Singapore Exchange Regulation (“SGX RegCo”), in consultation with the Monetary Authority of Singapore (“MAS”), will introduce measures to support issuers amid the challenging business and economic climate due to COVID-19, including enabling the acceleration of fund-raising efforts.
Suspension of Entry into the Financial Watch-List
COVID-19 has caused a drastic global deterioration in business conditions for all companies, with many experiencing significant loss of revenue and profitability. Share prices of companies have also fallen, translating to sharp declines in market capitalisation. Companies are also likely to face liquidity crunch at this time as banks are tightening credit.
SGX operates a Financial Watch-List and places companies on the List to compel them to turn around their financial performance after 3 years of losses and when market capitalisation falls below S$40 million. In light of current conditions, which are both unprecedented and unforeseen, placing listed issuers on the Financial Watch-List during this period might cause undue prejudice to companies in navigating the business challenges in this climate.
Accordingly, SGX RegCo will provisionally suspend the half-yearly reviews[1] on the first market days of June 2020 and December 2020 to place issuers on the Financial Watch-List[2](“Suspension”). The Suspension is to enable our issuers to focus on meeting the current business and economic challenges and dealing with any resultant liquidity crunch.
Companies which meet the exit criteria under the listing rules will continue to be able to exit the Watch-List.
SGX RegCo shall determine where appropriate, if the Suspension requires further extension in due course.
Enhanced Share Issue Limit for Mainboard Issuers
SGX RegCo will provisionally enable Mainboard issuers to seek a general mandate for an issue of pro-rata shares and convertible securities of up to 100% of its share capital (excluding treasury shares and subsidiary holdings in each class) versus 50% previously[3] (“Enhanced Share Issue Limit”).
The Enhanced Share Issue Limit is effective on 8 April 2020 and will be in force until 31 December 2021.
For the avoidance of doubt, the limit on the aggregate number of shares and convertible securities issued other than on a pro rata basis remains at not more than 20%.
Issuers intending to raise funds using the Enhanced Share Issue Limit must seek shareholders’ approval by way of an ordinary resolution either through obtaining a general mandate for the Enhanced Share Issue Limit at their annual general meeting or via specific shareholder approval by convening an extraordinary general meeting (“EGM”).
The Enhanced Share Issue Limit is subject to the following conditions:
- the Board of Directors’ confirmation to SGX RegCo that the Enhanced Share Issue Limit is in the interest of the issuer and its shareholders;
- compliance with any applicable legal requirements governing the issuer and the constitution/trust deed of the issuer (or the equivalent in the issuer’s country of incorporation) arising from the Enhanced Share Issue Limit;
- issue of not more than 100% of the issuer’s total number of issued shares excluding treasury shares and subsidiary holdings in each class at the conclusion of the first annual general meeting of the issuer following the passing of the resolution on the general mandate for the Enhanced Share Issue Limit.
- The issuer disclosing in the notice of general meeting:-
- why the Board of Directors is of the view that the Enhanced Share Issue Limit is in the interest of the issuer and its shareholders and their basis for forming such views;
- that the Enhanced Share Issue Limit may be renewed annually during the issuer’s annual general meeting (“AGM”) and is only valid until 31 December 2021, by which date the shares issued pursuant to the Enhanced Share Issue Limit must be listed; and no further shares shall be issued under this limit; and
- if the issuer is seeking shareholders’ approval via an EGM and has utilised any part of the existing share issue mandate (“Existing Amount Used”), the issuer is to disclose as at the latest practicable date[4], the remaining balance that would be available under the Enhanced Share Issue Limit after deducting the Existing Amount Used.
- The issuer notifying SGX RegCo of the following, by way of email to [email protected] when the general mandate for the Enhanced Share Issue Limit has been approved by shareholders:- name of issuer; and date on which such general mandate is approved by shareholders.
- The issuer disclosing that it is utilising the Enhanced Share Issue Limit in its announcement of an issue of shares or convertible securities in this regard.
Please note that the notice of general meeting does not have to be cleared with SGX RegCo and no circular is required.
SGX RegCo will work closely with our issuers in effecting these measures and giving expedited clearance to their fund-raising efforts.
[1] Paragraph 2.2 of Practice Note 13.2 Watch-List states that the Exchange will conduct half-yearly reviews to identify issuers to be included on the watch-list. The half-yearly review will take place on the first market day of June and December of each year. Upon identifying an issuer for inclusion on the watch-list, the Exchange will promptly notify the issuer of its status. [2] Listing Rule 1311(1) states that the exchange will place an issuer on the watch-list based on the financial entry criteria if it records pre-tax losses for the three most recently completed consecutive financial years (based on audited full year consolidated accounts); and an average daily market capitalisation of less than S$40 million over the last 6 months. [3] Listing Rule 806(2) states that a general mandate must limit the aggregate number of shares and convertible securities that may be issued. The limit must be not more than 50% of the total number of issued shares excluding treasury shares and subsidiary holdings in each class, of which the aggregate number of shares and convertible securities issued other than on a pro rata basis to existing shareholders must be not more than 20% of the total number of issued shares excluding treasury shares and subsidiary holdings in each class. [4] The date before the EGM for the passing of the Enhanced Share Issue Limit resolution.
