possess an understanding of their responsibilities and are expected to fulfil their obligations as per the Listing Rules.

At least one issue manager must be independent of the issuer.

An issuer seeking a Catalist listing must do so through an approved full sponsor. The full sponsor carries out duties similar to those of an issue manager in a Mainboard listing, but with an added responsibility of assessing whether the issuer is suitable for listing on Catalist. Additionally, the full sponsor must act as the continuing sponsor for the issuer for a minimum of three years following its listing on Catalist.

Minimum size requirements: For Mainboard listings, there are certain market capitalisation requirements related to the admission criteria. For Catalist listings, there is no minimum market capitalisation requirement.

Track record: Issuers seeking a Mainboard listing must have a minimum one-year track record to satisfy minimum operating track records, minimum profit or market capitalisation thresholds.

In contrast, issuers seeking a Catalist listing are not required to satisfy any minimum operating track record, profit or share capital requirements.

Repayment of debts: For both Mainboard and Catalist listings, all debts owing to the group by its directors, substantial shareholders/unitholders and companies controlled by the directors and substantial shareholders/unitholders must be repaid before listing.

Accounts: The prospectus that is to be issued for a public offering of shares or units in Singapore must incorporate the annual audited financial statements of the group for the three most recent financial years. These financial statements must be prepared or restated and audited in compliance with the accepted accounting and auditing standards as outlined by the Securities and Futures Regulations.

In addition, there is a general requirement for including interim financial information in the prospectus when the lodgment date of the preliminary prospectus with the MAS exceeds six months after the conclusion of the most recent completed financial year.

Accounting standards and auditors: For primary listings on the SGX-ST, the financial statements that are submitted with the listing application, included in the prospectus and presented in subsequent periodic financial reports must adhere to one of the following accounting standards:

• Singapore Financial Reporting Standards (International) (SFRS(I)s);
• International Financial Reporting Standards (IFRS); or
• US Generally Accepted Accounting Principles (US GAAP).

In the case of secondary listings, if the financial statements are prepared in accordance with different accounting standards, they are only required to be reconciled with either:

• SFRS(I)s;
• IFRS; or
• US GAAP.

Furthermore, the annual financial statements must undergo an audit conducted by certified public accountants, who are expected to adhere to the relevant auditing standards. The applicable auditing standards depend on the accounting standards used for preparing the financial statements.

Working capital: In the prospectus, an issuer’s directors must provide confirmation that the group possesses sufficient working capital to cover its financial needs for a minimum of the next 12 months from the date of lodgement of the prospectus. Additionally, the issuer must disclose the following information to the SGX-ST:

• any shortfall in working capital or negative cash flow from operating activities, and the explanation for the shortfall; and
• the views of the issue manager concerning the issuer’s viability and the underlying rationale for these views.

Directors and management: The directors and executive officers of the issuer are expected to possess the appropriate experience and expertise necessary to effectively manage the group’s business. Moreover, they are required to exhibit the character and integrity befitting a listed issuer.

The Code of Corporate Governance 2018 offers guidance regarding the composition of the board of directors and its committees, including the following:

• The board of directors and its committees should include directors who collectively offer a well-rounded and diverse set of skills, experience, gender representation and knowledge relevant to the issuer. These directors should bring core competencies such as:
• • expertise in accounting or finance;
  • business or management experience;
  • industry knowledge;
  • strategic planning expertise; and
  • customer-focused experience or knowledge.
• The issuer’s board should have a minimum of two non-executive directors who are independent and have no material business or financial connections with the issuer, in accordance with both the Listing Rules and the Code of Corporate Governance. Additionally, issuers are encouraged to ensure that independent directors constitute at least:
• • one-third of their board of directors; or
  • a majority of the board in cases where the chairman is not independent.
• For foreign issuers, it is a requirement to have at least two independent directors who are resident in Singapore.
• Starting from 1 January 2022, a director will no longer be considered independent if:
• • he or she has served as a director for a cumulative period exceeding nine years (whether before or after listing); and
  • his or her continued appointment as an independent director has not received approval from shareholders or unitholders in accordance with the Listing Rules.

Minimum shares/units in public hands (free float): For Mainboard listings on the SGX-ST, there are specific requirements related to the percentage of shares or units that must be held by the public:

• Pre-listing free float: The issuer must ensure that a minimum of 12% to 25% of its shares or units are in public hands at the time of listing. The exact percentage required depends on the market capitalisation of the issuer. For instance, larger issuers with a market capitalisation of at least S$1 billion are subject to a lower free float requirement of 12%.
• Post-listing free float: After the IPO, there is a continuous requirement for a 10% free float, meaning that at least 10% of the shares or units must remain in public hands.
• Minimum number of shareholders/unitholders: All issuers, regardless of market capitalisation, must have a minimum of 500 shareholders or unitholders at the time of listing.
• Treatment of existing public shareholders/unitholders: Existing public shareholders or unitholders immediately before the IPO can be counted towards the percentage of shares or units held by the public. However, there is an aggregate limit of 5% of the issuer’s post-IPO issued shares or units for such shareholders or unitholders, provided that these shares or units are not under a moratorium.
• Public subscription tranche: In a Mainboard IPO, there must be a public subscription tranche, to which a minimum of 5% of the number or $50 million in value (whichever is lower) of the offered shares or units is allocated for public subscription.
• Minimum subscription and allocation values: The minimum subscription and allocation values for shares or units at IPO is $500 for a Mainboard listing, based on a minimum offer price of $0.50 per share or unit.

For Catalist listings, the requirements are as follows:

• Minimum public float: At the time of listing, a minimum of 15% of the post-IPO issued share capital of the applicant must be held by the public.
• Minimum number of shareholders/unitholders: There must be a minimum of 200 public shareholders holding shares in the company at the time of listing.
• Minimum subscription and allocation values: The minimum subscription and allocation values for shares or units at IPO is S$200 for a Mainboard listing, based on a minimum offer price of S$0.20 per share or unit.

Listing framework for special purpose acquisition companies (SPACs): The SGX-ST introduced new rules in September 2021 to facilitate the listing of special purpose acquisition companies (SPACs) on the Mainboard. SPACs are companies that have no previous operating history, ongoing revenue-generating business or assets at the time of their initial public offering (IPO). They raise funds with the sole purpose of executing a business combination following the strategy and acquisition mandate disclosed in their IPO prospectus.

The key features and requirements for a listing on the SGX-ST under the SPAC framework are as follows:

• Minimum market capitalisation: A SPAC must have a minimum market capitalisation of S$150 million to be eligible for listing.
• De-SPAC timeline: The de-SPAC transaction, which involves the actual merger or business combination, must occur within 24 months of the IPO. An extension of up to 12 months is allowed, subject to meeting specified conditions.
• Moratorium: There is a moratorium on sponsors’ shares from the IPO until the de-SPAC process is completed. Additionally, a six-month moratorium is imposed after the de-SPAC transaction. For applicable resulting issuers, there is a further six-month moratorium on 50% of shareholdings.
• Sponsor participation: Sponsors must subscribe to a minimum of between 2.5% and 3.5% of the IPO shares, units or warrants, depending on the market capitalisation of the SPAC.
• Approval requirements: The de-SPAC transaction can proceed if:
• • more than 50% of independent directors approve it; and
  • more than 50% of the shareholders vote in support of the transaction.
• Detachable warrants: Warrants issued to shareholders are detachable and the maximum percentage dilution to shareholders resulting from the conversion of warrants issued at the IPO is capped at 50%.
• Redemption rights: All independent shareholders are entitled to redemption rights, allowing them to opt for a cash payout instead of participating in the de-SPAC transaction.
• Sponsors’ promotion limit: Sponsors can have a promotion limit of up to 20% of the issued share capital at the time of the IPO.

Exemptions from prospectus requirements: Under the Securities and Futures Act, an offer of shares/units in Singapore must be accompanied by a prospectus unless it falls within an exemption provided under the Securities and Futures Act. There are exemptions for certain types of offers such as the following, which are commonly relied on for secondary offerings:

• offers made to no more than 50 persons within any 12-month period;
• offers made to existing members of an entity whose shares/units are listed for quotation on the SGX-ST;
• offers made to institutional, accredited and other specified investors; and
• offers made using an offer information statement by an SGX-ST listed issuer.

Main requirements:

• Primary listing on home exchange: The issuer – typically a foreign issuer – should already have a primary listing on its home exchange.
• Listing methods: The secondary listing on the SGX-ST can occur concurrently with or after the primary listing on the home exchange. It can be done:
• • in conjunction with a public offer for subscription or sale of the issuer’s shares/units; or
  • by way of introduction.
• However, introduction is not allowed if the issuer has conducted fundraising activities in Singapore within six months before the listing application submission. Fundraising activities are also prohibited within three months of a listing by introduction.
• Listing criteria: The issuer must meet the listing criteria specified in the SGX-ST Listing Rules, except for certain provisions related to promoters’ shareholdings and shareholding distribution requirements. If the secondary listing includes a public offer of shares/units in Singapore, the offering is subject to regulation by the Securities and Futures Act and the Securities and Futures Regulations.
• Accredited issue manager: Similar to a primary listing, the issuer seeking a secondary listing must appoint an accredited issue manager to facilitate the listing process.

Minimum size requirements: Same as for a primary listing.

Track record: Same as for a primary listing.

Directors and management: The directors and executive officers of the issuer must:

• possess the necessary experience and expertise to manage the group’s business; and
• uphold the character and integrity expected of a listed issuer.

The issuer’s board should include at least two non-executive directors who are independent and free of any significant business or financial ties with the issuer, as per the Listing Rules. For a foreign issuer, there should be at least two independent directors who are residents of Singapore.

Minimum shares/units in public hands (free float): Unlike primary listings, secondary listings need not comply with certain shareholding and distribution requirements. However, the issuer must have a minimum of 500 shareholders/unitholders worldwide following the listing. In cases where the SGX-ST and the issuer’s home exchange lack an established framework for share/unit movement between jurisdictions, the issuer must have either:

• 500 shareholders/unitholders in Singapore; or
• 1,000 shareholders/unitholders worldwide.

Exemptions from prospectus requirements: See above.

There are a variety of listing structures and options apart from ordinary shares of an issuer. For example, companies can choose to list as a real estate investment trusts or a business trust. Global depository receipts, exchange-traded funds, exchange-traded notes and structured warrants are some of the other instruments that can be listed.

The listing of bonds is a simpler process, especially if the offering is only to institutional and accredited investors, which are in larger denominations and traded over the counter. In addition, an issuer can choose to list digital bonds, which are debt instruments that are represented in token format.

The main advisers in an IPO are as follows:

• Issue manager: The issue manager serves as the sponsor for the issuer’s listing on the SGX-ST Mainboard. It oversees the entire IPO process, providing guidance on:
• • meeting admission requirements;
  • preparing the issuer for listing; and
  • managing the listing application.
• The issue manager interacts with the SGX-ST on all matters related to the listing.
• Underwriters: Financial institutions, known as underwriters, can be engaged to underwrite the IPO. Underwriters commit to purchasing any shares or units that are not subscribed to by investors, mitigating the risk of an undersubscribed offering. In larger IPOs, a syndicate of underwriters may be involved, with one acting as the lead underwriter or global coordinator.
• Legal advisers: Legal advisers provide legal counsel to:
• • the issuer;
  • vendors (if applicable); and
  • underwriters.
• They are responsible for:
• • preparing the issuer for listing;
  • drafting the prospectus; and
  • negotiating legal agreements among the parties involved.
• Auditors: Independent auditors are responsible for preparing various financial statements (audited, interim and/or pro forma) to be included in the prospectus. They issue an audit report regarding the annual financial statements for inclusion in the prospectus. Auditors also provide comfort letters to the underwriters.
• Internal controls consultant: The issuer is typically required to engage an internal controls consultant to review the internal controls and risk management systems of the issuer group. It provides advice on remediation of any non-compliance or control deficiencies.
• Public relations (PR) consultants: PR consultants help generate press interest and publicity for the issuer before the IPO, while adhering to applicable publicity restrictions. They also monitor public statements and press releases during the IPO process. Post-IPO, PR consultants can assist in maintaining awareness of the issuer and promoting liquidity in its shares or units.
• Registrar and depository: The registrar is responsible for setting up and maintaining the issuer’s share or unit register, while the depository manages arrangements related to the scripless book-entry settlement system of the Central Depository (Pte) Limited.
• Receiving bank: A receiving bank is appointed to collect funds from the offering, ensuring the smooth flow of capital from investors.
• Experts: Depending on the nature of the issuer, experts such as valuers, industry consultants or other specialists may be involved in the IPO process. They can produce reports that are included in the prospectus, providing valuable insights and analysis.

Common claims against professional advisers include the following:

• criminal and civil liability under the Securities and Futures Act if there is:
• • a false or misleading statement in the prospectus; or
  • an omission of any information that must be included in the prospectus;
• claims under common law (eg, liability in tort for negligent misstatements);
• claims under the Misrepresentation Act 1967 (which could also cover innocent misrepresentations);
• claims under the provisions of the Penal Code 1871 on:
• • obtaining money by deception; and
  • fraud involving deliberate false statements; and
• claims under foreign securities laws, to the extent that the offer is extended or marketed to investors outside Singapore.

Claims can be mitigated in the following ways:

• Verification: Ensure that research reports only contain information from the prospectus and which is verified by the issuer.
• Management of conflicts of interest: Put in place internal conflict management policies to ensure effective controls and segregation of duties to mitigate potential conflicts of interest that may arise from the publication of reports.
• Exercise confidentiality: Take reasonable steps to prevent leakage of information to any person that is not an intended investor.
• Disclaimers: Use disclaimers (eg, that the prospectus is only intended for certain investors).

• Business objectives and strategy
• Listing eligibility and regulatory compliance
• Market capitalisation and size
• Sector and industry
• Exit strategy
• Investor base
• Regulatory environment and governance
• Funding needs
• Regional expansion
• Investor relations and disclosure
• Costs and fees
• Legal and tax implications
• Market liquidity
• Dual listing
• Market conditions

Voluntary delistings from stock exchanges can occur for various reasons and often reflect the strategic decisions of companies and their shareholders. Typical reasons for voluntary delisting include the following:

• Privatisation: Companies may choose to delist from a stock exchange to become privately held entities. This is often driven by a desire for:
• • greater control over the company’s operations and strategic direction;
  • reduced regulatory and reporting requirements; and
  • the ability to implement changes without the scrutiny of public shareholders.
• Share price performance: If a company’s share price consistently underperforms or falls below what the management and shareholders consider to be its fair equity valuation, the company may decide to delist. Going private allows the company to operate without the pressures of public market expectations and quarterly reporting.
• Low borrowing costs: When interest rates are low, companies may find it attractive to take on debt to finance a privatisation. This can be a cost-effective way to repurchase shares from public shareholders and delist the company.
• Strategic partnerships: Some companies may choose to delist and partner with private equity funds or other strategic investors that can provide capital, expertise and support for growth or restructuring initiatives. Going private can facilitate such partnerships.
• Greater flexibility: As private companies, issuers have more flexibility to make significant corporate actions or structural changes without the need for shareholder approval. This can expedite decision-making and execution of strategic plans.

Grounds for compulsory delisting: The SGX-ST can delist an issuer without its agreement if:

• the issuer is unable or unwilling to comply with, or contravenes, a listing rule; or
• in the SGX-ST’s opinion:
• • it is appropriate to do so; or
  • delisting is necessary or expedient in order to maintain a fair, orderly and transparent market.

Compulsory delisting can also occur after any of the following:

• A general trading suspension of the issuer’s securities is imposed by the SGX-ST;
• There is a takeover offer subsequent to a suspension;
• The issuer’s free float falls below 10% of the total number of issued shares/units in a class held by the public;
• The issuer’s assets primarily consist of cash or short-dated securities (making it a ‘cash company’) and it fails to meet the requirements for a new listing within 12 months of becoming a cash company; or
• The issuer has been on the SGX-ST’s watchlist for 36 months and fails to meet the necessary criteria for removal from the list.

The process for delisting is as follows:

• Shareholder/unitholder approval: The issuer must convene a general meeting of shareholders/unitholders to seek their approval for the voluntary delisting. A fair and reasonable exit offer, which includes a cash alternative as the default option, must be presented to the shareholders. An independent financial adviser appointed by the issuer will advise on the terms of the exit offer. The approval for delisting must receive at least 75% of the total number of issued shares/units held by the issuer’s shareholders/unitholders present and voting.
• Mechanisms for delisting: After obtaining the necessary shareholder/unitholder approval, the delisting may be carried out through one of the following mechanisms:
• • Scheme of arrangement (Section 210 of the Companies Act): A scheme of arrangement provides for the acquisition of the securities of the target on an ‘all or nothing’ basis. If the scheme is successful in obtaining the requisite majority approval of different classes of holders (including dissenting shareholders), the bidder can acquire all the shares of the target, resulting in the delisting of the target.
  • Amalgamation (Sections 215A to 215J of the Companies Act): In an amalgamation, the target is merged with the bidder, and the bidder or a special purpose vehicle becomes the surviving entity. As a result, the target ceases to exist, leading to its delisting.
  • Selective capital reduction (Section 78G of the Companies Act): In this mechanism, all shares held by minority shareholders are cancelled. A portion of the total paid-up share capital of the target is also cancelled and returned to the minority shareholders. However, this process involves specific requirements, including:
  • • a special resolution passed at a general meeting (with the bidder and its concert parties abstaining from voting); and
    • approval and confirmation by the High Court.

The following are relevant tax issues to consider with respect to an equity issue of shares from a Singapore perspective.

Taxation of sale of shareholding: In Singapore, the taxation of gains from the sale of shareholdings is primarily determined based on whether the gains are considered income or capital in nature. Key points regarding the taxation of shareholding gains in Singapore include the following:

• Capital gains tax: Singapore does not impose a specific capital gains tax. Instead, it imposes taxes on income. There are no specific laws or regulations that classify gains as either income or capital. The determination depends on factors such as:
• • the taxpayer’s intention at the time of acquisition; and
  • the nature of the activities related to the asset.
• Intent at acquisition: Case law has generally held that the taxpayer’s intention when acquiring the asset is a significant factor in determining whether the gain is considered income or capital. If the asset was acquired for investment purposes and there is no subsequent change in intention, the gain is more likely to be treated as capital in nature.
• Objective test: The classification of gains as income or capital is an objective test, meaning that it is determined based on facts and circumstances, not solely on the taxpayer’s stated intention. The activities of the taxpayer and all circumstances related to the purchase and sale of the securities are considered.
• Badges of trade: The Singapore courts have endorsed the use of the ‘badges of trade’ concept, which originated in the United Kingdom, to determine whether a transaction is considered a trading transaction. These badges include factors such as:
• • the length of ownership;
  • the frequency of similar transactions;
  • the circumstances of the disposal; and
  • the motive for the acquisition.
• Long-term investment: Gains from shares held for long-term investment purposes since acquisition are typically treated as capital gains and are not subject to income tax.
• Tax exemption: Singapore provides tax exemptions on gains or profits derived from the disposal of ordinary shares under certain conditions. For example, a divesting company can enjoy a tax exemption if it has held at least 20% of the ordinary shares in another company for at least 24 months before the disposal. However, there are exceptions; and this exemption does not apply to disposals of unlisted shares in an investee company in the business of trading, holding or developing immovable properties in Singapore or outside Singapore.

Dividends: The taxation in Singapore of dividends paid by the listing vehicle depends on whether the listing vehicle is resident in Singapore or elsewhere:

• Where the listing vehicle is a Singapore-resident company, all Singapore-resident companies come under the one-tier corporate tax system (one-tier system). Under the one-tier system, corporate profits are taxed once at the company level and shareholders – whether individuals or companies – receive tax-free dividends, regardless of their residency in Singapore. Correspondingly, no Singapore withholding tax will be imposed on such dividends.
• Where the listing vehicle is not a Singapore-resident company, income tax is chargeable on both:
• • income accruing in, or derived from, Singapore; and
  • foreign-sourced income which is received (or deemed received) in Singapore from outside Singapore.

Foreign-sourced income in the form of dividends, branch profits and service income (specified foreign income) received, or deemed to be received, in Singapore by Singapore-resident companies is exempt from tax, provided that certain conditions are met, including the following:

• Such income must be subject to tax of a similar character to income tax under the laws of the jurisdiction from which such income is received; and
• At the time the income is received in Singapore, the highest rate of tax of a similar character to income tax (by whatever name called) levied under the laws of the territory from which the income is received on any gains or profits from any trade or business carried on by any company in that territory at that time is not less than 15%.

In the case of dividends paid by a company which is resident in a territory from which the dividends are received, the ‘subject to tax’ condition above is considered met where either:

• tax is paid in that territory by that company in respect of its income out of which such dividends are paid; or
• tax is paid on such dividends in that territory from which such dividends are received.

Certain concessions and clarifications have also been announced by the Inland Revenue Authority of Singapore with respect to the above conditions.

Goods and services tax (GST): In Singapore, the taxation of share sales and related services under the GST regime can be summarised as follows:

• Sale of shares within Singapore: When a GST-registered investor in Singapore sells shares to another person in Singapore, the sale is considered an exempt supply and is not subject to GST. Input GST incurred by the investor in making this exempt supply is generally not recoverable from the Singapore comptroller of GST.
• Sale of shares outside Singapore: If the shares are sold by a GST-registered investor in Singapore as part of its business and the sale benefits a person outside Singapore, the sale is generally considered a taxable supply subject to GST at a rate of 0%. Input GST incurred by the investor in making such a supply may be fully recoverable from the Singapore comptroller of GST, subject to certain conditions.
• Services related to share transactions: Services such as arranging, brokering, underwriting or advising on the issuance, allocation or transfer of ownership of shares are subject to GST at the standard rate of 7% when provided to an investor in Singapore. However, if these services are provided to an investor outside Singapore, they are generally subject to GST at a rate of 0%, provided that certain conditions are met.

Stamp duty:

• Subscription of shares: Stamp duty is not payable when subscribing to shares.
• Acquisition of shares: When acquiring shares of a Singapore-incorporated company (or a foreign-incorporated company with its share register in Singapore) in certificated form within Singapore, stamp duty is payable on the instrument of transfer. The rate is 0.2% of either the consideration paid for the shares or their market value, whichever is higher.
• Transfer executed outside Singapore: If the instrument of transfer is executed outside Singapore, no stamp duty is payable on the acquisition of shares. However, stamp duty may be applicable if the transfer document executed outside Singapore is received within Singapore. An electronic transfer executed outside Singapore is considered received in Singapore if:
• • it is retrieved or accessed by a person in Singapore;
  • an electronic copy is stored on a device brought into Singapore; or
  • an electronic copy is stored on a computer in Singapore.
• Scripless trading system: Stamp duty is not applicable to electronic transfers of shares conducted through the scripless trading system managed by the Central Depository (Pte) Limited.

Under the Securities and Futures Act, an offer of securities or securities-based derivatives in Singapore must be accompanied by a prospectus unless it falls within an exemption provided under the Securities and Futures Act.

‘Securities’ include:

• shares;
• debentures;
• units in a business trust; and
• any instrument conferring or representing a legal or beneficial ownership interest in:
• • a corporation;
  • a partnership; or
  • a limited liability partnership.

The term does not include:

• any unit of a collective investment scheme;
• any bill of exchange; or
• any certificate of deposit issued by a bank or finance company.

‘Securities-based derivatives’ include any derivatives contract of which the underlying thing or any of the underlying things is a security or a securities index. However, it does not include any derivatives contract that is, or that belongs to, a class of derivatives contracts that is, prescribed by regulations made under Section 341 of the Securities and Futures Act.

Key exemptions for offers of securities or securities-based derivatives contracts include:

• offers where the minimum transaction amount is S$200,000;
• small offers, where the total amount raised is S$5 million or less in 12 months;
• private placements – that is, offers made to no more than 50 persons in 12 months; or
• offers targeted at accredited or institutional investors.

The requirements governing the information that must be disclosed in the prospectus are set out in the Securities and Futures Act and the Securities and Futures Regulations.

The Securities and Futures Act requires a prospectus to contain all the information that is reasonably required by the investors and their professional advisers to make an informed assessment of:

• the rights and liabilities of the shares/units being offered;
• the assets and liabilities, profits and losses, financial position and performance, and prospects of the issuer; and
• the assets and liabilities, profits and losses, financial position and performance, and prospects of the underlying entity if it is controlled by the offeror and/or its related parties (together or alone).

The Securities and Futures Act also requires the prospectus to contain the matters prescribed in the Securities and Futures Regulations, including:

• details of the issuer, its directors, its executive officers and the vendors (if any);
• details of the underwriters, independent auditors and other experts;
• the issuer’s share capital and its substantial shareholders/unitholders;
• the issuer’s business operations;
• the operating and financial review (ie, a description of the issuer’s financial position, changes in financial condition and results of operations for each financial year and interim period reported on in the prospectus);
• recent developments and prospects;
• risk factors;
• interested person transactions and conflicts of interest; and
• financial statements prepared or restated in accordance with:
• • Singapore Financial Reporting Standards (International) (SFRS(I)s);
  • International Financial Reporting Standards (IFRS); or
  • US Generally Accepted Accounting Principles (US GAAP).

A supplementary or replacement prospectus must also be lodged with the Monetary Authority of Singapore (MAS) if, after the prospectus is registered with the MAS but before the close of the offer, the issuer is made aware that the prospectus is defective (eg, where the prospectus contains a false or misleading statement).

In 2015, the MAS introduced guidelines on effective drafting practices for prospectuses. These guidelines emphasise the need for information presented in prospectuses and profile statements to be in clear, plain English, organised comprehensively for easy understanding. Additionally, in 2018, the MAS issued guidelines that cover, among other things, the disclosure of financial information in prospectuses, such as how audited, pro forma and interim financial information should be presented in prospectuses.

When a prospectus is required, issuers must also provide a products highlight sheet (PHS) alongside it. The PHS is designed to present key information about the investment product, enabling investors to make informed decisions. It:

• must adhere to MAS-prescribed templates; and
• must not exceed the specified page limit.

On 8 October 2018, the MAS revised its guidelines to provide further clarification on the type of information that should be disclosed in the PHS that would give a fair and balanced view of the nature, material benefits and material risks of the investment product.

The prospectus must be submitted to MAS through the Offers and Prospectuses Electronic Repository and Access platform. It will be available for public viewing and undergo review by the MAS for a period ranging from seven to 21 days. If a draft has previously been submitted to the MAS for pre-lodgement review, this timeline may differ.

The MAS has the authority to officially register the prospectus within this seven to 21-day window (inclusive of both days). The registration date can be extended by the MAS if necessary. Once the prospectus has been registered, the issuer can proceed with the initial public offering.

See question 5.3 on the PHS.

Various individuals and entities can face both criminal and civil liability if the prospectus contains false or misleading statements or omits necessary information. These parties include:

• the person making the offer and, if that person is an entity, each director or equivalent individual within that entity;
• when the offeror is the issuer, each person who has given consent to be named in the prospectus as a proposed director or equivalent role within the issuer;
• if the issuer is under the control of the offeror and/or its related parties, each director or equivalent individual, and each person who has consented to be named in the prospectus as a proposed director or equivalent person within the issuer;
• the issue manager involved in the offer of the shares/units which has consented to be named in the prospectus;
• the underwriter (excluding sub-underwriters) involved in the issue or sale of the shares/units which has consented to be named in the prospectus;
• any individual named in the prospectus with his or her consent who either:
• • made the false or misleading statement; or
  • provided the basis for the false or misleading statement in the prospectus; and
• any other person who contributed to the false or misleading statement or omission of information but specifically with respect to the inclusion of the false or misleading statement or omission.

There are certain statutory defences available to such statutory criminal and civil liability. One of the more important statutory defences in the Securities and Futures Act is applicable where the relevant person can prove that:

• he or she made all reasonable inquiries (if any) given the circumstances; and
• after doing so, he or she believed on reasonable grounds that the statement was not false or misleading.

A similar defence also applies in respect of omissions.

In addition to liability under the Securities and Futures Act, there are potential liabilities under:

• common law (eg, liability in tort for negligent misstatements);
• the Misrepresentation Act 1967 (which could also cover innocent misrepresentations);
• the provisions of the Penal Code 1871 on:
• • obtaining money by deception; and
  • fraud involving deliberate false statements; and
• foreign securities laws, to the extent that the offer is extended or marketed to investors outside Singapore.

Payments, banking, capital markets, financial advisory and insurance businesses require licences from the Monetary Authority of Singapore (MAS) before commencing operations.

Proprietary trading is allowed in Singapore, subject to certain restrictions imposed by the Banking Act and the Securities and Futures Act.

There are no specific special authorization requirements imposed on shareholders of the Singapore Exchange (SGX). Shareholders of SGX, like shareholders of publicly traded companies in general, are typically not subject to unique or special authorization requirements merely for holding shares in the exchange.

Financial instruments are typically marketed in Singapore through various channels and methods, both traditional and digital, such as the following:

• Financial institutions: Banks, insurance companies and other financial institutions have a significant presence in Singapore. They often market a wide range of financial products – including savings accounts, investment products, insurance policies and loans – through their branches, websites and customer service teams.
• Financial advisers: Independent financial advisers and financial planning firms assist individuals and businesses in selecting suitable financial instruments. They offer personalised advice and recommendations based on the client’s financial goals and risk tolerance.
• Online platforms: With the growth of digital technology, online platforms and robo-advisers have become increasingly popular for marketing and selling financial instruments. These platforms provide easy access to various investment products, such as stocks, bonds, mutual funds and exchange-traded funds.
• Stock exchanges: The Singapore Exchange (SGX) plays a vital role in marketing and facilitating the trading of securities, including stocks, bonds and derivatives. Investors can access information about listed companies and their financial instruments through the SGX website and trading platforms.
• Asset management companies: Asset management firms market investment funds and portfolios to both retail and institutional investors. They may use advertising, seminars and educational materials to attract investors.
• Insurance agents: Insurance companies often rely on a network of insurance agents that market life insurance, health insurance and other insurance products to individuals and businesses. These agents provide information and assistance in selecting appropriate coverage.

Initial public offerings (IPOs) are marketed at various stages through the following methods:

• Pre-IPO placements: Issuers often engage in pre-IPO placements to attract early investors. These placements are typically made to institutional or strategic investors and can enhance the issuer’s credibility. Pre-IPO investors may also help to generate interest and demand among other potential investors.
• Cornerstone investors: Placements may be made to investors that commit to purchasing a significant portion of the IPO shares at the offer price.
• Roadshows. After the prospectus is lodged with the MAS, issuers may conduct roadshow presentations for institutional and accredited investors.
• Advertising/other publicity: Advertising and other publicity efforts are only allowed for retail offers. These campaigns may include:
• • print and digital advertisements;
  • social media promotions; and
  • other marketing materials.
• However, advertising the IPO before prospectus lodgement with the MAS is generally prohibited, with certain exceptions.

Book building is used in IPOs and secondary offerings, such as placements, to:

• get a better sense of the size of the demand; and
• determine the exact offer price.

Mainboard IPOs follow a sequential structure:

• Placement focus: The initial focus is on the placement tranche for institutional investors.
• Placement book building: The placement agent conducts book building in a short timeframe to gauge investor interest.
• Overnight process: Book building occurs overnight to determine the final offer price based on demand.
• Announcement: The offer price and allocation for the placement tranche are announced.
• Public offer: The public offer phase for retail investors opens with a fixed offer price.

The advantages of book building are as follows:

• Price discovery: It helps to determine the optimal offer price by assessing investor demand. This can result in a fair market price.
• Efficiency: It streamlines the IPO process by efficiently gauging investor interest and pricing shares accordingly.
• Stabilisation: The demand information gathered during book building can guide the issuer in allocating shares to various investor categories, reducing the risk of underpricing.
• Institutional focus: It allows for a targeted approach, focusing on institutional investors before the public offer, which can enhance the success of the IPO.

The disadvantages of book building include the following:

• Limited transparency: The process is often non-transparent, as it involves discussions between issuers and institutional investors, leaving retail investors with less information.
• Potential for manipulation: There is a risk of market manipulation, as the offer price can be influenced by a handful of large investors.
• Exclusion of retail investors: Retail investors may not have an opportunity to participate in the price-setting process, which can lead to concerns about fairness.
• Complexity: It can be complex, involving multiple steps and negotiations, which may deter some issuers or investors.
• Underpricing risk: If demand is significantly underestimated, the offer price may be set too low, resulting in missed capital-raising opportunities for the issuer.

Price stabilisation activities in relation to securities undergoing an IPO and listing on the Singapore Exchange Securities Trading Limited (SGX-ST) may contravene the false trading and market rigging, securities market manipulation and insider trading prohibitions contained in the Securities and Futures Act.

The Securities and Futures (Market Conduct) (Exemptions) Regulations 2006 provide an exemption for stabilising actions during an IPO, subject to certain conditions, including the following:

• Offer value: The total value of securities offered in the IPO must be at least S$25 million (or its equivalent in a foreign currency).
• Maximum securities: Stabilisation activities cannot involve the purchase of securities exceeding 20% of the total securities offered in the IPO (before any overallotment, if applicable).
• Time limits: Stabilisation actions can start from the commencement of trading of the issuer’s securities and must end either:
• • within 30 calendar days of the commencement of trading; or
  • when the stabilising manager has acquired the specified number of securities for stabilisation, as stated in the prospectus, whichever is earlier.
• Price limits: The maximum purchase price for stabilising actions depends on the initial offer price. After initial stabilisation, it is determined based on independent transactions on the SGX-ST or other criteria.
• Disclosures: There must be adequate disclosure requirements in the prospectus and other notifications and public announcements.

In its role as a central counterparty, Singapore Exchange Derivatives Clearing Limited (SGX-DC) ensures the financial performance of every cleared trade. To maintain the integrity of the clearing system, the SGX-DC has well-established risk management systems to monitor and measure the risk exposures of its members.

The risk management framework employed by the SGX-DC includes:

• stress testing to determine the capital adequacy of the clearing fund;
• position limits on individual customer group to prevent excessive concentration risk; and
• responsive margining and collateralisation processes.

Margin reviews are conducted on a regular basis. In addition, during adverse market conditions or whenever the situation warrants, margin reviews are performed more frequently to ensure sufficient collateralisation of trades. In accordance with the Futures Trading Act, each clearing member must keep customer collateral deposits segregated from its own.

In addition, the Clearing Fund provides resources with which the SGX-DC can discharge its respective obligations and the liabilities of defaulting clearing members arising from positions in derivative contracts.

The relevant SGX-DC rule requires each clearing member to report to Central Depository (Pte) Limited (CDP) such information as the CDP may require for each position account opened with the CDP:

• as soon as practicable; and
• in any event, no later than such time as may be required for timely and orderly settlement of the first trade cleared by the clearing member for the customer into the intended securities account.

The SGX-DC is a wholly owned SGX subsidiary.

The SGX-DC provides clearing for:

• products listed on Singapore Exchange Derivatives Trading; and
• over-the-counter commodity trades registered via SGX trade registration platform Titan OTC.

The SGX-DC is also a qualifying central counterparty, whereby members are subject to lower capital requirement for their trade and default fund exposures under the Basel III framework.

Listed companies in Singapore must follow the ‘comply or explain’ principle in relation to the Monetary Authority of Singapore (MAS) Code of Corporate Governance (which is given effect to by the Listing Rules). They should either:

• adhere to the recommended practices outlined in the MAS Code of Corporate Governance; or
• provide explanations for any deviations in their annual reports.

Listed companies are expected to ‘comply or explain’ in relation to the requirements in the MAS Code of Corporate Governance. As part of the MAS’s efforts to streamline the Code of Corporate Governance, certain important requirements and baseline corporate governance practices stipulated in the code were shifted to the Listing Manual, rendering compliance with these requirements mandatory.

Mandatory corporate governance requirements include:

• with effect from 1 January 2019:
• • director independence tests;
  • board committee requirements;
  • director appointments;
  • training for directors; and
  • internal audit functions; and
• with effect from 1 January 2022, requirements relating to:
• • board composition; and
  • the reappointment of independent directors after nine years by way of a two-tier vote by shareholders.

The main areas of continuing obligations set out in the Listing Rules are as follows:

• Disclosure of material information: Issuers must disclose any information that could impact their securities’ price or create a false market. This obligation is subject to limited exceptions and is guided by the Corporate Disclosure Policy of the Singapore Exchange Securities Trading Limited (SGX-ST). Issuers must promptly clarify or confirm any unverified rumours that could affect the price of their securities.
• Other disclosure obligations: Issuers must disclose certain specific information, including:
• • the appointment or termination of key personnel;
  • breaches of loan covenants; and
  • other significant developments that could affect the company’s financial status or operations.
• Periodic financial reporting: Issuers must announce their financial statements for the first half of the financial year and the full financial year immediately after the figures become available. The announcements must occur within specified timeframes, typically 45 days after the first half and 60 days after the financial year’s end. Issuers with adverse audit opinions, going-concern uncertainties or regulatory concerns must also announce quarterly financial statements.
• Interested person transactions (IPTs): Immediate announcements are required for IPTs with a value equal to or exceeding 3% of the group’s latest audited net tangible assets. If the aggregate value of all transactions with the same interested person in the same financial year reaches 3% or more of the net tangible assets, immediate announcements are necessary for subsequent transactions with that interested person during that financial year.
• Shareholders’/unitholders’ approval for IPTs: Transactions with the same interested person during the same financial year, with a value equal to or exceeding 5% of the group’s latest audited net tangible assets, require prior approval from shareholders/unitholders. However, transactions already approved by shareholders/unitholders or aggregated with such transactions are exempt from this requirement, provided that the total remains below the threshold. IPTs which are below S$100,000 are not subject to announcement or shareholder/unitholder approval requirements.
• Acquisitions and realisations: Immediate announcements are necessary for asset acquisitions or disposals exceeding 5% of the relative figures calculated based on the Listing Rules. Transactions exceeding 20% or 100% of these relative figures trigger additional conditions and may require shareholder/unitholder approval.

The following rules apply to listed foreign companies:

• Primary listing on the SGX-ST: A foreign issuer with a primary listing on the SGX-ST must comply with the continuing obligations under the Listing Rules.
• Secondary listing on the SGX-ST: A foreign issuer with a primary listing on what the SGX-ST considers to be developed markets and which is secondarily listed on the SGX-ST need not comply with additional continuing obligations (except for Rule 217 and Rule 751 of the Mainboard Listing Rules), if the foreign issuer maintains its primary listing on its home exchange and complies with its home exchange rules. However, issuers with a primary listing in jurisdictions other than developed markets are subject to a full review by the SGX-ST of the home exchange’s legal and regulatory requirements, particularly in relation to:
• • shareholder/unitholder protection; and
  • corporate governance standards.
• The continuing obligations in Chapters 9, 10 and 13 of the Mainboard Listing Rules will be imposed for:
• • transactions relating to IPTs;
  • significant transactions; and
  • delistings.

Please see Question 8.3.

Penalties under the Listing Rules: The SGX-ST has the authority to deal with an issuer’s failure to comply with its ongoing obligations, including the power to suspend trading or delist the issuer without its consent. The SGX-ST can also take enforcement actions and initiate disciplinary proceedings against individuals who violate the Listing Rules.

The Listing Rules are also given effect by the Securities and Futures Act, which provides that where any person that is obliged to comply with, observe, enforce or give effect to the Listing Rules fails to do so, the court – on the application of the MAS or the SGX-ST, among others – can make an order directing the person to comply with, observe, enforce or give effect to the Listing Rules.

Penalties under the Securities and Futures Act: The Securities and Futures Act mandates that issuers must not intentionally, recklessly or negligently fail to disclose information required by the SGX-ST or other listing rule obligations. Intentional or reckless violations of continuing obligations can result in criminal or civil penalties under the Securities and Futures Act.

Annual financial statements (and interim financial reports) must be prepared in accordance with the relevant accounting standards for interim financial reports under:

• Singapore Financial Reporting Standards (International);
• International Financial Reporting Standards; or
• US Generally Accepted Accounting Principles.

Inside information is information that is not generally available but, if it were generally available, it would have – or a reasonable person would expect it to have – a material effect on the price or value of:

• securities;
• securities‑based derivatives contracts; or
• units of collective investment schemes.

Persons with inside information are prohibited from engaging in insider trading by dealing, or procuring others to deal in, securities while in possession of non-public price-sensitive information, subject to certain exceptions.

Exceptions include:

• the redemption of units in collective investment schemes;
• underwriting;
• purchases pursuant to legal requirements; and
• information communicated pursuant to legal requirements.

See Question 8.3 above on disclosure of material information

The offence of insider trading is set out under Section 218 of the Securities and Futures Act (Securities and Futures Act). For a breach of Section 218 of the Securities and Futures Act to be made out, it must be established that:

• The offender is a “person who is connected to a corporation”;
• The offender possessed “information concerning that corporation”;
• The information was not “generally available”;
• A reasonable person would, if that information were generally available, expect it to have a “material effect on the price or value of securities of that corporation”;
• The offender knew or ought reasonably to have known that the information was not generally available; and
• The offender knew or ought reasonably to have known that if the information were generally available, it might have a material effect on the price or value of those securities of that corporation.

Once all these limbs are satisfied, a person will be found liable for breaching Section 218 of the Securities and Futures Act.

No.

• Engaging in false trading and market rigging transactions that create a false or misleading appearance of active trading and/or manipulate the market price of the securities (eg, buying and selling securities with no change of beneficial ownership);
• Engaging in securities market manipulation with the intention of inducing other persons to deal in the securities of the issuer or its related corporation;
• Disseminating false or misleading statements and information that is likely to induce others to deal in securities or manipulate the market price of securities;
• Engaging in insider trading by dealing, or procuring others to deal in, securities while in possession of non-public price-sensitive information, subject to certain exceptions;
• Fraudulently inducing persons to deal in securities;
• Employing manipulative and deceptive devices in connection with the dealing of securities; and
• Disseminating information about illegal transactions.

However, the Market Conduct Regulations allow the price stabilisation of securities that are the subject of an initial public offering as an exception to the rules against market abuse (see question 6.5), provided that such actions are taken in accordance with the Market Conduct Regulations.

Individuals who breach market abuse and insider trading regulations in Singapore may face criminal penalties, including fines of up to S$250,000, imprisonment for a maximum of seven years or both. Additionally, they may be subject to civil penalties or civil liabilities resulting from claims by affected investors under the Securities and Futures Act.

Corporations can also face penalties in the following situations:

• fines or civil penalties if the corporation was involved in, or aware of, an employee’s or officer’s market abuse or insider trading activities;
• civil penalties if the corporation failed to prevent or detect violations by an employee or officer; and
• compensation payments to affected investors under the Securities and Futures Act if the corporation benefited from an employee’s or officer’s market abuse or insider trading activities, resulting in a profit or avoidance of a loss.

Short selling in Singapore is regulated. The relevant regulations are primarily overseen by:

• the Monetary Authority of Singapore (MAS); and
• the Singapore Exchange Securities Trading Limited (SGX-ST).

The SGX operates a securities lending and borrowing programme that allows market participants to lend and borrow securities. This programme facilitates short selling by providing a mechanism for borrowing securities that are in demand for short positions.

Market participants are typically required to report their short positions.

There may be potential conflicts of interest, as the author’s financial interests may not align with the interests of the investors who may rely on the research reports.

No; however, the production of an annual sustainability report is a requirement.

The sustainability report must include the following primary components:

• material environmental, social and governance (ESG) factors;
• climate-related disclosures consistent with the recommendations of the Task Force on Climate-Related Financial Disclosures;
• policies, practices and performance;
• targets;
• sustainability reporting framework; and
• board statement and associated governance structure for sustainability practices.

The issuer should review its business in the context of the value chain and determine which ESG factors in relation to its interaction with its physical environment and social community and its governance are material for the continuity of its business. The issuer is expected to report the criteria and process by which it has made its selection with reference to how these factors contribute to the creation of value for it.

The issuer should select a sustainability reporting framework which is appropriate for and suited to its industry and business model, and explain its choice. In doing so, the issuer should place importance on using a globally recognised framework to ensure its wider acceptance in today’s increasingly global marketplace. The issuer can then be more easily understood and compared with its peers in Singapore as well as in other jurisdictions across the world.

The Ministry of Finance has developed the Singapore Green Bond Framework, under which it intends to issue multiple green bonds and use the proceeds to finance and refinance, in whole or in part, existing and future government expenditures:

• in the form of:
• • capital and operational expenditures;
  • fiscal measures (eg, tax expenditures and subsidies); and
  • transfer payments for central government purposes; and
• extended to:
• • statutory bodies;
  • departments; and
  • state-owned and private entities.

Separately, the Singapore Exchange Securities Trading Limited (SGX-ST) has a Sustainable Fixed Income initiative which recognises fixed income securities listed on the SGX-ST that meet recognised standards for green social or sustainability fixed income securities.

No, although the issuer is required to procure an annual sustainability report.

Wholesale and retail fixed income securities need to meet the following criteria at issuance to be recognised under the SGX Sustainable Fixed Income initiative:

• The fixed income securities are aligned with recognised green, social or sustainability standards for fixed income securities;
• A reputable external reviewer has confirmed that the fixed income securities are aligned with the recognised standards; and
• The reports setting out the fixed income securities’ alignment with the recognised standards are publicly available.

Investment managers and institutional investors may be required to incorporate ESG factors into their investment decision-making processes. This could lead to a shift in capital towards companies with strong sustainability practices and away from those with poor ESG performance.

Digital payment token (DPT) service providers should not promote their DPT services to the general public in Singapore.

DPT service providers should not engage in marketing or advertising of DPT services:

• in public areas in Singapore such as through:
• • advertisements on public transport, public transport venues, public websites, social media platforms, broadcast and print media; or
  • provision of physical ATMs; or
• through the engagement of third parties, such as social media influencers, to promote DPT services to the general public in Singapore.

DPT service providers can only market or advertise on their own corporate websites, mobile applications or official social media accounts.

The Monetary Authority of Singapore (MAS) will issue guidelines and policies from time to time concerning marketing and distribution activities for financial institutions.

Due diligence requirements for corporate finance advisers: On 23 February 2023, the Monetary Authority of Singapore (MAS) published Notice Securities and Futures Act 04-N21 on Business Conduct Requirements for Corporate Finance Advisers. The notice imposes mandatory requirements for business conduct and due diligence for corporate finance advisers.

Under the notice, corporate finance advisers will be required among other things, to:

• identify, mitigate and disclose conflicts of interest to a customer;
• ensure adequate supervision and management when advising on corporate finance; and
• keep records of due diligence work done.

There are additional regulatory requirements for corporate finance advisers that are acting as an issue manager, sponsor or financial adviser on a Singapore Exchange Securities Trading Limited (SGX-ST) initial public offering (IPO) or reverse takeover (including an IPO of a special purpose acquisition company (SPAC) or a business combination by an SGX-ST-listed SPAC). These requirements include:

• assessing to their sastisfaction that a listing applicant is suitable for listing; and
• ensuring that there is adequate supervision by senior management on the formulation and the implementation of any due diligence plan proposed by the transaction team.

Where a third-party service provider is engaged to perform any due diligence work, the corporate finance adviser must satisfy itself that it may reasonably rely on the due diligence performed by the third party service provider.

Top Tips:

1. Early Planning: Initiate the planning process well in advance, allowing for comprehensive consideration of legal, regulatory, and logistical facets of the offering.
2. Engage Legal and Financial Advisors: Seek the counsel of seasoned legal and financial advisors who possess a profound understanding of the Singaporean market, guiding the offering through regulatory compliance and the listing process.
3. Comprehensive Due Diligence: Conduct rigorous due diligence encompassing financials, operational aspects, and legal compliance of the company. Early identification and resolution of potential issues mitigate the risk of last-minute complications.
4. Transparency and Disclosure: Sustain a high degree of transparency throughout the offering process, providing investors, regulators, and other stakeholders with unambiguous and accurate information.
5. Effective Engagement with Regulatory Authorities: Foster positive relations with regulatory bodies, particularly the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX), through ongoing and transparent communication.
6. Strategic Timing: Strategically select the timing of the offering, considering the influence of market conditions and investor sentiment on its outcome.
7. Stakeholder Engagement: Communicate with existing shareholders, employees, and other stakeholders to ensure their support and alignment with the offering.
8. Robust Corporate Governance: Uphold stringent corporate governance standards, a highly esteemed quality in the Singaporean market.
9. Corporate Structure and Compliance: Ensure the soundness of the corporate structure and adherence to Singaporean regulations, as compliance issues can become major obstacles.
10. Clear Offering Structure: Craft well-defined and structured offering documents that are fully compliant with regulatory requirements for prospectus or disclosure documents.

Potential Sticking Points:

1. Regulatory Compliance: Regulatory approval and compliance pose substantial challenges, with any instances of non-compliance or regulatory issues potentially leading to delays or the cessation of the offering.
2. Market Conditions: Unfavorable market conditions, including downturns or heightened volatility, can significantly impact the success of the offering.
3. Investor Sentiment: Changes in investor sentiment may cause fluctuations in the demand for the offering.
4. Legal or Tax Issues: Legal or tax complexities arising during due diligence may create complications that necessitate timely resolution.
5. Offering Structure: An overly intricate or ambiguous offering structure may confuse investors and deter their participation.
6. Financial Performance: Poor financial performance or unfavorable market dynamics can affect investor confidence.
7. Timing Delays: Delays in the process, such as regulatory approval, may be frustrating and costly.
8. Underpricing or Overpricing: Setting the offering price too high or too low may affect investor interest and the company's ability to raise the desired capital.
9. Market Competition: The presence of competing offerings in the market may affect investor attention and demand for the offering.
10. Post-Offering Compliance: Compliance with post-offering requirements and disclosure obligations is critical. Failure to meet these obligations can lead to regulatory issues.