Corporate Finance Law & Practice in Singapore Assignment

7/31/2019 Corporate Finance Law & Practice in Singapore Assignment

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U086426A LLPAdvocates & Solicitors

RE: Raising Funds for Great Gatsby Pty Ltd in Singapore

Sent: Sunday, February 26, 2012 12:00 AMTo: [email protected]

Dear Scott,

We refer to your email dated 22 January 2012. Attached to this email is our preliminary advice in respect ofyour wish to explore the possibility of raising funds in Singapore and the questions that you have posed inthat connection.

Please feel free to email or call us if you have further queries or should you wish to arrange a meeting withus.

Yours Sincerely,U086426A LLP7 ABC Road #14-02 XYZ Plaza | Singapore 123456

T: +(65) 6999 9999 | F: +(65) 6888 8888 | M: +(65) 9777 [email protected]

U086426A LLP is incorporated in Singapore with limited liability. Company Registration No. 2004820M.This email may contain privileged and confidential information. If you are not the intended recipient of thismessage, please delete all copies from your computer system and do not circulate or reply to it. Pleasenotify us immediately by return e-mail or at the above telephone or fax number.

________________________________________From: [email protected]: Thursday, January 22, 2012 6:30 PMSubject: Raising Funds for Great Gatsby Pty Ltd in Singapore

Dear U086426A LLP,

We are currently considering raising capital in Singapore to support our expansion plans. In thisconnection, we seek your views on the following:

1. In light of the current global economic and financial difficulties, what are the challenges andopportunities for companies wishing to raise funds through the capital markets in Singapore?

2. What is the legal and regulatory framework underpinning equity and debt capital raising in Singapore?

3. How have the Monetary Authority of Singapore and the Singapore Exchange Trading Limited sought tostrengthen the legal and regulatory regime relating to the offer of securities, to enhance investor protectionin the wake of corporate scandals and collapses that came to light over the last 3 years?

4. What are the options available in respect of an exemption from prospectus requirements so as to makethe fund-raising process less complicated and therefore more efficient, bearing in view that the amountsought to be raise far exceeds the sum of S$5 million and the wish for a wide investor base so as to ensurethe success of the listing?

I look forward to your response. Thank you.

Yours Sincerely,Scott Fitzgerald,Great Gatsby Pty Ltd


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AbbreviationsAC Audit Committee

ASEAN Association of Southeast Asian Nations

ASX Australian Securities Exchange Limited

Board Board of Directors

BOJ Bank of Japan

CA Companies Act(Chapter 50) of Singapore

Catalist Catalist Board of the Singapore Exchange Securities Trading Limited

CEO Chief Executive Officer

CFO Chief Finance Officer

CGC Corporate Governance Council

Code Singapore Code of Corporate Governance

Company Great Gatsby Pty Ltd

CR Catalist Listing Rule

EC European Commission

ECB European Central Bank

EFSF European Financial Stability Facility

ETL Eligibility-to-list

EU European Union

EUR Euro

Fed Federal Reserve of the United States of America

Firm U086426A LLP

FRS Financial Reporting Standards

FY Financial Year

GDP Gross Domestic Product

HKEx Hong Kong Exchanges and Clearing Limited

IFRS International Financial Reporting Standards

IMF International Monetary Fund


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IPO Initial Public Offering

LM Listing Manual

LR Mainboard Listing Rule

LTRO Long Term Refinancing Operation

Mainboard Mainboard of the Singapore Exchange Securities Trading Limited

MAS The Monetary Authority of Singapore

PRC The Peoples Republic of China

QE Quantitative Easing

RC Remuneration Committee

S&P Standard & Poor

SFA Securities and Futures Act(Chapter 289) of Singapore

SFA 2005 Securities and Futures (Amendment) Act2005 of Singapore

SFA 2009 Securities and Futures (Amendment) Act 2009 of Singapore

SFR 2005 Securities and Futures (Offers of Investment) (Shares and Debentures)

Regulations 2005 of Singapore

SFR 2008 Securities and Futures (Offer of Investments) (Shares) (Exemption from

Prospectus Requirements) Regulations 2008 of Singapore

SGD Singapore Dollar

SGX Singapore Exchange Limited

SGX-ST Singapore Exchange Securities Trading Limited

SIC Securities Industry Council

SID Singapore Institute of Directors

SMU The Singapore Management University

Take-over Code Singapore Code on Take-overs and Mergers

U.S. United States of America

U.S. GAAP U.S. Generally Accepted Accounting Principles

WTI West Texas Intermediate


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Exclusions and Limitations of Liability

The views and opinions herein relating to macroeconomic factors, whether current or prospective, and howthey affect the capital markets, particularly those expressed in Question 1, are not expressed or purported tobe expressed in any professional capacity and therefore should not be construed as constituting professional

advice, financial or otherwise, upon which reliance may be placed for the purposes of making any decisionor taking any action.

Preliminary Matters

Since you have indicated your wish to list on SGX, it would be necessary, as a preliminary matter, tohighlight that the Mainboard LRs prescribe certain specific requirements in respect of both equity1 anddebt2 securities listings that a prospective foreign issuer is required to comply with. This necessitates thatyou consider whether an application for listing as a foreign issuer, a newly incorporated company inSingapore, or by any subsidiary of the Company that we may be presently unaware of would be more

appropriate for your purposes. In this connection, you should bear in mind that a listing applicant will berequired to either convert to or be incorporated as a public company.We will now proceed to address your questions in turn.

1 Part V of Chapter 2.

2 Part III of Chapter 3.


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Question 1

In light of the current global economic and financial difficulties, what are the challengesand opportunities for companies wishing to raise funds through the capital markets inSingapore?

Your investment banker will probably be placed to answer this question, but since you have indicated yourwish that we express a view, we will attempt to proffer an objective assessment of the currentmacroeconomic climate and the challenges and opportunities that it presents in the context of fund-raisingin Singapores capital markets, so as to facilitate any subsequent meetings you may convene with yourinvestments bankers.

The threat of a financial crisis that surpasses 2008 in scale and impact3 continues to loom ominously overthe global economy, as the European debt issue continues to hang in the balance. In 2012 alone,approximately US$10 trillion4 worth of G-75 sovereign and global corporate debt will need to be paid orrolled, re-hypothecated, and have capital allocated to it6.

3 To put things into perspective, default by financial institutions precipitated the financial crisis of2007/2008, whereas sovereign defaults are expected to trigger the anticipated financial meltdown.4 To put things into perspective yet again, the indicative aggregate global GDP in 2010 was US$63 trillion.In addition, default by a sovereign could potentially trigger a whole chain of credit events on credit defaultswaps and other complex financial instruments, which could cause the 700 trillion-dollar (notional value,which means that the real value could potentially be in excess of 700 trillion) derivative behemoth toimplode. It remains to be seen whether the 53.5% voluntary haircut on the Greek debt will trigger a creditevent on credit default swaps.5 Collectively, G-7 nations comprise approximately 50% of global nominal GDP.6 To make matters worse, the deadline for European banks to meet the 9% core Tier 1 capital ratio as

prescribed by Basel III is 30th June 2012.


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Global Schedule for Maturing Corporate Debt

(Billion US$)

2011 2012 2013 2014 2015 Total

Non-Financials

Investment Grade 383.7 551.49 521.75 504.64 420.01 2381.59

Speculative Grade 77 144.52 231.14 348.63 284.35 1085.64

Financials

Investment Grade 860.88 1192.90 842.93 791.21 621.28 4309.20

Speculative Grade 59.55 58.84 61.41 37.3 40.46 257.56

Aggregate 1381.13 1947.75 1657.23 1681.77 1366.10 8033.99

*Data as of 31 March 2011. Source: S&P's Global Fixed Income Research.

The increasing incidence of sovereign as well as corporate downgrades7 and rising bond yields8 will onlyincrease the cost of borrowing, which in turn makes it more difficult for maturing debts to be rolled over.Against the backdrop of costlier access to funds, there is a greater need to turn to bailouts9, which havehitherto been the principal apparatus in the crisis-prevention arsenal, in order to prolong the inevitable.Recent developments in Athens10, however, have revealed that bailouts are increasingly losing theirpopularity and being met with heavy resistance. As a result of aggressive expansionary monetary policy11,interest rates have been near zero for almost 4 years and the Fed has already announced 2 official 12 roundsof QE, with a third, it is speculated13, likely to follow in the coming months. Similarly, the BOJ very

7 On 13 January 2012, S&P downgraded a host of European nations, including France (AAA to AA+),Austria (AAA to AA+), Spain (AA- to A), Italy (A to BBB+), Portugal (BBB- to BB), Cyprus (BBB toBB+), Malta (A to A-), Slovakia (A+ to A) and Slovenia (AA- to A+), and placed a host of others onNegative Outlook. Moodys followed suit on 13 February 2012, downgrading 6 European nations,

including Italy (A3 to A2), Malta (A3 to A2), Portugal (Ba3 to Ba2), Slovakia (A2 to A1), Slovenia (A2 toA1) and Spain(A3 to A1), and placed a host of others on Negative outlook.8 The upward pressure on European sovereign bond yields has barely regressed despite unprecedentedintervention by the ECB through the guise of the LTRO in an attempt to control rising bond yields.9 In this connection, the European Council announced on 27 October 2011 a massive increase in the EFSFfrom 780 billion EUR to 1 trillion EUR.10 Negotiations over a US$130 billion bailout fund put together by the Troika of the EC, IMF and EU weremet with fierce resistance from the Greek public, and several members of the Greek coalition government,including the Infrastructure, Transport and Networks Minister, the Alternative Defence Minister, DeputyAgriculture Development Minister, the Development, Competitiveness and Shipping Deputy Minister, andthe Deputy Labour Minister, resigned when the interim administration of Prime Minister Lucas Papademosagreed to the austerity package, upon which the bailout fund was conditioned.11 For an insight into the Feds crisis-prevention paradigm, see current Fed Chairman Ben Bernankesspeech made in his capacity as a Governor of the Fed before the National Economists Club on 21

December 2002, where his ide fixe with preventing deflation at all cost is discernable. To achieve this end,he advocated 5 methods, viz, (1) lowering interest rates to zero or near zero; (2) expanding the Fedsbalance sheet through asset purchase; (3) increasing the money supply; (4) purchasing foreign governmentor the U.S. government debt; and (5) devaluing the U.S. dollar. Interestingly, (1) to (4) have already beenemployed. (5) has not yet been done on an explicit basis, and the devaluation of the U.S. dollar hithero hascome about mostly as a by-product of (1) to (4). The speech is available at:http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm.12 Although, officially speaking, there has only been 2 rounds of QE since the inception of the 2008financial crisis, moves like Operation Twist, through which the Fed will purchase, by the end of June 2012,US$400 billion worth of Treasury securities with remaining maturities of 6 years to 30 years and to sell anequal amount of Treasury securities with remaining maturities of 3 years or less, is effectively QE onlycloaked in different nomenclature.13 Our speculation is predicated in part on the fact that 2012 is an elections year in the U.S., as well as

several other important nations such as PRC, Russia, France and Mexico.


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recently expanded its asset purchase facility by an additional 10 trillion. The ECBs LTRO is also, in ourview, essentially a backstop QE program14. PRC, too, has jumped on the bandwagon by cutting bankreserve ratio requirements for the second time in 3 months. The overall net outcome is rising inflation, aproblem particularly prevalent in Asia15. This might have a demand-dampening effect on the debt capitalmarket in general, since inflation erodes real returns on debt instruments, although equity financing16 mightbe nominally cheaper as a resulted of inflated stock valuations17.

Despite all the limelight on the European debt, the U.S., as the largest debtor nation in history, remains theelephant in the room, with US$2.76 trillion worth of U.S. debt falling due in 2012 alone. Further East,PRC, for all its unparalleled growth, will not be spared in the carnage. Talks of a hard landing are farfrom being outside the realms of possibility, given that it remains, despite structural efforts to reorientate itseconomy towards domestic consumption, a highly export-drive economy, with Europe and the U.S. itsprimary customers. We should also highlight in passing the geopolitical uncertainties surrounding Iran (andthe Middle East in general), and should military conflict precipitate, the price of crude oil is likely to riseappreciably18, which will in turn further dampen economic activity.

If the current macroeconomic issues do indeed culminate in a global financial crisis accompanied byworldwide deleveraging reminiscent of 2008 except on a larger scale, risk appetite for most asset classeswill almost invariably plummet19. With capital drying up, fund-raising will become a significantly more

challenging endeavour. To illustrate, figures from Thomson-Reuters20 revealed that the financial crisis of2008 had the following impact on U.S. capital markets:

(1) IPOs declined to a 30-year low in 2008, raising US$26 billion compared to US$46 billion in2007 a decrease of 43%21. There were only 29 IPOs in 2008, a low not seen since 1977 anda significant decrease from the 202 IPOs in 2007 and 195 IPOs in 2006. In addition, over 110companies dropped their plans to go public in 2008 due to market conditions;

(2) Investment grade debt issuances declined 35% compared to 2007. Issuances of corporateinvestment grade debt decreased by close to 35% from $987 billion in 2007 to $645 billion in2008. Most notably, investment grade debt issuances totaled only $71 billion in the thirdquarter of 2008, a 77% decrease from the second quarter of 2008 and the lowest quarterlydebt volume since 1999. Issuances in the fourth quarter remained flat at $72 billion.

Further East, Asian exchanges raised a total of US$77.7 billion in the first 11 months of 2011 amidst risinginvestor concern over the sovereign debt issues and the resulting market volatility, a 56% drop from the fullyear of 2010. The various figures foretell a gloomy picture for capital markets if and indeed, when, theanticipated financial crisis materializes. For corporations that continue to have access to funds in the capitalmarkets, such as those with stellar credit, not only will capital raising become a more protracted endeavour,capital will become costlier, with risk premiums over debt increasing in the form of higher spreads22 andstock valuations plunging to or below 2008 lows.

14 The only difference between QE and LTRO, being a temporary open market purchase facility, is anagreement that the bank utilizing the facility will repurchase the sold asset in 3 years.15 Asian Development Bank,Asian Development Outlook 2011 Update: Preparing for DemographicTransition (Mandaluyong City, Asian Development Bank, 2011) at 4.16 For our purposes, we shall use the formula Cost of Equity = Dividends per Share for Following Year /Current Share Price + Dividend Growth Rate.17 QEs 1 and 2 were followed by surging rallies in the major equity markets of the world.18 When Libyan oil production was halted towards the end of February 2011 as a result of the Libyaninsurrection, oil prices jumped by more than 30% over the next 2 months. By way of comparison, Libyathen supplied approximately 2% of the worlds oil, whereas Iran supplies approximately 4%. At the date ofthis writing, WTI crude price has crept over US$108/barrel, an approximately 9% increase since the start ofFebruary 2012.19 Indeed, signs of declining liquidity are already starting to manifest: NYSE volume on 13 February 2012dipped to the lowest level in almost a decade for a non-Holiday day.20 http://in.mobile.reuters.com/article/article/idINN3138728020081231.21 The decrease would have been 85% but for Visas US$19 billion IPO.22 Indeed, based on forecasts of 10-year government bond yields by 74 economists and strategists surveyed

by Bloomberg News, borrowing costs for G-7 nations will rise as much as 39% from 2011:


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Notwithstanding the foregoing, Singapore has certain advantages that might stand it in good stead in termsof attracting global capital. Firstly, Singapore has the advantage of a relatively stable currency, whichmakes instruments denominated in SGD relatively more attractive as investments. The case has also oftenbeen made that Singapore, with its stable geopolitical climate, open capital market, modern financialinfrastructure, efficient listing process, market-orientated regulatory regime and image of good corporate

governance, is primed to be the base for global corporations seeking to capitalize on the opportunitiesoffered by Asias inexorable ascendancy. Furthermore, Singapores diversity and its unique status as anexus between East and West are amongst the nations strengths. Indeed, one of the key, oft-mootedreasons why Singapore is attractive as a base for international companies is that it successfully integratesWestern business practices with Eastern markets and opportunities. In this connection, though, Hong Kong,as the unequivocal gateway to PRC by virtue of its geographical proximity, has perhaps seen far moresuccess in this respect23, which perhaps prompted the recent proposal to raise the capitalizationrequirements for prospective listing applicants24. Nonetheless, SGX has signified its intention25 to mount aserious challenge to the HKExs regional dominance, and companies listed or intending to list on SGX arelikely to benefit from the resulting improvements to liquidity and investment mobility. Apart from regionalcompetition, other conceivable challenges should also not be overlooked. Firstly, Singapores relativelysmall domestic market and its reliance on export make its economy particularly susceptible to the economichealth of its global customers. Secondly, as an import-reliant nation, that Singapores inflation levels will

be further exacerbated by imported inflation cannot be discounted. The Company should consider thesefactors in tandem with the various advantages of Singapore in deciding whether or not to tap the capitalmarkets in Singapore.

As to opportunities that might arise in respect of specific asset classes, the likely market volatility mightdrive investor demand for certain hybrid securities. The unique equity-linked feature of a convertible bondmay be attractive to investors during times of pronounced economic uncertainty as a risk-controlled avenueto gain exposure to the equity market while generating income 26. From the perspective of the issuer,though, the heightened risk of default amidst the economic uncertainty as well as the risk of inflation mighthave to be priced into the computation of the payable interest rate, consequently raising capital costs.Nonetheless, it remains a cheaper alternative to traditional debt instruments. Aside from hybrid securities,instruments that are pegged to inflation, such as inflation-indexed bonds, might also be relatively moreattractive to investors. We do note, however, the likelihood of stigma attached to all types of debt, and

therefore greater downward pressure on demand for such instruments, should the financial crisismaterialize, as it is, after all, a debt crisis. Finally, we should mention in passing that the economic climatemight present opportunities in the capital markets for certain sectors, such as the commodities sector27.

http://www.bloomberg.com/news/2012-01-03/world-s-biggest-economies-face-7-6-trillion-bond-tab-as-rally-seen-fading.html.23 Based on statistics by Ernst & Young, the HKEx was ranked top globally in terms of capital raised fromIPOs in 2010, whereas SGX did not even feature in the top 10:http://www.ey.com/Publication/vwLUAssets/Global-IPO-trends_2011/$FILE/Global%20IPO%20trends%202011.pdf at 4.24 See http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_B669DD128F13C3EF482576A300327852/$file/01062010_SGX_proposes_revisions_to_Mainboard_admission_criteria_and_the_introduction

_of_SPAC_listing.pdf?openelement.25 Despite SGXs failed takeover bid for ASX, great strides have been made towards plan to form anintegrated ASEAN exchange. In June 2011, Bursa Malaysia, the Philippine Stock Exchange, SGX and theStock Exchange of Thailand appointed SunGard Data Systems Inc as the technology provider of thebusiness-to-business intra-ASEAN cross-border order routing and trading platform that will electronicallyconnect the markets of the 4 exchanges and allow investors and broker members to access multiple marketsvia a single connection. The platform is expected to go live by the end of the first quarter of 2012. TheHochiminh Stock Exchange and the Indonesia Stock Exchange are likely to join the move within a fewyears. The integrated trading platform will potentially cover a combined market capitalization ofapproximately US$1.8 trillion.26 Although the real return from such income might be overall negative given the inflationary environment.27 Massive inflation generated by persistent loose monetary policies will likely be accompanied by anincreasing capital flight to quality, inflation-resistant assets like precious metals and agriculture. As such,

companies engaged in these sectors and related businesses are likely to experience unprecedented growth,


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At this juncture, we wish to point out that given the likelihood of deterioration in the prevailing marketcondition further into the year, time-to-market is particularly crucial. As to how the Firm is able to assistyou with this is a matter that will be addressed towards the end of Question 4.

thereby opening up opportunities in the capital markets as investors seek out safer investments that would,

at least, preserve the real value of their investments.


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Question 2

What is the legal and regulatory framework underpinning equity and debt capital raising inSingapore?

This question may be broken down into 3 segments, viz, the regulatory philosophy adopted in Singapore,the legislative framework which supports the prevailing regulatory philosophy, and the institutions thatadminister and enforce the legislative framework.

Regulatory Philosophy

By way of introduction, two regulatory philosophies underpin securities regulation generally. Under amerit-based regime, the securities regulator, in deciding whether to approve a particular transaction,reviews and determines the merits of the transaction and the disclosure standard. Such a case-to-case basisapproach results in delay, loss of business efficacy, flexibility and missed opportunities28. The merit-basedregime also encourages undue reliance by market participants on the securities regulator in the assessmentof transaction quality29.

In contrast, a disclosure-based regime does away with ex ante value judgment by the securities regulator,acknowledging, instead, that the market is better placed to decide on the merits of a transaction. Theunderlying premise of a disclosure-based regime is therefore that of the informed investor, who, throughthe exercise of greater vigilance and shareholder participation, subjects the merits of a transaction to marketdiscipline30. As a result, instead of the securities regulator scrutinizing the business plans of the issuer,information asymmetry between investors and the issuer is cured by entrusting with the issuer and theprofessionals31 advising on the securities offering the responsibility to ensure adequate and accuratedisclosure so that reasonable investors are able to make informed decisions.

Some benefits of a disclosure-based regime have been identified as such:

(1) Delay occasioned by regulatory requirements is reduced, thereby promoting business and

financial innovation, which in turn expands the breadth and depth of investment choice

32

.(2) The greater breadth and depth of investment choice has the effect of attracting more capital,both local and foreign, retail and institutional, which in turn generates greater marketliquidity33.

(3) The increased liquidity attracts more companies, local and foreign, to list and raise funds inSingapore34.

In line with Singapores aims to promote the country as an international capital centre and to foster amarket driven environment, with greater efficiency, innovation and entrepreneurship, a predominantlydisclosure-based regulatory regime was adopted in 199835. The shift was accompanied by structuralreforms of the legal, regulatory and institutional framework then existing.

Legislative Framework

Prior to the SFAs enactment in 2002, the prospectus requirements, including the form and content, for theoffer of securities were provided for in the CA. However, in order to support the shift to a predominantlydisclosure-based regulatory regime, an update, re-design and consolidation of securities laws and rules then

28 Corporate Finance Committee, Consultative Paper on the Securities Market(26 May 1998) at [11],available at: http://www.mas.gov.sg/resource/publications/consult_papers/cfc.pdf.29Ibidat [12].30Ibidat [7].31 These professionals include legal counsel, underwriters and auditors.32SupraNote 28 at [19].33Ibid.34Ibid.

35SupraNote 28 at [3].


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residing in various statutes and other non-legal documents into a single comprehensive legislation wasnecessitated. Thus, the SFA was enacted as an omnibus legislation that sets out, inter alia, the legislativeframework and requirements relating to all offers of securities in Singapore. The SFA introduced a strongerlegal obligation to disclose and a higher standard of disclosure. These obligations are backed byinvestigative and enforcement powers vested with the regulatory authorities36, including the power to takeup criminal37 and civil38 actions where it is in the public interest to do so. Thus, with the inception of theSFA, particularly following the SFA 200539, any offer of securities must be accompanied by a disclosuredocument, most often a prospectus40, which must include in it all the information that investors and theirprofessional advisers would reasonably require to make an informed assessment of the securities beingoffered41. The issuer and its advisers are responsible for ensuring that the prospectus complies with therequirements of the law, including the prospectus disclosure checklists contained in the SFR 2005, which inturn places greater importance on the conduct of due diligence42.

Apart from the SFA, the legislative framework consists of non-statutory rules pertaining to listing and take-overs. Companies seeking listing on SGX-ST are required to enter into a listing undertaking43 in which theyare contractually bound44 to comply with the listing rules promulgated in the LM (and the Code45), whichincludes the Mainboard and Catalist rules, for as long as they remain on the Official List of SGX-ST. Thisis reinforced by s.25 of the SFA, which gives the High Court the power to order a listed company to complywith the listing rules. The LM contains, inter alia, listing requirements, the manner in which securities are

to be offered and sets out the corporate disclosure policy and other policies and continuing disclosurerequirements affecting companies seeking a primary listing46 or are already listed on SGX-ST.

Finally, take-overs and mergers are subject to the rules promulgated in the Take-over Code.

Institutional Framework

Singapores capital markets today operate broadly under a dual-level institutional framework. MAS, asstatutory regulator, administers and enforces the corpus of statutory law regulating the offering of securitiesand maintains oversight of SGXs regulatory responsibilities. SGX, in turn, while not vested with anystatutory powers, has direct and frontline regulatory responsibilities for regulating, through theinterpretation, administration and enforcement of the LM47, companies that raise capital and have theirshares traded on SGX-ST. The latter function of MAS is vital for ensuring that there are no gaps in the

overall regulatory framework, since SGXs listing on SGX-ST raises potential conflict of interest issuesover the commercial drive for profit vis--vis the commitment and resources deployed by SGX for theproper performance of its regulatory function.

In relation to Catalist listings, while SGX retains the power to take disciplinary action for breaches of therules, it does not undertake the usual supervisory role over the admission and continuing listing ofcompanies. Instead, SGX-approved Sponsors, which are qualified professional companies experienced incorporate finance and compliance advisory work, undertake the direct supervision of these companies.

The statutory function of MAS in respect of securities offerings includes reviewing lodged prospectuses oroffering documents for compliance with the statutory disclosure requirements. If MAS is satisfied that theprospectus or offering document is in compliance with the applicable law, it will register the prospectus or

36SupraNote 28at [26] and [27].37 Section 253, SFA.38 Section 254, SFA.39SFA 2005 abolished the concept of an offer to the public.40 Section 240, SFA.41 Section 243, SFA.42 Pursuant to s.255 of the SFA, due diligence constitutes a valid defence to both criminal and civil liability.43 LM, Appendix 2.3.1.44 Section 72(1)(a), SFA.45 Rule 710 provides that the Code is applicable, as part of continuing listing obligations, to listedcompanies on a comply or explain basis.46 A foreign issuer seeking a secondary listing on SGX-ST need not comply with the listing rules in theirentirety: Rule 217.

47 Rule 105, LM.


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offering document. While MAS will not refuse registration on the basis of merit, s.240(15) confers uponMAS the power to refuse registration on the ground of public interest48, as was the case in the proposedlisting of Nagacorp Ltd in 2003, where the registration of the prospectus was refused on concerns overissues relating to money laundering49. Where registration is rejected, the aggrieved party may appeal to theMinister of Finance within 30 days, whose decision will be final. Following registration, MAS has thepower to issue stop orders to halt any further allotment, issuance or sale of securities50. MAS may also

issue from time to time codes, guidelines, policy statements, practice notes and no-action letters to provide,inter alia51, guidance in furtherance of its regulatory objectives52.

Where a listing application is involved, SGX-ST reviews the listing application and has full discretion todecide whether an applicant is eligible for listing. Should SGX-ST determine eligibility in the positive, anETL would be granted and the applicant will lodge its prospectus with MAS for registration. To reduce thetime-to-market and enhance the attractiveness of Singapore as a listing destination, MAS and SGX-STcommenced road-testing a concurrent review process for IPO prospectuses from March 2010, under whichissuers may submit their draft prospectuses to MAS for pre-lodgment review at the same time they submittheir listing applications to SGX. Finally, SGX-ST has the power to modify the rules by imposingadditional requirements53, modify compliance to suit the circumstances54 and issue practice notes to provideguidance on the application of any of the listing rules55.

Finally, the Take-over Code is administered by the SIC.

48 The current regime is a predominantly disclosure-based one, and hence there remain elements of a merit-based regime.49 MAS Press Releases, MAS Refuses Registration of Nagacorp Limited's Prospectus, available at:http://www.mas.gov.sg/news_room/press_releases/2003/MAS_Refuses_Registration_of_Nagacorp_21_Oct_03.html.50 Pursuant to s.242(1) of the SFA, a stop order may be issued where (a) the prospectus contains a false ormisleading statement; (b) there is an omission from the prospectus of any information that is required to beinclude; (c) the prospectus does not comply with the requirements of the SFA; or (d) it is in the publicinterest to do so.51 See s.321(1), SFA.52 Section 321(1)(a), SFA.53 Rule 106, LM.54 Rule 107, LM.

55 Rule 109, LM.


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Question 3

How have the MAS and SGX sought to strengthen the legal and regulatory regime relatingto the offer of securities, to enhance investor protection in the wake of corporate scandalsand collapses that came to light over the last 3 years?

In the wake of the recent financial crisis, several post-crisis reviews56 revealed that the crisis was, to animportant extent, attributable to failures and weaknesses in corporate governance, thus prompting closerstudy of corporate governance issues around the world. Locally, a spate of S-chip57 scandals58 highlighted aneed to reinforce the existing corporate governance regime. Thus, a substantial portion of the post-crisisregulatory response by MAS and SGX pertained to strengthening the local corporate governance regimeand bringing it more in line with various leading jurisdictions such as Hong Kong and Australia.

Reforms Undertaken by MAS

In November 2011, the CGC59 submitted its final recommendations on the proposed revisions to the Codefollowing public feedback on a consultation paper60 issued in June 2011. The recommendations, which

effect changes to the existing Code in several areas61

, were made with a view to further strengthen andrefine the existing corporate governance regime. The proposed revisions are the latest in a series of moves62to keep Singapore in line with international best practices in the area of corporate governance. For thepurposes of this advice, we highlight only the recommendations made in respect of director independence,board composition and remuneration:

1. Director Independence

The CGC recommended tightening the definition of independent directors by including (a) a director,executive officer or substantial shareholder63 of an organisation which provides or receives significantpayments or material services to or from the issuer or any of its related corporations; (b) a directorassociated with a substantial shareholder of the issuer in the current or past 3 FYs; and (c) a director who is

56 See, e.g., Kirkpatrick, Grant, The Corporate Governance Lessons from the Financial Crisis, Fin.Market Trends (OECD, 2009) at 2, available at: http://www.oecd.org/dataoecd/32/1/42229620.pdf.57 PRC companies listed on SGX-ST.58 Examples include, inter alia, China Print and Dye, where the founding couple embezzled the company'smoney and ran away; FerroChina, which dropped a bombshell when it announced sudden bankruptcy;FibreChem, a high-profile S-chip with a 'who's who' list of institutional shareholders, including Newsmithand JF Asset Management, reported accounting irregularities; Oriental Century, where the chairmanconfessed to the board that he had been falsifying financial performance as well as the company's bank cashbalances since its listing; and Sino Environment, where the CEO had pledged his own shares in thecompany against a personal loan which he subsequently defaulted on, and the consequent sale of thepledged shares triggered an early redemption clause of the companys own S$149 million convertible bond,thereby raising doubts over the companys viability as a going concern.59 The CGC was established by MAS in February 2010 to conduct a comprehensive review of the 2005Code with a view to promoting a high standard of corporate governance among listed companies inSingapore.60 Available at:http://www.mas.gov.sg/resource/publications/consult_papers/2011/Consultation_Paper_on_Proposed_Revisions_to%20the%20CCG_14Jun2011.pdf.61 These areas are director independence, board composition, director training, multiple directorship,alternate directors, remuneration practices and disclosure, risk management and share rights and role. Theproposed revised Code may be viewed at:http://www.mas.gov.sg/resource/publications/consult_papers/2011/ProposedCodeofCorporateGovernanceFinal.pdf.62 In 2010, MAS strengthened its corporate governance regulations and guidelines for banks and insurancecompanies.

63 Defined as a shareholder that holds 5% or more voting shares in the company: Section 4, CA.


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a substantial shareholder or an immediate family member64 of a substantial shareholder of the issuer.Additionally, the CGC recommended that a director who has served 9 years from the date of his/her firstelection be deemed non-independent.

The reformulated definition of independent directors will bring Singapore in line with what seems to be aglobal trend towards ensuring more accountability and independence of corporate directors, further

boosting corporate governance standards in the process. The recommendations are particularly salient inthe local context, as non-independence has traditionally been a prevalent culture amongst Asian issuers,whose boards are typically dominated by directors who either hold a controlling interest or have long-standing relationships with controlling shareholders. The proposed revisions will therefore require manyissuers to make radical changes to their existing board configurations. Similarly, the recommendations ontenure will affect a substantial portion of SGX-listed issuers. 512 of the 2098 independent directors recentlysurveyed65 have served more than 9 years, which suggests that approximately 25% of current independentdirectors of SGX-listed companies would be caught by the revisions.

2. Board Composition

The CGC has recommended that independent directors constitute at least 50% of the Board where thechairman and CEO

(i) is the same person;(ii) are immediate family members;(iii) are part of the same management team; or(iv) if the chairman is not independent.

It is critical for the Board not to be dominated by any individual groups in order for it to exercise objectivejudgment. Thus, such a compositional change to the Board reduces the risk of groupthink, and thereforeimpaired objectivity and independence, setting in on the issuers Board. Again, this is particularly relevantin the local context considering that 76% of companies recently surveyed 66 had a non-independentchairman, and of the 76%, 55% had a board composition of less than 50% independent directors. Inpractice, however, whether these changes will do much to introduce an adequate element of independenceon a board will depend heavily on whether compliance is done in spirit rather than merely in form67.

3. Remuneration Practices and Disclosures

The CGC has proposed, inter alia68, that (1) the remuneration of an issuers directors and CEO be fullydisclosed on a named basis, while its top 5 key executives remuneration be disclosed on an aggregatebasis, and (2) issuers disclose more information on the link between remuneration and performance ofexecutive directors and key management personnel. Presently, the Code requires only that remuneration ofall the aforementioned personnel be disclosed on an aggregate basis.

64 Immediate family members refer to the persons spouse, child, adopted child, step child, brother, sisterand parent: LM, Definitions and Interpretation.65Singapore Board of Directors Survey 2011 (Singapore: SID and SGX, in partnership with Aon Hewitt,

Egon Zehnder International Private Limited, PricewaterhouseCoopers LLP and SMU, 2011).66Ibid.67 Independent directors reaching the 9-year limit on one board could bypass the provisions by rotating withindependent directors of other friendly issuers in the same situation, such that both issuers technicallymeet the requirements for director independence while keeping control of their boards in the hands offamiliar individuals. Similarly, a company could quite easily avoid the 50% board composition requirementby arranging for the executive chairman to step into the role of deputy chairman and appointing a puppetindependent director as chairman.68 Other recommendations in respect of remuneration practices and disclosures include: (a) the RC shouldensure that existing relationships between the company and its appointed remuneration consultants will notaffect the independence and objectivity of the remuneration consultants; and (b) companies should considerincorporate claw-back clauses that allow the company to reclaim incentive components of remunerationfrom directors and key management personnel in exceptional circumstances, such as if financial results are

misstated or if there is misconduct resulting in financial loss to the company.


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Directors, CEOs and key management personnel serve important roles. Their actions could potentiallyvalue-add or destroy value and therefore directly impact the wealth of shareholders. The proposals aretherefore a positive step towards improving transparency and accountability and put shareholders in a betterposition to determine if executive compensation is structured in a way as to support sustainableperformance.

Reforms Undertaken by SGX

In December 2009, SGX issued a consultation paper69 proposing extensive amendments to the LM, with aview to strengthening the practice of corporate governance in issuers and safeguarding shareholdersinterests70. The final changes were announced on 14 September 2011 and took effect from 29 September2011. The table below summarises the key amendments:

Rule Amendment Our Comments

LR105 /CR104

All listed companies must comply with the LRs inaccordance with the spirit, intent and purpose and mustlook beyond form to substance.

This addition improves enforceabilityof SGX-STs rules, decisions andrequirements.

LR719 /CR719

LR610(5) /CR704(4)

Adequacy of Internal Controls

Issuers are to have a robust and effective system ofinternal controls that addresses financial, operationaland compliance risks.

The board of the issuer, with the concurrence of the ACof the issuer, is to give an opinion on the adequacy ofthe internal controls at the time of listing.

LR719 improves on the comply orexplain regime under the Codebymandating, as a listing requirement,compliance with the internal controlsrequirement.

LR704(31) /CR704(33)

LR728 /CR728

Disclosure of Share Pledging Arrangements

If an issuer or any of its subsidiaries enters into a loanagreement or issues debt securities that contains acondition making reference to the shareholding interest

of any controlling shareholders or places restriction onany change of control of the issuer (each, RestrictiveCovenant), and the breach of this condition orrestriction will cause a default in respect of the loanagreement or debt securities, which would significantlyaffecting the operations of the issuer, it mustimmediately announce the details of such condition orrestrictions.

The issuer must also obtain an undertaking from itscontrolling shareholders to notify the issuer, as soon asit becomes aware, of any share pledging arrangementsrelating to these shares and of any event which may

result in the breach of the issuers loan covenants.

LR704(31) aims to better protect theinterest of minority shareholders byfacilitating greater corporate disclosure.

It is important for shareholders to beaware of the Restrictive Covenants inan issuers loan agreements so as tomake informed investment decisions,as these covenants will significantlyaffect the financial condition of theissuer when breached. Requiringdisclosure also allows shareholders toappraise the full extent of the liabilitiesthat the issuer is exposed to due tocross default provisions typically foundin most loan agreements.

LR728 was proposed in response to theSino Environment saga71, with the aimof fostering greater transparency andmaintaining a fair, open and orderlymarket, as defaults on such loanagreements would adversely affect theissuer and its operations.

69 Available at:http://www.sgx.com/wps/wcm/connect/334ec200409aaac1bc08ffe7608732c1/Consultation_Paper_Proposed_Amendments_to_the_Listing_Rules_to_Strengthen_Corporate_Governance+Practice_20091209.pdf?MOD=AJPERES.70Ibid 1.1.

71 SeeNote 58.


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LR704(11) /CR704(11)

LR610(7) /CR407(4)(d)

Disclosures Pertaining to Legal Representatives

The appointment or cessation of service of an issuerslegal representative should be disclosed.

Where a legal representative has been appointed ordesignated with sole powers to represent, exerciserights on behalf of, and enter into binding obligationson behalf of an issuer or its principal subsidiaries,information regarding the legal representatives must bedisclosed in the applicable disclosure document.

In PRC, companies are required toappoint legal representatives, who holdthe company seal used to executetransactions and transfer assets on theirbehalf. Several issues involving thelegal representatives of S-chips72exposed the corporate governanceshortcomings in relation to these legalrepresentatives, and the amendmentsimprove local corporate governancepractices by seeking to make issuersmore careful in their selection of legalrepresentatives.

LR610(8) /

CR407(4e)

LR704(12) /CR704(12)

Independent Directors Appointment to the Board

of Principal Subsidiaries

An issuer has to disclose whether any of the issuers

independent directors has been appointed to the boardof the issuers principal subsidiaries based injurisdictions other than Singapore.

The appointment and cessation of service to and fromthe boards of these principal subsidiaries of suchindependent directors has to be announced.

The rationale behind these amendments

is two-fold, viz(i) to ensure that there issome form of accountability fromissuers who have their principalsubsidiaries based overseas vis--visthe independent directors appointed tothe board of such principal subsidiaries;and (ii) in doing so, restore theconfidence of retail investors in theseissuers whose corporate image mayhave been affected by association as aresult of the scandals of other issuerswith overseas principal subsidiaries.

LR720(4) /CR720(4)

Role of Board of Directors, Key Executive Officers

and Auditors

SGX has the right to take action against directors orkey executive officers, if it is of the opinion thatthe said person has breached the LRs or any other lawsor regulations.

While this amendment purports toimprove enforceability, practicallyspeaking, SGX only has a limited rangeof penalties73 that it can resort to, asdirectors and key executive officerstypically do not enter into any personalundertaking with SGX at the time oflisting or any time thereafter.

Finally, we should mention in passing that Singapore has committed to require SGX-listed companies to

fully comply with IFRS by 2012, with a view to improving the quality and comparability of financialinformation available to the public and investors.

72 For e.g., Falmacs legal representatives denied the companys directors access to factory premises and allcompany records, including key financial records.73 Such as public censure, objecting to the appointments of errant directors or key executives to the boards

of other issuers, or referring the matter to MAS or the police.


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Question 4

What are the options available in respect of an exemption from prospectus requirementsso as to make the fund-raising process less complicated and therefore more efficient,bearing in view that the amount sought to be raise far exceeds the sum of S$5 million and

the wish for a wide investor base so as to ensure the success of the listing?

Subsequent to the enactment of the SFA 2005, all securities offerings are prima facie subject to theprospectus requirement unless expressly excluded or exempted. Part XIII, Division 1(4) of the SFAprescribes an exhaustive list of safe harbours which a prospective issuer may rely upon so as to dispensewith the prospectus requirement and its associated regulatory costs. Taking into consideration your wishesas to a listing on SGX, a large investor base, as well as the prospective amount sought to be raised, it wouldappear that only a handful of the exemptions are potentially applicable. For your benefit, we will delineatethe limits, practical or otherwise, of the various exemptions.

Section 272A74 is not a feasible option for various reasons. Firstly, the statutorily prescribed limit forqualification under s.272A is S$5 million, which immediately rules out this exemption for your purposes,

unless you wish to consider raising S$5 million every 12 months until the target sum is raised, which, whilenot necessarily limiting on the breadth of the investor base, is prohibitively time-consuming, such that anybenefit accrued from not having to issue a prospectus is effectively negated. Secondly, an offer madepursuant to s.272A may not be advertised75, which might be considerably restrictive for the purposes ofacquiring a wide investor base. Thirdly, the offer must be a personal one, which requires that the offer bemade to a designated group of offerees, and such offer may only be accepted by such offerees76 who arelikely to be interested in the offer77 due to:

(a) any previous contact78 or previous professional or other connection79 with the Company; or(b) any previous indication of interest to:

(I) the Company80;(II) Singapore licensed81 or exempt securities dealers82;(III) Singapore licensed83 or exempt84 financial advisers; or(IV) a person who is a licensed, approved or authorised securities dealer or financial

adviser in other jurisdictions

85

.The personal nature of the offer under s.272A therefore necessarily circumscribes the reach of theCompanys fund-raising endeavours.

As for s.272B86, the statutorily prescribed limit of 50 offerees for qualification under this exemptionrenders it unsuitable for the purposes of a wide investor base. The limit also necessarily contravenes thedistribution requirements provided for in Rule 210 of the LM87, defeating, consequently, your wish as tolisting on SGX. The second aforementioned reason which renders s.272A unsuitable also applies here.

74 Section 272A of the SFA dispenses with the prospectus requirement for securities offerings made to adesignated group of offerees that do not exceed S$5 million (aggregated) within a 12-month period.75 Sections 272A(c), SFA.76 Section 272A(3)(a), SFA.77 Section 272A(3)(b), SFA.78 Section 272A(3)(b)(i), SFA.79 Section 272A(3)(b)(ii), SFA.80 Section 272A(b)(iii)(A), SFA.81 Section 272A(b)(iii)(B), SFA.82 Section 272A(b)(iii)(C), SFA.83 Section 272A(b)(iii)(D), SFA.84 Section 272A(b)(iii)(E), SFA.85 Section 272A(b)(iii)(F), SFA.86 Section 272B of the SFA dispenses with the prospectus requirement for securities offerings made to nomore than 50 persons within a 12-month period.

87 See Annex A.


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Sections 274 and 275 dispense with the prospectus requirement where the offer of securities is made toinstitutional investors88 or to relevant persons89 respectively. Section 275(1A) exempts from the prospectusrequirement an offer made to a person who, pursuant to the offer, acquires securities as principal if theaggregate consideration for the acquisition is not less than S$100,00090. These are plausible exemptionsthat you may wish to further explore with your investment banker, who will be able to assist you as to theviability of soliciting subscriptions from such investors or relevant persons at the book-building and

balloting stages for the purposes of complying with the distribution requirements. Do note, however,similar restrictions on advertising should you decide to rely on either of these exemptions. We also drawyour attention to Rules 303(2)(b) and 304(2) of the LM, which provides that for an issuer who wishes to listan issue of local debt securities but whose equity securities are not listed on SGX-ST, at least 80% of theissue must be subscribed by sophisticated91 or institutional investors. Accordingly, invoking the ss. 274 and275 exemptions will automatically satisfy the requirement under Rules 303(2)(b) and 304(2), which woulddispense with having to comply with the other alternatives prescribed under those Rules. We do, however,wish to indicate that s.276 mandates a prospectus if the securities initially acquired pursuant to an offermade in reliance on ss. 274 or 275 are resold within 6 months from the date of the initial acquisition to anyother persons that do not fall within the sections 274 or 275 exemptions. Once again, your investmentbanker will be in a better position to advise you as to how this restriction will affect demand and thereforethe viability of an issuance under these exemptions.

Alternatively, s.278 could be considered should you decide to tap only the debt capital market through anoffer of an international debenture, that is, an offer of debenture made by a company incorporated outsideof Singapore. However, such an offer may only be made to such institutional, professional or businessinvestors that appear to MAS to have sufficient expertise to understand any risk involved in buying andselling those debentures92. Whether this inhibits your wish as to a wide investor base is an issue that youwill need to discuss with your investment banker. Section 278(2)(a) further imposes the condition that thedebenture may only be denominated in a currency other than the SGD, which may or may not, dependingon your fund-raising objectives, impede your fund-raising endeavours.

For completeness, s.273 does not apply, as the circumstances prescribed therein relate to take-over offers93,acquisition of shares in an unlisted corporation94, a proposed compromise or scheme of arrangement95,secondary sale of securities96, issuance of structured warrants97 and offers of securities to be held for thebenefit of a qualifying person98. Section 272 is irrelevant as it pertains to offers for no consideration, which

are typically bonus shares or debentures. Sections 277 and 279 are irrelevant as they relate to rights issuesand offers of debentures made by the Government or international financial institutions respectively.

88 Institutional investors include licensed banks (s.4A(1)(c)(i)), approved merchant banks (s.4A(1)(c)(ii)),licensed finance companies (s.4A(1)(c)(iii)), registered insurers (s.4A(1)(c)(iv)), registered trustees(s.4A(1)(c)(v)), the Government (s.4A(1)(c)(vi)), statutory bodies (s.4A(1)(c)(vii)), pension funds orinvestment schemes (s.4A(1)(c)(viii)), holders of a capital markets service license for various securities-related activities (s.4A(1)(c)(ix)), or persons which carry on the business of dealing in bonds withaccredited or expert investors (s.4A(1)(c)(x)).89 Relevant persons include an accredited investor (defined by section 4A(1)(a) as including a person whosetotal net personal assets exceed S$2 million or whose income in the preceding 12 months is not less thanS$300,000; or a corporation whose total net assets exceed S$10,000,000 in value as determined by its lastaudited balance sheet or a balance sheet of the corporation certified by the corporation as giving a true and

fair view of the state of affairs of the corporation as of the date of the balance sheet, which must be a datethat is no earlier than 12 months before the date on which the offer is made), a holding company, a trusteefor an accredited investor or a direct relation of an officer of the offeror.90 The previous prescribed amount of S$200,000 has been amended by SFA2009.91 This is the equivalent of accredited investors in the SFA.92 The Securities and Futures (Institutional, Professional and Business Investors) Order 2005 clarifies thatany institutional, professional or business investor who is a non-resident will satisfy the requirementunder s.278(1).93 Section 273(1)(a), SFA.94 Section 273(1)(b), SFA.95 Section 273(1)(c), SFA.96 Section 273(1)(d), SFA.97 Section 273(1)(e), SFA.

98 Section 273(1)(f), SFA.


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Lastly, s.239A empowers MAS, by order published in the Gazette, to declare that the prospectusrequirement shall not apply to an offer or a class of offers to which that offer belongs. However, thisdiscretion is exercised only under very limited circumstances and therefore unlikely to be of assistance foryour purposes.

Apart from the safe harbours, listing on Catalist does not require a prospectus to be lodged with MAS99.

While this may prima facie be a viable solution, the reality is that companies seeking a listing on Catalistare still required to lodge with SGX an offer document, which is subject to the same disclosurerequirements as those of a prospectus. That being the case, in the absence of any applicable safe harbour,there is, practically, no appreciable advantage in terms of time-to-market for Catalist listings.

In view of the preceding discussion, we are of the opinion that the most practicable course to adopt wouldbe to make an offer by way of a prospectus or offering document, whichever is applicable. We have ahighly professional and efficient capital markets team that possesses the necessary expertise to oversee andfacilitate your fund-raising endeavours such that it is carried out in the most timely, straightforward andcost-effective manner. For your benefit, we have attached as Annex B a summary of SGXs listingrequirements and as Annex C an indicative timeline and summary of the listing process.

99 Section 3(2)(a) of the SFR 2008.


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Annex A

Distribution and Public Float Requirements

PUBLIC FLOAT DISTRIBUTION

Market

Capitalisation

(S$ million)

("M")

Proportion

of post-

invitation

share capital

in public

hands

Number of

shareholders

Total Offer

Size

(S$ million)

("O")

Distribution

M < 300 25% 500 O< 75

At least 40% of the invitation shares or $15 millionwhichever is lower, must be distributed to investors eachallotted not more than 0.8% of the invitation shares or$300,000 worth of shares whichever is lower.

300 M < 400 20% 500 75 O < 120At least 20% of the invitation shares must be distributedto investors, each allotted not more than 0.4% of theinvitation shares.

400 M < 1000 15% 500 O 120 No requirement applicable.

G

M

R

M 1000 12% 500

Notes:1) The shareholdings of an applicant and his associatesmust be aggregated and treated as one single holder.2) Preferential allotments made pursuant to Rule 234must be excluded.


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Annex B

Summary of SGX Listing Requirements

MainboardAlternative 1 Alternative 2 Alternative 3 Catalist

Pre-tax Profits Cumulative pre-taxprofits of at leastS$7.5 million over thelast 3 consecutiveyears, with a pre-taxprofit of at least S$1million in each ofthose 3 years.

Cumulative pre-taxprofits of at least $10million for the latest1 or 2 years

N.A. N.A.

Market Capitalisation

N.A. N.A.

Market capitalisationof at least S$80

million at the time ofthe initial publicoffering, based on theissue price

N.A.

Operating Track

Record3 years N.A. N.A. N.A.

Continuity of

Management3 years

1 or 2 years as thecase may be

N.A. N.A.

Requirements for

Independent

DirectorsAt least 3 independent directors. For foreign companies, at least 2 ofthese independent directors must be resident in Singapore

At least 2independent directors.For foreigncompanies, at least 1of these independent

directors must beresident in Singapore

Sponsorship

N.A.

All Catalistcompanies mustretain a Sponsor foras long as they arelisted

Working Capital

Statement

Requirement N.A.

Sufficient workingcapital for the presentrequirements and forat least 12 monthsafter IPO

Moratorium Period Restriction on promoters sale of shares and lock-up period for pre-IPO investors and promoters

Accounting Standard Singapore FRS or IFRS or U.S. GAAPFinancial Information

Post-listing

Full year unaudited announcement must be made 60 days after year end. Annual reports mustbe approved by shareholders in annual general meeting within four months of the year end Half year unaudited announcement must be made 45 days after period end if the marketcapitalisation is below S$75 million Quarterly unaudited announcement must be made 45 days after quarter end if the marketcapitalisation is above S$75 million

Trading and

Reporting CurrencyAt the discretion of the issuer

Business Operations No requirement for operations in Singapore

YesContinuing ListingObligations Waived from having to comply with continuing listing obligations if listed on another foreign

stock exchange


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Annex C

Indicative Listing Timeline and SGX Listing Process

Time Line Mainboard CatalistPre-listing Preparation

Work

6 9 months Appoint professionals andadvisors Due diligence work Pre-listing restructuring ofgroup Preparation of listingdocuments

Appoint professionals andadvisors Due diligence work Pre-listing restructuring ofgroup Preparation of listingdocuments

Submission to SGX Mainboard:8 12 weeks

Catalist:14 days

Review of documents bySGX Receipt of ETL from SGX

Review of documents bySponsor who will assesssuitability to list Includes statements fromthe directors and theSponsor that the workingcapital available to thecompany will be sufficientfor its present purposes andfor at least 12 months fromthe date of listing.

7 21 days period forpublic comments

Lodgement of prospectus onMAS website for publiccomments100 Public can submit commentson lodged prospectus to MAS

Lodgement of offerdocument on SGXsCatalodge website forpublic comments Public can submitcomments on lodged offerdocument to SGX

Lodgement and Launch

Mainboard:14 days for registration

Catalist:15 days after date oflodgement

Registration of prospectuswith MAS (from 7 days to 14days, if extended, after publiccomments period) Issuer can launch offer anddistribute registeredprospectus after registration

Issuer can launch offerand distribute after publiccomments

100SFA 2005 requires additional interim financial information to be provided if the date of lodgment of the

prospectus is more than 6 months after the end of the most recently completed FY.

Corporate Finance Law & Practice in Singapore Assignment

Documents

Transcript of Corporate Finance Law & Practice in Singapore Assignment