Whole Section

  • Part IX Moratorium

    • 419 Purpose of a Moratorium

      The purpose of a moratorium is to maintain the promoters' commitment to the issuer and align their interests with that of public shareholders. In the case of investors other than promoters, the purpose of the moratorium is to promote the interests of a fair and orderly market.

    • Moratorium Undertakings

      • 420

        The promoters must give contractual undertakings to the sponsor to observe a moratorium on the transfer or disposal of all their interests in the securities of the issuer.

      • 421

        Where a promoter has an indirect shareholding in the listing applicant, the promoter must also provide an undertaking to maintain the promoter's effective interest in the securities under moratorium during the moratorium period. However where an indirect shareholding is held through a company which is listed, the promoter's holding in that listed company is excluded from the moratorium.

    • Period of Moratorium

      • 422

        The period of moratorium must not be shorter than the following:

        (1) A promoter's entire shareholdings at listing for at least 6 months after listing, and no less than 50% of the original shareholding (adjusted for any bonus issue, subdivision or consolidation) for the next 6 months.
        (2) In the case of investors who acquired their securities, and who made payment for their acquisition, less than 12 months prior to the date of the listing, a proportion of their shareholdings will be subject to moratorium for 12 months after listing computed based on the following cash formula:



        Where

        M = the number of shares subject to moratorium;
        VCP = the total cash paid for the shares acquired by the investor within the 12 months preceding the date of the listing;
        VIPO = the value of the investor's total shareholdings acquired within 12 months preceding the date of the listing based on the issue price at the initial public offering; and
        P = the total number of shares paid for by the investor in the 12 months preceding the date of the listing.
        (3) In the case of investors who are connected to the sponsor for the initial public offering of the issuer, their shareholdings will be subject to a moratorium for 6 months after listing. For the avoidance of doubt, these investors are prohibited from selling vendor shares at the time of the initial public offering.
        (a) Rule 422(3) will not apply if:
        (i) the investor is a fund manager and the funds invested in the issuer are managed on behalf of independent third parties;
        (ii) the investor and the sponsor have separate and independent management teams and decisions making structures; and
        (iii) proper policies and procedures have been implemented to address any conflict of interest arising between the sponsor and the investor.
        The issuer (through its sponsor) should consult and demonstrate to the Exchange that these conditions have been met, to the satisfaction of the Exchange, for Rule 422(3) not to apply. The Exchange retains the discretion to require compliance with Rule 422(3) where it deems fit.
        (4) For the purposes of Rules 422(2) and (3), where an introducer of the issuer, a consultant to the issuer for the initial public offering, or investors who are connected to the sponsor have an indirect shareholding in the issuer, these investors may be required to comply with the moratorium requirements in Rule 421.

        Amended on 29 September 201129 September 2011 and 7 February 20207 February 2020.