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  • Practice Notes

    • Practice Note 2A Eligibility Criteria for Sponsors

      1. Introduction

      (a) This Practice Note sets out the Exchange's expectations in relation to some of the eligibility criteria for becoming and remaining a sponsor.

      2. Minimum Capital (Rules 204(1) and 205(1))

      (a) A full sponsor must maintain a minimum base capital of S$500,000 and a continuing sponsor must maintain a minimum base capital of S$250,000. The Exchange will calculate minimum base capital in a similar way to that applicable for a capital market services licence.

      3. Physical Office (Rules 204(2) and 205(2))

      (a) As part of operating out of a physical office in Singapore, a sponsor should have at least 2 registered professionals based in Singapore.

      4. Fit and Proper Criteria(Rules 204(3) and 205(3))

      (a) The Exchange will assess whether an applicant's substantial shareholders, directors and officers are fit and proper, using the guidelines applicable to capital market services licence holders. In general, the substantial shareholders, directors and officers must demonstrate the following:
      (i) honesty, integrity and reputation;
      (ii) competence and capability; and
      (iii) financial soundness.
      (b) When assessing honesty, integrity and reputation, the Exchange will take into account whether the substantial shareholders, directors and officers have any links with money laundering or terrorist financing activities.

      5. Experience (Rules 204(4) and 205(4))

      (a) For an applicant intending to undertake introducing activities, the Exchange would normally regard relevant experience as having managed at least 3 initial public offerings or reverse takeovers in the last 2 years on the Exchange or an exchange from an acceptable jurisdiction (i.e. within a market of comparable regulatory standards to Singapore).
      (b) For an applicant intending to undertake continuing activities, the Exchange would normally regard relevant experience as having advised on corporate finance transactions in the last 2 years on the Exchange or an exchange from an acceptable jurisdiction (i.e. within a market of comparable regulatory standards to Singapore). Relevant transactions include acquisitions and disposals, rights/bonus issues, placements of securities, and takeovers.
      (c) An applicant relying on overseas experience must provide documentary proof of the work done on overseas exchanges and, where available, any formal communication indicating the quality of work. The Exchange may contact the overseas exchange(s) to verify the information.

      6. Reputation and Work Record (Rules 204(5), 204(6), 205(5) and 205(6))

      (a) The Exchange will take into consideration any previous breaches by the applicant, its directors or key officers, of any relevant rule or law, and past disciplinary action by any regulatory authority. The Exchange will also take into account whether the applicant has been denied of any membership or licence in other jurisdictions.
      (b) The Exchange will normally not accept an applicant if complaints, warning letters, fines, private or public censures or reprimands, or other disciplinary action by any regulatory authority has occurred in the last 2 years. The Exchange may require proof that an applicant has rectified any problems or weaknesses if they have been subject to disciplinary actions more than 2 years ago.
      (c) The Exchange will consider the quality of the applicant's past submissions, including initial public offering/reverse takeover applications rejected in the last 5 years.
      (d) The applicant should be financially sound and the Exchange will take into account whether the applicant or any member of its group is under receivership, judicial management, liquidation or experiencing other financial difficulties.

      7. Sufficient Skills and Resources (204(7), 205(7) and 224(3)(a))

      (a) For a sponsor to ensure that it has sufficient skills and resources as required in Rules 204 and 205, it must engage enough corporate finance, compliance and other employees to support its duties and responsibilities so that each employee has enough time to properly consider the position in respect of each of the sponsored entities.
      (b) Every employee performing continuing sponsorship work must be supervised by a registered professional. The employee involved must have appropriate competency to be considered suitable.
      (c) In connection with continuing activities, the ratio of sponsored issuers to suitable employees performing Catalist continuing sponsorship work should generally not exceed 8:1. This means that each employee can only be responsible for monitoring a maximum of 8 issuers at any one time.
      (d) Even if the ratio is maintained, the sponsor should still assess whether this provides it with sufficient resources. The sponsor must consider the number and type of issuers it sponsors, the workload in its organisation (such as how many initial public offerings/reverse takeovers are being undertaken at one time), the work ethic and compliance culture of the organisation, the work ethic and compliance culture of the issuers it is sponsoring, the internal management and supervision arrangements in the organisation, and any other factors that might influence its ability to fulfil its obligations.

      Amended on 7 February 20207 February 2020.

    • Practice Note 2B Guidelines for Preparing a Listing Applicant for Admission or Advising an Issuer in a Very Substantial Acquisition or Reverse Takeover

      1. Introduction

      (a) A sponsor undertaking introducing activities for a listing applicant or an issuer must comply with the guidelines in this Practice Note, in order to assess the suitability of a listing applicant or the continued listing of an issuer on Catalist.

      2. Understanding the Listing Applicant/Enlarged Group (Rules 225(1)(a) and 226(1)(a))

      (a) To achieve a thorough understanding of a listing applicant/enlarged group and its business, the sponsor should do the following.
      (i) Ensure that it has, or has access to, appropriate experience in the listing applicant's/enlarged group's sector. (ii) Use in-house specialists or external experts where necessary.
      (iii) Consider the listing applicant's/enlarged group's sector, proposition, business plan or similar, historical financial information and other corporate information, including the due diligence performed further to the due diligence requirements.
      (iv) Consider any issues relating to its country of incorporation and operation and any other issues that might affect its appropriateness.
      (v) Undertake a visit of the listing applicant's/enlarged group's material site(s) of operation and meet the directors and key managers. The necessity of meeting any other relevant material stakeholders (e.g. key shareholders) should also be considered.
      (vi) Consider appointing its own legal advisers who are independent from the listing applicant/enlarged group to assist in the sponsor's understanding of the listing applicant/enlarged group and to provide advice to the sponsor that is independent of the listing applicant/enlarged group.
      (vii) Consider and advise on the suitability and competence of other professional advisers involved in the admission, including consultants.

      3. Listing Applicant's/Enlarged Group's Directors and Board (Rule 225(1)(b) and 226(1)(b))

      (a) To assess the appropriateness of a listing applicant/enlarged group and its securities for Catalist, the sponsor should do the following.
      (i) Investigate and consider the suitability of each director and proposed director of the listing applicant/enlarged group and consider the efficacy of the board as a whole for the company's needs.
      (ii) Issue and review directors' questionnaires and review directors' CVs.
      (iii) Test the information revealed by the above questionnaires and CVs, for example by conducting third party checks, press searches, Accounting and Corporate Regulatory Authority (ACRA) checks and taking-up references. For directors who are not Singapore-based, other appropriate investigations should be undertaken.
      (iv) Extend these investigations and considerations as appropriate to key managers and consultants who are disclosed in the offer document.
      (v) Consider undertaking such investigations in relation to substantial shareholders at admission as appropriate, especially where there is uncertainty as to their identity or where they are not established institutions, in particular to ascertain the existence of shadow or de facto directors.
      (vi) Analyse any issues arising from these investigations, in particular as to how they could affect the listing applicant's/enlarged group's appropriateness to be admitted to Catalist and be publicly traded.
      (vii) Consider each director's suitability and experience in relation to their (proposed) company role.
      (viii) Consider the board of directors as a whole in relation to the listing applicant's/enlarged group's needs, for example given its type, size, expected profile and that the listing applicant/enlarged group will be admitted to a Singapore-based, English-language public market.
      (ix) Consider, with the directors of a listing applicant/enlarged group, the adoption of appropriate corporate governance measures.

      4. Due Diligence (Rule 225(1)(c))

      (a) When preparing a listing applicant for admission or advising an issuer in a very substantial acquisition or reverse takeover, the sponsor should do the following.
      (i) Undertake due diligence including at a minimum, complying with the due diligence guidelines issued by The Association of Banks in Singapore where applicable, or such other satisfactory and no less strict due diligence guidelines or processes, in addition to any other appropriate due diligence.
      (ii) Exercise its own judgment on the nature and extent of due diligence work needed to satisfy itself as to suitability to list and have knowledge of all relevant facts and circumstances concerning a listing applicant's/enlarged group's ability to meet the Exchange's listing requirements.
      (iii) Take all reasonable steps to verify the facts and, if requested, be readily able to confirm them to the Exchange. The sponsor must be in a position to substantiate its opinions, such as in respect of the integrity of the management and controlling shareholders or that the accounts are genuine and conform to applicable standards.
      (iv) Oversee the entire due diligence process, satisfying itself that it is appropriate to the listing applicant/enlarged group and transaction being done.
      (v) Ensure that any material issues arising are dealt with or otherwise do not affect the suitability of the listing applicant/enlarged group for Catalist.
      (vi) Look at the connection to Singapore of every foreign applicant. This is to ensure sufficient local representation and the ability to take steps in the event of a problem. A foreign issuer is required to have a resident director. To meet the objective of sufficient connection, residence means either citizenship or permanent residence status.
      (vii) Ensure appropriate professional firms are engaged as needed — particularly for financial and legal due diligence.
      (viii) Be able to satisfy the Exchange that it has conducted due diligence through independently-sourced information, by a reputable agent, on the applicant or its management or controlling shareholders. The Exchange may request a sponsor to furnish the results of any independent verification undertaken.
      (ix) Exercise due care to prevent any leakage of confidential information to persons not entitled to receive it.
      (x) Continually review its due diligence procedures to see how they might be refined or improved.
      (b) Without affecting the sponsor's obligation to undertake due diligence, the Exchange may conduct checks using an agency the Exchange appoints. However, the Exchange will usually make inquiries of the sponsor before it decides to conduct such checks. The cost would be borne by the listing applicant/enlarged group. If the Exchange undertook such a check, it would be likely to involve (as circumstances warranted):
      (i) 2 or 3 key persons, and their personal and business backgrounds and integrity, role in the listing applicant's/enlarged group's business, interests in other companies, and any criminal or other records or links to money laundering or organized crime.
      (ii) The listing applicant's/enlarged group's history, structure, accounts, business reputation and development, its related companies, its other businesses, and the influence of key persons.

      5. Preparing the Offer Document or Very Substantial Acquisition/Reverse Takeover Circular (Rule 225(1)(d))

      (a) To properly oversee the preparation of the offer document or circular, the sponsor should:
      (i) Be actively involved in the preparation of the document.
      (ii) Satisfy itself that the document has been prepared in compliance with the Regulations under the Securities and Futures Act and relevant Rules and that the statements and information in it have been made after due and careful enquiry.
      (iii) Lead the drafting of the sections of the document that relate to the business of the listing applicant/enlarged group and the risk factors, being satisfied that they take account of matters raised by due diligence.
      (iv) Be satisfied that the financial and additional information sections have been appropriately prepared.
      (v) Consider whether any specialist third party reports are required.
      (vi) Be satisfied that appropriate verification of the document and any related notifications has taken place.
      (vii) Liaise with the Exchange to the extent that any rule interpretation may be required.
      (viii) Ensure the sponsor's declaration is on the cover (or first page if no cover) of the document.

      6. Rule Compliance (Rule 225(1)(e) and 226(1)(c))

      (a) To satisfy itself that the listing applicant/enlarged group has in place sufficient systems, procedures and controls, the sponsor should:
      (i) Be satisfied that procedures within the listing applicant/enlarged group have been established to ensure compliance with the Rules.
      (ii) Be satisfied that the listing applicant's/enlarged group's directors understand their obligations under the Rules.
      (iii) Be satisfied that the listing applicant's/enlarged group's directors have been fully advised of both their own and the entity's continuing responsibilities and obligations under the Rules.
      (iv) Be satisfied that the listing applicant's/enlarged group's directors are aware of when they should consult with, or seek the advice of, the sponsor.
      (v) Be satisfied that the listing applicant's/enlarged group's directors are aware of the practical consequences of the rule requirements.

      7. Listing Applicant's/Enlarged Group's Professionals and Consultants (Rule 225(1)(f))

      (a) When considering and advising on the suitability and competence of other professionals and consultants, the sponsor should also assess the suitability of the listing applicant's/enlarged group's reporting and ongoing auditors, including their reputation, track record, relevant experience and adequacy of resources.

      8. Suitability for Listing (Rule 225)

      (a) Under Rule 225, a sponsor conducting introducing activities must be satisfied, having made reasonable due diligence enquiries and having considered all relevant matters, that a listing applicant is suitable to be listed, or in the case of a very substantial acquisition or reverse takeover, that the issuer is suitable for continued listing. Apart from addressing the Rule in detail, the sponsor must also address whether the entity's structure or operations are suitable for the marketplace.
      (b) Entities that may be involved in or connected with any money laundering, terrorist financing, or other illicit activities should not be listed. Other entities may be unsuitable because their businesses are not currently addressed by the Rules (e.g. companies engaged in scientific research and development with no established financial track record, investment funds, trust structures or structured warrants), or because their structures are not currently addressed (e.g. differential voting rights). A sponsor should consult the Exchange if in doubt as to the suitability of an entity.

      Amended on 1 February 20111 February 2011.

      9. Conditions to be Fulfilled After Listing

      (a) There may be conditions imposed by a sponsor on a listing applicant/enlarged group that the listing applicant (issuer) must meet after it is admitted. Such conditions should not be material to the suitability of the listing applicant for listing or the issuer for continued listing, e.g. conditions related to interested persons transactions.
      (b) Proposed conditions must be disclosed to the Exchange as part of Appendix 4A.

      Amended on 7 February 20207 February 2020.

    • Practice Note 2C Guidelines for Continuing Sponsorship

      Cross-referenced from Rules 226(2), 226(3), 226(4) and 228

      1. Introduction

      (a) A sponsor undertaking continuing activities for an issuer must comply with the guidelines in this Practice Note.

      2. Regular Contact (Rule 226(2)(a))

      (a) As part of maintaining regular contact with its issuer, the continuing sponsor should:
      (i) Assess whether the issuer continues to understand its obligations under the Rules.
      (ii) Assess whether it is being kept up-to-date with developments at the issuer so that it can advise the company.
      (iii) Establish a regular contact routine.
      (iv) Hold discussions with the directors where appropriate.
      (v) Be satisfied that any procedures established at admission continue to be effective.
      (vi) Review the trading and financial performance of the issuer on a regular basis.
      (vii) Endeavour to attend shareholder meetings of the issuer.
      (viii) In the case of an overseas issuer, arrange for visits as necessary to get a proper understanding of their operations and personnel.

      3. Review of Documents Released to the Market (Rule 226(2)(b))

      (a) When reviewing documents to be released by the issuer to shareholders or to the market, the sponsor should:
      (i) Be readily accessible for reviewing all such documents so that the requirement of immediate disclosure can be met.
      (ii) Review the document with a view to ensuring rule compliance and in particular proper disclosure.
      (iii) Establish in advance a procedure for the issuer to identify and notify the sponsor of all documents to be released to the market.
      (iv) Ensure that the statement required in Rule 753(2) is included prominently in all documents to be released to its shareholders or the market.

      4. Monitor Trading (Rule 226(2)(c))

      (a) As part of monitoring the trading of the listed securities of its issuer, the sponsor should:
      (i) Be aware of the issuer's daily trading activity.
      (ii) Contact the issuer if there is a substantial movement in the price or volume of the issuer's securities, to ascertain whether an announcement or other action is required.
      (iii) Arrange for regular press monitoring to identify any material information reported in the press which has not been released via SGXNET. This is particularly important when the sponsor is aware of material undisclosed price-sensitive information in existence.
      (iv) Respond speedily to enquiries from the Exchange.
      (b) The sponsor may put in place arrangements with third parties for assistance in monitoring.

      5. Advise on Changes to the Board (Rule 226(2)(d))

      (a) In advising its issuer on the suitability of directors arising from proposed changes in the issuer's board of directors, the sponsor should:
      (i) Investigate and consider the suitability of each director and proposed director of the issuer and consider the efficacy of the board as a whole for the company's needs.
      (ii) Issue and review directors' questionnaires and review directors' CVs.
      (iii) Test the information revealed by the above questionnaires and CVs, for example by conducting third party checks, press searches, ACRA checks and taking-up references. For directors who are not Singapore-based, other appropriate investigations should be undertaken.
      (iv) Analyse any issues arising from these investigations, in particular as to how they could affect the issuer's appropriateness for continued listing on Catalist and trading in a public market.
      (v) Consider each director's suitability and experience in relation to their (proposed) company role.
      (vi) Consider the board of directors as a whole in relation to the issuer's needs, for example given its type, size, profile and that the issuer is listed on a Singapore-based, English-language public market.

      6. Trading Halt or Suspension of a Counter (Rule 226(2)(f))

      (a) As part of its review of trading, or when an announcement should be made, the sponsor may form the view that the issuer needs to halt the trading in, or suspend, its securities. If so, the sponsor must inform the issuer, together with its reasons, and inform the Exchange at the same time. This allows the Exchange to watch the counter and to expect the request for a trading halt or suspension from the issuer.
      (b)The issuer, not the sponsor, requests the Exchange to halt or suspend trading in its securities. If the issuer does not contact the Exchange, the Exchange will contact the issuer for an explanation as to why it has not accepted the advice of its sponsor. The Exchange may take action under the Rules to halt or suspend the securities in the usual way.

      7. Listing of Additional Securities (Rule 226(4)(b))

      (a) In assessing whether an issuer's listing of additional securities complies with rule and legal requirements, a sponsor should take the following into consideration and determine if disclosure in a circular and/or announcement is necessary:
      (i) The financial position of issuer, including:
      (A) if the group is currently under pressure from its bankers to repay any of its borrowings and whether there are any arrangements for refinancing of the group's borrowings; and
      (B) whether the group has sufficient resources to meet its capital commitments.
      (ii) In a rights issue:
      (A) the amount of cash raised from issues of securities in the past 2 years and whether the proceeds were used for the intended purposes; and
      (B) if applicable, whether a valid share issue mandate is available and sufficient for the proposed issue of securities.
      (iii) In an issue of convertible securities:
      (A) the form, basis of allotment, exercise price, exercise period and whether the convertible securities are detachable;
      (B) the number of new shares that will be issued upon full exercise or conversion of the proposed convertible securities as a percentage of the applicant's issued shares as at the date of the application; and
      (C) the number of new shares that will be issued upon full exercise or conversion of the proposed convertible securities and all outstanding convertible securities as a percentage of the applicant's issued shares as at the date of the application.
      (iv) In an issue of shares for cash under Part IV of Chapter 8:
      (A) the issue price and the weighted average price for the period specified in Rule 811;
      (B) the amount of cash raised from issues of securities in the market in the past 2 years and a statement on whether the proceeds had been used for the intended purposes;
      (C) where the end-placee(s) is not procured by a placement agent, that the end-placee(s) and its(their) directors and substantial shareholders (if applicable) have no connections (including any business relationship) with the issuer and its directors and substantial shareholders; and
      (D) if applicable, whether a valid share issue mandate is available and sufficient for the proposed issue of securities.

      8. Ending of Sponsorship (Rule 228)

      (a) An outgoing sponsor should discuss its experience of the issuer and the reasons for ending the sponsorship. The Rules require an outgoing sponsor to be constructive and open with a prospective new sponsor.
      (b) The outgoing sponsor must disclose any compliance issues to the incoming sponsor in order to meet its obligation under Rule 228(5). If the issuer is not in compliance with the Rules, or is in poor financial health, the new sponsor may require rectification or disclosure before it starts its sponsorship role. In this event, the incoming sponsor should liaise with the Exchange to ensure that a smooth transfer of responsibilities from the outgoing sponsor to the incoming sponsor is possible.
    • Practice Note 4A Equity Securities Listing Procedure

      Cross-referenced from Chapters 4 and 10

      1. Introduction

      (a) This Practice Note explains:
      •   the Exchange's procedures for an initial public listing, a very substantial acquisition or reverse takeover; and
      •   the principles in dealing with comments the Exchange occasionally receives from the public on a proposed initial public listing, very substantial acquisition or reverse takeover.

      2. Exchange's Procedure

      (a) A sponsor has the primary responsibility for assessing a listing applicant's suitability for listing, or an issuer's suitability for continued listing when an issuer makes a very substantial acquisition or is the subject of a reverse takeover. If the sponsor considers that the listing applicant is suitable for listing or that an issuer is suitable for continued listing, it should complete the required documents. The Exchange will normally admit the listing applicant on receipt of conforming documents. If there are concerns, the Exchange will ask the sponsor for clarification or explanation. The Exchange may require the sponsor to produce information to satisfy it of the listing applicant's suitability to be listed or the issuer's suitability for continued listing.
      (b) The Exchange may require the sponsor to undertake more due diligence. It may require the listing to be subject to conditions or may require the listing applicant or issuer to provide additional disclosure.
      (c) If the sponsor is of the view that the listing applicant is suitable for listing or the issuer for continued listing, but some rules need to be waived, the sponsor will have to consider whether waivers should be granted, and make the appropriate application to the Exchange. If waivers are granted, they must be disclosed in the offer document, or as pre-quotation disclosure if given later, in a case of a new listing; or in the circular or by way of an announcement in a case of a very substantial acquisition or reverse takeover.

      3. Comments Received

      (a) The Exchange will give consideration to comments received on the offer document or circular from the public (whether anonymous or not).
      (b) All comments will be forwarded to the sponsor who must take such actions as it deems fit.
      (c) The Exchange may require the sponsor to investigate and report its findings to the Exchange.
      (d) The Exchange may also carry out its own investigation and, where appropriate, enter into correspondence with the person who sent the comments.
      (e) The Exchange may delay the listing until it is satisfied with the findings. The Exchange is not obliged to disclose any findings or its conclusion.
    • Practice Note 4B Requirements for Lodgement or Submission of Documents

      Cross-referenced from Rules 406(10), (11) and (12), 407, 865 and Appendix 4F

      Part I Introduction

      1. This Practice Note sets out the general requirements for the lodgement of documents with the Exchange.
      2. The documents which must be lodged with or submitted to the Exchange include:
      (a) an offer document;
      (b) a preliminary offer document;
      (c) a supplementary offer document;
      (d) a replacement offer document;
      (e) an offer information statement;
      (f) a circular to the shareholders of an issuer seeking the approval of a very substantial acquisition or reverse takeover; and
      (g) an issuer's undertaking not to make an exempt offer.

      Part II Requirements for Lodgement or Submission in Electronic Form

      3. A document to be lodged with the Exchange under the Rules must be lodged or submitted in electronic form (in searchable format) and must comply with the following requirements:
      (a) The document must be in portable document format (PDF), or such other format as the Exchange may from time to time allow.
      (b) The document must be lodged or submitted to the Exchange in a CD-ROM, or such other medium as the Exchange may from time to time allow, containing the document.
      (c) The medium by which the document is lodged or submitted must be labelled with:
      (i) the names of the person making the offer and the listing applicant;
      (ii) the nature of the document; and
      (iii) the date the document is lodged with or submitted to the Exchange.
      4. When the document is lodged with or submitted to the Exchange in electronic form under paragraph 3 above, an electronic image of each of the following must be lodged with or submitted together with the document:
      (a) every signature on or accompanying the document;
      (b) any duly signed form which is part of or which accompanies the document;
      (c) any duly signed statement referred to in paragraph 8(b) that the copy of the document submitted in paper form is a true copy of the document lodged with the Exchange in electronic form;
      (d) any duly signed letter or report (other than a statutory audit report) enclosed in or forming part of the document;
      (e) any duly signed expert's consent required to be lodged;
      (f) any duly signed sponsor's consent and (if applicable) issue manager's consent required to be lodged;
      (g) any duly signed underwriter's consent required to be lodged;
      (h) if applicable, the authorisation referred to in Part IV;
      (i) any pre-deal research report which has been issued in respect of the securities to which the document relates; and
      (j) any other duly signed statement or letter required under the Rules to be lodged or submitted together with the document.
      5. An electronic image to be lodged with or submitted to the Exchange under paragraph 4 must comply with the following requirements:
      (a) The image must be in portable document format (PDF), or such other format as the Exchange may from time to time allow.
      (b) The image must be lodged or submitted by submitting to the Exchange a CD-ROM, or such other medium as the Exchange may from time to time allow, containing the image.
      (c) The medium by which the image is lodged or submitted must be labelled with:
      (i) a description of what the electronic image relates to; and
      (ii) the nature and date of lodgement of the document lodged with the Exchange in electronic form under paragraph 3 together with which the electronic image is lodged or submitted.
      6. For the avoidance of doubt, a document lodged with or submitted to the Exchange in electronic form under paragraph 3 and every electronic image lodged with or submitted to the Exchange together with that document under paragraph 4 may be contained in the same medium.

      Part III Requirements for Lodgement in Paper Form

      7. A person who lodges any document in electronic form must also provide a copy of that document in paper form to the Exchange:
      8. A copy of any document in paper form required under paragraph 7:
      (a) must comply with the following requirements:
      (i) the copy of the document must be on paper that is 297 millimetres in length and 210 millimetres in breadth (A4 paper size); and
      (ii) the contents of the copy of the document must be legible; and
      (b) must be accompanied by a true and complete electronic image of a signed statement of:
      (i) in the case where the person making the offer is an individual:
      (A) the person making the offer;
      (B) a person authorised in writing by him; or
      (C) an advocate and solicitor acting on his behalf;
      (ii) in case where the person making the offer is an entity:
      (A) a director or an equivalent person of the entity;
      (B) a person authorised in writing by a director or an equivalent person of the entity; or
      (C) an advocate and solicitor acting on behalf of the entity; or
      (iii) in a case where the person making the offer is the government of a State:
      (A) an official of the government of the State who is authorised to sign the statement on its behalf; or
      (B) an advocate and solicitor acting on behalf of the government of the State,
      verifying that the copy of the document in paper form is a true copy of the electronic document lodged with or submitted to the Exchange under paragraph 3.
      9. The electronic image of the signed statement under paragraph 8(b) must comply with the requirements in paragraph 5.

      Part IV Authorisation

      10. A person making an offer of securities may authorise another person to sign, on its behalf:
      (a) any document lodged with the Exchange; or
      (b) any verification statement referred to in paragraph 8(b).
      11. The following persons may be authorised:
      (a) in a case where the person making the offer is an individual, a person authorised in writing by the individual;
      (b) in a case where the person making the offer is an entity, a person authorised in writing by a director or an equivalent person, or a proposed director or an equivalent person, of the entity; or
      (c) in a case where the person making the offer is the government of a State, an official of the government of the State who is authorised to sign the document or statement, as the case may be, on its behalf.
      12. A true and complete electronic image of the authorisation must be submitted to the Exchange, together with the document lodged with the Exchange or statement, as the case may be. The electronic image of the authorisation must comply with the requirements in paragraph 5.
      13. The authorisation submitted to the Exchange should not, as a general rule, be more than 3 months old.

      Part V Administrative Procedures

      14. Lodgement of documents must be made by appointment between 9am and 5pm from Mondays to Fridays (except public holidays).
      15. The timetable for initial public offerings and very substantial acquisitions/reverse takeovers is contained in Appendix 4F.

      Part VI Specific Requirements for Documents

      Preliminary Offer Document

      16. Where an issuer wishes to exclude information from a preliminary offer document, other than that permitted under Rule 407(6), an application must be made to the Exchange for the relevant exemption before the document is lodged with the Exchange.
      17. Where the issuer lodges a preliminary offer document with the Exchange, a final offer document must be lodged subsequently, which includes such information required by Rule 407(1) to (5) that was omitted in the preliminary offer document.

      Amended Offer Document

      18. Any amendment to an offer document must be lodged with the Exchange in accordance with the requirements in Parts II and III.
      19. Both the electronic copy and paper copy of the amended offer document must show the amendments tracked over the originally lodged offer document. Reasonable steps should be taken (including the use of different fonts, colours or highlights) to distinguish between:
      (a) amendments made due to the insertion of information required under Rules 407(1) to (5) for registration; and
      (b) any other amendments made.
      20. In addition, a clean electronic copy of the amended offer document must be lodged for posting on the Exchange's website.

      Supplementary or Replacement Offer Document

      21. Any supplementary or replacement offer document must be lodged with the Exchange in accordance with the requirements in Parts II and III.
      22. Both the electronic copy and paper copy of a replacement offer document must show the amendments tracked over the originally lodged offer document.

      Amended on 7 February 20207 February 2020.

    • Practice Note 4C Requirements for Mineral, Oil and Gas Companies

      Cross-referenced from Rules 440, 441,704(35), 705(7), 1014(2) and 1204(23)

      Added on 1 February 20111 February 2011.

      1. Introduction

      1.1 This Practice Note sets out guidance on the requirements for mineral, oil and gas companies.
      1.2 Exploration, development or production of mineral, oil or gas may be considered as principal activities of the issuer if the mineral, oil and gas activity of the issuer and/or its subsidiaries, based on the issuer's latest audited consolidated financial statements: (i) represents 50% or more of the total assets, revenue or operating expenses of the group; or (ii) is the single largest contributor based on any of the tests in (i) above.

      The issuer is required to make an announcement when any of the above situation occurs and will thereafter be required to comply with all the continuing listing rules applicable to mineral, oil and gas companies.
      1.3 A mineral, oil and gas company must demonstrate plans to obtain all necessary approvals required to proceed with development. The qualified person must provide basis for expecting that all required approvals will be granted and the directors must provide evidence of the company's intention to proceed with development within a reasonable time frame. The qualified person should highlight and discuss any material unresolved matter that is dependent on a third party on which extraction is contingent.
      1.4 The following sets out the Listing Rules specifically applicable to mineral, oil and gas companies:

      (a) Rule 438;

      (b) Rule 439;

      (c) Rule 440;

      (d) Rule 441;

      (e) Rule 442;

      (f) Rule 443;

      (g) Rule 444;

      (h) Rule 704(35);

      (i) Rule 705(6);

      (j) Rule 705(7);

      (k) Rule 712;

      (l) Rule 718;

      (m) Rule 1006(e);

      (n) Rule 1014(2);

      (o) Rule 1015(2);

      (p) Rule 1015(3);

      (q) Rule 1207(23); and


      Other generally applicable Listing Rules also apply to mineral, oil and gas companies.

      2. General Requirements for Disclosure of Reserves, Resources or Exploration Results

      2.1 All mineral, oil and gas companies must comply with the following requirements:
      (a) All statements and reports in relation to reserves, resources or exploration results mustbe prepared and presented in accordance with a Standard. The listing applicant or issuer muststate in the offer document, circular or announcement, as the case may be, the Standard used.
      (b) Tabuldated estimates of reserves and resources should be presented in the format as set out in Appendix 7D.
      (c) Assay results must include disclosure of the analytical methods used and the name of the analytical laboratories which assayed the material sampled, together with details of their relationship, if any, to the listing applicant or issuer. The accreditation of each laboratory, or lack thereof, must also be disclosed.

      3. Additional Disclosure Requirements for Offer Document

      3.1 In addition to paragraph 2 of this Practice Note, the prospectus, offering memorandum or introductory document relating to a mineral, oil and gas company must include the following:
      (a) Information required in paragraph 1.3 above;
      (b) the directors' opinion which must state, without requiring a profit forecast that in their reasonable opinion, the working capital available to the applicant is sufficient for the present requirements and for at least 18 months after listing;
      (c) a statement by the listing applicant that no material changes have occurred since the effective date of the qualified person's report. Where there are material changes, these should be prominently disclosed together with a statement that the listing applicant will as soon as practicable following its listing, announce the qualified person's report or the independent qualified person's report, as the case may be, on the material changes in accordance with Rule 704(35);
      (d) the listing applicant's plans and milestones to advance to production stage with capital expenditure for each milestone for an issuer applying for listing pursuant to Rule 439. These plans must be substantiated by the opinion of an independent qualified person;
      (e) the listing applicant's policies and practices in relation to operating in a sustainable manner, including:
      (i)the listing applicant's policy with regards to environmental and social issues;
      (ii)impact of the listing applicant's business practices on the environment and the communities in which it operates; and
      (iii)environmental and social risks faced by the listing applicant.
      (f) In relation to a listing applicant whose principal activities consist of exploration for mineral, oil or gas, a clear and prominentstatement on the front cover highlighting that fact; that the listing applicant may not progress to the next stage of development or to a stage where it is able to generate revenue; and industry-specific risks.

      4. Additional Continuing Obligations

      4.1 In addition to paragraph 2 of this Practice Note, a mineral, oil and gas company must also comply with the following:
      (a) Exploration, development and production activities mustbe reported in a timely and responsible manner. If the issuer releases partial results, e.g. the first two holes of a six hole program, it must ensure that the balance of the results are disclosed in a timely manner whether the results are positive or negative.
      (b) Where work has been discontinued on properties about which the issuer has made prior disclosure, there must be further information provided as to any undisclosed results and reasons for the cessation of work.

      5. Qualified Person's Report

      5.1 The qualified person's report must be prepared in accordance with a Standard.
      5.2 The qualified person must review the information contained in the offer document, circular or announcement, as the case may be, which relates to the qualified person's report and confirm that the information presented is accurate, balanced, complete and not inconsistent with the qualified person's report. The qualified person's report must not include blanket disclaimers or contain indemnities for fraud and gross negligence. If the qualified person's report includes a statement on the qualified person not accepting any responsibility for the completeness or adequacy of the information provided by the company and its advisors and for information extracted from public sources, this qualification must be subject to the qualified person having: (i) made reasonable enquiries and exercised his judgement on the reasonable use of such information; and (ii) found no reason to doubt the accuracy or reliability of the information.
      5.3 A qualified person's report must include the following:
      (a) Executive summary
      (b) Introduction
      •   Full name and if applicable, the partner/director in charge of the report; professional qualifications, years of relevant experience, Professional Society Affiliations and Membership (including details of a recognised professional association) of the qualified personand the address of the qualified person's firm/company;
      •   Aim of the report;
      •   Scope of the report;
      •   Basis of the report — including data sources, data validation and reliance on other experts; and
      •   Standard used
      (c) Property description, size, location, access, natural and cultural environment, including:
      •   listing applicant's/issuer's assets and liabilities, including the following summary table of assets:

      Asset name/Country Issuer's interest (%) Development Status Licence expiry date Licence Area Type of mineral, oil or gas deposit Remarks
                   
      •   nature and extent of listing applicant's/issuer's rights of exploration or extraction; and
      •   description of the economic conditions for the working of the licenses, concessions or similar, with details of the duration and other principal terms and conditions of the concessions including fiscal conditions, environmental and rehabilitation requirements, abandonment costs and any necessary licenses and consents including planning permission.
      (d) History of the property, including exploration history and any production history.
      (e) Geological and geophysical setting, type and characteristics of the deposit/accumulation
      (f) Exploration data including drilling and sampling, sampling and analysis methods, sample preparation and security, quality assurance and quality control on the sample analyses.
      (g) Mineral processing and metallurgical testing, if applicable.
      (h) Resource and reserve estimates and exploration results, as applicable, in accordance with the relevant Standard, including a summary of reserves and resources in the form of Appendix 7D.
      (i) Planned extraction method, processing method, capital costs, operating costs, considerations including social, environmental, health and safety factors that may affect exploration and/or exploitation activities; and production schedule, if applicable.
      (j)) Financial analysis of the operations, taxes, liabilities, marketing if applicable.
      (k))Interpretation and conclusions
      (n) [deleted]
      (o) [deleted]
      (p) [deleted]
      (q) [deleted]
      (r) [deleted]

      6. Summary Qualified Person's Report

      6.1 A summary report prepared by a qualified person shall contain the following:
      (a) Appendix 7D and a commentary of material changes to the issuer's reserves and resources. The commentary should include information on the changes to the reserves estimates, indicating explanation for the changes (e.g. extensions and improved recovery, technical revisions, discoveries, acquisitions, dispositions, economic factors, production);
      (b) with regard to minerals, Table 1 of the JORC Code; and
      (c) with regard to oil and gas, paragraphs 5.3(b) and 5.3(c) of Practice Note 4C.

      7. Valuation Report

      7.1 The prospectus, offering memorandum or introductory document relating to a mineral, oil and gas company must include a valuation report on the assets of the listing applicant. The valuation report must be prepared by an independent expert in accordance with the VALMIN Code, SPEPRMS or an equivalent standard that is acceptable to the Exchange. The effective date of the valuation report must not be more than 6 months from the date of lodgement of the offer document.
      7.2 With regard to any valuation, the following must be disclosed:
      (a) the Standard used;
      (b) principal assumptions used in arriving at the valuation, including but not limited to, assumed commodity prices, rate of discount and rate of inflation, and the basis for each assumption. Contracted commodity prices must be used where applicable and available. If unavailable, either forecast or constant prices may be used. Where forecast commodity prices are used, this should be accompanied by a statement by the qualified person that such forecast was arrived at after due and careful enquiry and reflects their view of a reasonable outlook of the future;
      (c) analysis of the sensitivity of such valuations to variation in the principal assumptions provided in (b) above. In relation to commodity prices, the scenarios must include both constant and forecast prices. In relation to the rate of discount, the scenarios must include the weighted average cost of capital;
      (d) an estimate of net present value. If the valuation is arrived at on an alternative basis, an explanation of the basis and the reasons for adopting the basis; and
      (e) risk factor in the prospectus highlighting the uncertainties inherent in the assumptions made in arriving at the valuation and the effects they may have on the valuation of the mineral, oil and gas assets and the value of the offering shares.

      8. Farm-in and Farm-out Transactions

      8.1 A farm-in transaction refers to an acquisition of a partial interest of an existing asset by a company from a third party. A farm-out transaction refers to a sale of a partial interest of an existing asset owned by a company to a third party.
      8.2 Farm-in and farm-out transactions are excluded from the requirements in Chapter 10 if they are in the ordinary course of business of the issuer under Rule 1002.
      8.3 Where a farm-in or farm-out transaction only changes an issuer's effective interest in the asset, Rule 704(35) is not applicable. However, the issuer must consider if the transaction needs to be disclosed under Rule 703. If so, the issuer must disclose its new working interest and/or net entitlement.

      Amended on 29 September 201129 September 2011, 27 September 201327 September 2013 and 23 August 201823 August 2018.

    • Practice Note 4D Training for Directors with No Prior Experience

      1 Introduction

      1.1 Rule 406(3)(a) provides that a director who has no prior experience as a director of a listing applicant listed on the Exchange (a "First-time Director") must undergo training in the roles and responsibilities of a director of a listed issuer as prescribed by the Exchange.
      1.2 This Practice Note prescribes the training that a First-time Director must undergo within one year from the date of his appointment to the board ("Mandatory Training"). If any director of an issuer which is newly listed on the Exchange has not attended any training as prescribed in paragraph 2 below, such director must attend Mandatory Training by the end of the first year of the issuer's listing.

      2 Mandatory Training

      2.1 To fulfil the Mandatory Training requirements, First-time Directors must attend the training programmes conducted by a training provider as specified in Schedule 1 to this Practice Note.

      3 Persons with Relevant Experience

      3.1 The Exchange expects all First-time Directors to attend Mandatory Training.
      3.2 In exceptional circumstances, First-time Directors assessed by the issuer's Nominating Committee to possess relevant experience need not attend Mandatory Training. In assessing the relevant experience, the Nominating Committee must have regard to whether the experience is comparable to the experience of a person who has served as a director of an issuer listed on the Exchange. The issuer's Nominating Committee must disclose its reasons for its assessment that the First-time Director possesses relevant experience. Such reasons shall be disclosed in the announcement of the appointment of the First-time Director as director of the issuer or in the offer document.
      3.3 Notwithstanding paragraph 3.2 above, the Exchange has the discretion to direct a First-time Director to attend Mandatory Training.

      Schedule 1

      Training Provider Mandatory Training
      Singapore Institute of Directors Listed Entity Directors Programme
      LED 1 – Listed Entity Director Essentials
      LED 2 – Board Dynamics
      LED 3 – Board Performance
      LED 4 – Stakeholder Engagement
      Environmental, Social and Governance Essentials
      The First-Time Director must also attend the modules relevant to his appointment on the board of the issuer. The modules are:
      LED 5 – Audit Committee Essentials
      LED 6 – Board Risk Committee Essentials
      LED 7 – Nominating Committee Essentials
      LED 8 – Remuneration Committee Essentials

      Added on 1 January 20191 January 2019 and amended on 1 January 2022.

    • Practice Note 4E Summary Property Valuation Report

      Rule 416(3)(c) requires a summary property valuation report to contain the information required for prospectuses and circulars in accordance with the standards of the Singapore Institute of Surveyors and Valuers. The information required for prospectuses and circulars is set out in a Practice Guide published by the Singapore Institute of Surveyors and Valuers.

      Please click here to view the Practice Guide.

      Added on 12 February 2021.

    • Practice Note 7A Continuing Disclosure

      Cross-referenced from Rule 703 and Appendix 7A

      1. Introduction

      1.1 This Practice Note provides guidance on the continuing obligations of issuers in respect of Listing Rule 703 on the disclosure of material information and Appendix 7A on the Exchange's Corporate Disclosure Policy. Issuers should apply the principles outlined in the Practice Note flexibly and sensibly. Issuers are still obliged to make their own judgments when determining whether a particular piece of information is material and requires disclosure. The purpose of timely disclosure of material information is to allow the operation of a fair, orderly and transparent market. The following discussion should be read in that light.
      1.2 Issuers should consult with their sponsors with respect to the application of the rules.
      1.3 In case of doubt, sponsors must consult the Exchange.

      2. Interaction with the SFA

      2.1 The Exchange's continuous disclosure rules are given statutory backing under Section 203 of the SFA. A breach of the Exchange's continuous disclosure obligations may be considered an offence under the SFA and may have serious legal consequences for the issuer and its officers.

      3. Guidance on what constitutes material information

      3.1 Rule 703(1) requires an issuer to announce any information known to the issuer concerning it or any of its subsidiaries or associated companies which:
      (a) is necessary to avoid the establishment of a false market in the issuer's securities (Rule 703(1)(a)). Appendix 7A explains that a false market may exist if information is not made available that would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, or buy or sell the securities. Such information may be referred to as “trade-sensitive” information; or
      (b) would be likely to materially affect the price or value of the issuer's securities (Rule 703(1)(b)). Information would be likely to have such material price impact if it is likely to prompt a significant change in the price or value of the issuer's securities. Such information may be referred to as “materially price-sensitive” information.
      3.2 Information is considered material and required to be disclosed under Rule 703(1) as long as it is either trade-sensitive or materially price-sensitive. Issuers must exercise judgment when deciding whether information is material using both these tests. If an issuer is unable to ascertain whether the information is material, the recommended course of action is to announce the information via SGXNET.

      Materially price-sensitive information
      3.3 The test of whether information is materially price-sensitive is an objective one. Issuers must assess, on an ex-ante basis, if the information is likely to have a material impact to the price of its securities. It requires issuers to foresee how investors will react to any particular information when it is disclosed.
      3.4 Issuers' assessment should consider the significance of the information in the context of the issuer's business. Information that might be immaterial to another entity may be material to the issuer, as the impact to the issuer would depend on its business and market expectations of the issuer's performance. Issuers should therefore rely on experience and knowledge of past market impact of similar type of disclosures made under comparable circumstances to form their assessment.
      3.5 Issuers should also consider prevailing market conditions in their assessment of price impact. Factors to be considered could include liquidity of the issuer's securities, macroeconomic or sector-specific factors and the general market sentiment. Information that might be considered immaterial during stable macroeconomic and industry conditions but could become material when the industry is undergoing extreme volatility or a protracted downcycle.
      3.6 For the purposes of assessing if a breach of Rule 703(1)(b) has occurred, the Exchange will examine actual market reaction to the information when it is disclosed. If information that is disclosed does not result in a significant change in price of the securities, then it is likely that the information may not be considered to be materially price-sensitive. The Exchange may examine market reaction over a length of time suitable for the liquidity of the securities. For example, if the securities are not actively traded, it may be necessary to look at a longer period of activity.

      Trade-sensitive information
      3.7 The test for trade-sensitive information does not focus on the potential price impact of information, but rather the likelihood that the omission or failure to disclose such information will result in the market trading on an uninformed basis. Such information must be disclosed to avoid the establishment of a false market in the securities. As set out in the Corporate Disclosure Policy in Appendix 7A, a false market may exist if information is not made available that would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, or buy or sell the securities.
      3.8 The test of whether information is trade-sensitive is also an objective one. The question to ask is, is the information expected to influence an investor who commonly invests in securities to subscribe for, or buy or sell the issuer's securities in reliance of that information, if it had been known beforehand? If so, the information is trade-sensitive.
      3.9 The term “persons who commonly invest” is defined in Section 214 of the SFA. MAS has also issued guidelines on the interpretation of the term, which set out that the class of investors that are considered “persons who commonly invest” will be product-specific, and will include retail investors for listed shares. The Exchange will employ the same definition and interpretation for the purposes of the Listing Rules.
      3.10 For practical purposes, information which is materially price-sensitive would likely also be trade-sensitive. If information has a material price impact, it would also influence investors in their investment decisions. However, trade-sensitive information need not necessarily have a material price impact. For example, information on a transaction may have a neutral effect on share price, but may be considered to be trade-sensitive if the transaction is material to the issuer and likely to influence investors' decision to invest in the securities.
      3.11 Therefore, the Exchange's assessment of whether information is trade-sensitive is broader than that for materially price-sensitive information. The test for trade-sensitive information assesses the likelihood that the information, if undisclosed, will cause investors to trade on an uninformed basis. In that regard, the Exchange may consider information to be trade-sensitive, even if there is no significant market reaction to the information when disclosed.
      3.12 Issuers should make their own judgment on whether information would be trade-sensitive. In particular, an issuer should consider whether a person who commonly invests in that security would likely trade in the security in reliance of that piece of information. As with the test for materially price-sensitive information, which requires issuers to assess the impact of the information to the price of the issuer's securities, issuers should review the information in the context of the issuer's business as well as prevailing market conditions in making their assessment.

      4. Exceptions to Rule 703(3)

      4.1 Rule 703(3) allows exception from disclosure provided that three conditions are met. These conditions are that (a) a reasonable person would not expect information to be disclosed, (b) the information is confidential and (c) the information either (i) concerns an incomplete proposal or negotiation, (ii) comprises matters of supposition or is insufficiently definite to warrant disclosure, (iii) is generated for internal management purposes, or (iv) is a trade secret. Information should be disclosed if any one of the three conditions is not satisfied.

      Confidential information
      4.2 Where material, non-public information has been reported but not released via SGXNET, the Exchange will require clarification from an issuer to ensure that the market is trading on accurate information. If information has been reported in a reasonably specific manner or from a reliable identified source, the Exchange is likely to consider that the information is no longer confidential. For example, should the report contain the salient terms of a contract or the information has been attributed to the issuer or a reliable source, this indicates that there may have been a leakage of material information. Leakage of material information would result in a loss of confidentiality and thus an issuer can no longer rely on the confidentiality exemption under Rule 703(3).
      4.3 An issuer is required to announce any material, non-public information that has leaked to the market even though it was covered by the exemptions in Rule 703(3) (for example, regardless of whether the transaction is still undergoing negotiation). This is regardless of the issuer's original intentions to keep the information confidential. It is therefore important for issuers to put in place strong safeguards to preserve confidentiality of its information. If the issuer is not ready to confirm the information that was leaked or there is too much uncertainty (for example, if the transaction is undergoing negotiation), the issuer should release a holding statement to sufficiently explain its position.
      4.4 If an issuer is of the view that there has been no leak, but there is unusual market activity that could be attributable to the report, the issuer should release a statement to provide clarity on the actual situation and deny or confirm the matters in the report, even if the statement may be a reiteration of information previously announced. Where there are no media reports, but unusual market activity is observed, the issuer should undertake a review to seek the causes of the unusual market activity and take action as set out in paragraph 22 of Appendix 7A. The issuer should also respond promptly to any queries made by the Exchange concerning the unusual trading activity. Failing which, the Exchange may suspend the issuer's securities from trading.
      Positive example:

      The Exchange issued a query to an issuer due to unusual market activity observed on the issuer's securities.

      The issuer requested a trading halt on the same day, and responded that it had received a non-binding proposal from a third party who had expressed interest to purchase certain businesses of the issuer and was currently in discussions with the third party. The issuer also clarified that as at the date of the announcement, no binding offer has been made and no definitive agreements have been entered into in relation to any merger and acquisition, joint venture or strategic alliance opportunity.

      Upon the subsequent confirmation of the transaction, the issuer followed up with another announcement that it had entered into a conditional share purchase agreement for the sale of a certain part of its business to a third party.
      4.5 An issuer must not agree to a confidentiality clause with any other parties, for example as part of contractual terms, which may result in it not being able to comply with the continuous disclosure rules in the Listing Manual. If the test for disclosure under Rule 703 is otherwise met (for example, the entering into of a material agreement), the Exchange will expect the information to be disclosed notwithstanding that the information is confidential or that the issuer has signed a non-disclosure agreement. This requirement does not apply if Rule 703(2) applies.

      Rumours or speculation
      4.6 The Exchange generally does not expect issuers to respond to rumours or speculation (including reports predicting future sales, earnings or other data) unless there is a price or volume movement in the market. However, an issuer is expected to clarify the position if the information contained in the report or rumour is reasonably specific to suggest that the information came from an insider or a reliable source. For example, if there are media reports setting out material allegations involving an issuer or its business, its Board or its management, the issuer should, where necessary, request a trading halt and promptly release an announcement to clarify its position.

      Information concerns an incomplete proposal or negotiation
      4.7 Information that concerns an incomplete proposal or negotiation is excluded on the basis that the likelihood of such agreements proceeding is low or uncertain. Issuers cannot rely on this exception for material developments or arrangements where commitments to or from the issuer have already been made, even if there are expected to be subsequent developments that may change the potential impact.
      4.8 For example, if a material transaction is subject to conditions precedent, the issuer must make prompt disclosure when commitment to undertake the transaction is made, even if the conditions precedent have yet to be satisfied. If and when there is subsequent development, issuers should then provide further updates to the market.
      4.9 As another example, the service or receipt of a letter of demand or the commencement of a lawsuit may require disclosure if the amount or action claimed otherwise has a material impact, notwithstanding that negotiations on the letter of demand may be ongoing or the outcome of the lawsuit is not yet known. This is particularly so if the claim may, so long as it succeeds in part, materially impact the issuer's performance, even if the exact quantum of the claim may still be uncertain. However, if the claim or action could reasonably be characterised as bound to fail (for example, if the issuer has received legal advice to that effect), disclosure may not be necessary.
      Negative example:

      An issuer received a letter of demand from its lender. The amount owed by the issuer to the lender was substantial. The issuer did not immediately announce the receipt of the letter of demand, nor did it request a trading halt. The issuer said that it was still in negotiations with the lender to seek a time extension to make repayment and hence did not think that disclosure was necessary.

      The Exchange determined that the receipt of the letter of demand was material and took disciplinary action against the issuer for failure to disclose the matter promptly. The Exchange considered that the receipt of a letter of demand by the issuer from its lender would be considered material information for the issuer, given the amount owed. The fact that a time extension was being sought should not have altered the decision to disclose immediately, as there was already certainty of the claim. The issuer should have announced the receipt of the letter of demand promptly.
      Trade secrets
      4.10 An issuer also cannot rely on reasons, such as possible erosion of the issuer's competitiveness or unfavourable impact on the issuer's business to avoid complying with the disclosure rules, unless the matter is a trade secret. Trade secrets are intellectual property of the issuer, such as a specific process, system or know-how belonging to the issuer which provides it with a competitive advantage. It does not include general information that can be easily discoverable or observed.

      5. Guidance on particular situations

      5.1 Examples of the types of information that could be material are provided under paragraphs 5 and 9 of Appendix 7A. However, no definitive list can be given. What may be considered material to one issuer may not be material to another. Hence each issuer must exercise its own judgment when deciding whether information is material. Apart from considering quantitative factors, an issuer should consider qualitative and circumstantial factors when deciding whether it is necessary to disclose a particular piece of information. These include trading history of the issuer, unexplained change in price or volume of the issuer's shares, volatility of the issuer's shares, operating environment of the issuer, and the total mix of information that is publicly available. As a guiding principle, an issuer should always consider whether a reasonable person would expect the information to be disclosed.

      Change in the issuer's near-term earnings prospects
      5.2 During the course of preparing its financial reports, an issuer may become aware that the company's financial position will significantly deviate from previously reported results. In such a situation, the issuer should disclose the significant deviation immediately, and not withhold it until the scheduled release of the financial report. This is made clear in paragraph 9 of Appendix 7A, which states that where there is firm evidence of significant improvement or deterioration in the near-term earnings prospects, this is likely to be considered material information which must be disclosed immediately. The same obligation also applies if there are material adjustments to the issuer's previously announced financial statements.
      5.3 Issuers should take into account the information currently available to the public that might inform investors' expectations on the issuer's future performance. This will necessarily include previous prospect statements made by the issuer in its financial reports.
      5.4 Apart from the financial reporting cycle, an issuer may also become aware of material changes to its near-term earnings prospects caused by general trading trends or by specific events or developments during the course of its business which may be likely to materially affect its earnings (for example, a loss of a major customer or disruption to a major supplier). The issuer should assess if such events or developments are material and require immediate disclosure. The issuer should put in place internal controls to escalate material information to the Board expediently for consideration.

      Ongoing developments
      5.5 In certain situations, a matter may still be developing or undergoing further assessment, and issuers may not be able to quantify the impact at the occurrence of the material event. Issuers must still make disclosure of the event without delay. Their announcement should contain sufficient information for investors to understand the potential magnitude of the event and its relevance in the context of the issuer's prospects. Useful information will include a description of the risks or uncertainties and mitigating measures to be taken by the issuer. Issuers should follow up with further announcements to the market when there are subsequent material developments.
      Positive example:

      A fire occurred at a storage facility of a major supplier of an issuer. The issuer made immediate announcement of the incident on SGXNET, while it was still in the process of assessing the scale of the impact.

      In its announcement, the issuer included information on the extent of its reliance on that particular supplier, the immediate impact of the fire to its supply operations and obligations to existing customers, as well as mitigating measures undertaken to minimise impact of the disruption.

      The issuer also stated that it was conducting further assessment of the impact, and would provide updates to the market if it is concluded that there is material impact.
      Investigation on a director or an executive officer of the issuer
      5.6 Under Rule 704(6)(a), an announcement of the appointment of key persons by an issuer must contain material background information as set out in Appendix 7F. Such information includes, among others, whether the key person has been concerned with the management or conduct of the affairs of any corporation or entity which has been investigated, or the subject of civil or criminal proceedings (including pending proceedings), in each case, involving a breach of law or regulatory requirement as set out in Appendix 7F relating to the securities or futures industry, or involving fraud or dishonesty.
      5.7 Under Rule 720(1), an issuer must also comply with Rule 406(3) on a continuing basis, which requires, among others, a consideration of the character and integrity of directors and management.
      5.8 Issuers should put in place internal controls to ensure that where directors or executive officers are notified by a regulatory authority, an exchange, a professional body or a government agency (“relevant authority”), that they are to be interviewed or under investigation, such information is escalated expediently to the Board, including the Nominating Committee. The Board should conduct an independent assessment of the matter and not rely solely on the representations made by the director or executive officer. Where investigations are on-going, directors and executive officers must continue to provide updates to the Board on material development relating to the investigations, including the conclusion of investigations, so long as they are not prohibited from doing so by the regulatory requirements.
      5.9 In determining whether the information is material for disclosure, the Board should consider, among others:
      (a) whether the information is material to the affairs of the issuer, taking into account factors such as:
      (i) the extent to which the interview or investigation concerns the affairs of the issuer or the group;
      (ii) the extent to which the issuer is reliant on the director or executive officer for the proper oversight and management of the issuer; and
      (iii) the extent to which the director's or executive officer's ability to oversee or manage the issuer is compromised; and
      (b) whether the investigation would affect the information previously disclosed in accordance with Rule 704(6)(a) or the assessment of the character and integrity of the director or executive officer; and
      (c) the severity of the potential breach.
      5.10 Subject to paragraph 5.9 above, the following events are likely to require immediate disclosure:
      (a) the director or executive officer has been served with an order for the production of documents to assist in an investigation in relation to a breach of law, rule or regulation;
      (b) the director or executive officer was investigated and interviewed by the relevant authority;
      (c) the director or executive officer has surrendered his passport to a relevant authority, has been arrested (with or without posting bail) by a relevant authority, has been formally charged by a relevant authority or a relevant authority has imposed conditions or restrictions on the director or executive officer; or
      (d) the director or executive officer has been convicted or disqualified or is the subject of any judgement or ruling.
      5.11 To give clarity to such events, an announcement made pursuant to paragraph 5.10 above should contain:
      (a) the name and position of the relevant director or executive officer;
      (b) the relevant fact (for example, that the director has surrendered his passport to the relevant authority) and details of any other conditions or restrictions imposed by the relevant authority, where applicable;
      (c) the alleged offences and the identity of the offender whom the authorities were investigating as stated in the order, where applicable;
      (d) the Nominating Committee’s assessment of the suitability of the continued appointment of the director or executive officer and continued compliance with Rule 720(1) (read with Rule 406(3)) as well as the measures (if any) put in place to safeguard against risks associated with his continued appointment, where applicable;
      (e) a statement by the director or executive officer that he undertakes to inform the Board of the ongoing investigation and subsequent developments; and
      (f) the Board’s statement that it will continue to monitor the progress of the investigation and the Nominating Committee will continue to re-assess the suitability of the continued appointment of the relevant director or executive officer as and when there are material developments to the investigation. If no measures to safeguard against risks associated with the retention of such individual are considered necessary by the Board, this should be stated in the announcement, along with the reasons.
      5.12 Where a person is a director or executive officer in multiple listed issuers, the onus is on the person to notify the Boards of all these listed issuers of his involvement in an ongoing investigation. Where an issuer has been notified by its director or executive officer of his involvement in an ongoing investigation that does not directly concern the affairs of the issuer, the Nominating Committee must still assess the suitability of the continued appointment of the relevant director or executive officer. For instance, the Nominating Committee must assess whether the investigation is material to the issuer, and whether the investigation would affect the assessment of the character and integrity of the director or executive officer. Where the Nominating Committee opines that the investigation is material to the issuer or has a bearing on the character and integrity of the director or executive officer, the issuer must announce the Nominating Committee’s assessment of the suitability of the continued appointment of the relevant director or executive officer and continued compliance with Rule 720(1) (read with Rule 210(5)) as well as the measures (if any) put in place to safeguard against the risks associated with his continued appointment. If no measures are considered necessary by the Board, this should be stated in the announcement, along with the reasons.
      5.13 Where the Nominating Committee finds that it is not in the best interest of the Company for the relevant director or executive officer to continue with his current appointment, an announcement should be made on the suspension or cessation of service pursuant to Rule 704(6)(a) and the reason for the suspension or cessation.
      5.14 On the other hand, where a relevant conduct has resulted in a private sanction by the relevant authority, such information need not be disclosed as the breach is likely to be of a less serious nature and the relevant authority has deemed it appropriate for the sanction to remain confidential.
      Investigation on an issuer
      5.15 In the case where the issuer itself is involved in an investigation, the market should similarly be updated in a timely manner. In determining whether the information is material for disclosure, the Board should consider, among others:
      (a) whether the information is material to the affairs of the issuer; and
      (b) the severity of the potential breach.
      5.16 Subject to paragraph 5.15 above, the following events are likely to require immediate disclosure::
      (a) it has been contacted by a relevant authority or served with an order for the production of documents to assist in an investigation in relation to a breach of law, rule or regulation; or
      (b) it has been informed or becomes aware that any of its subsidiaries or associated companies are under investigation by a relevant authority.
      5.17 To give clarity to such events, an announcement made pursuant to paragraph 5.15 above should contain:
      (a) the name of the relevant subsidiary or associated company, where applicable;
      (b) the relevant fact and details of any other conditions or restrictions imposed by the relevant authority, where applicable;
      (c) the alleged offences and identity of the offender whom the authorities was investigating as stated in the order, where applicable; and
      (d) the Board’s statement that it will continue to monitor the progress of the investigation and to provide updates on material developments.

      6. Content of announcements

      Publication of promotional material
      6.1 Announcements on SGXNET must be balanced and fair. That is, both the positive and negative aspects of the development or prospects must be disclosed honestly and without bias. Issuers should be cautious not to mislead investors with the presentation or emphasis of certain favourable information, or omission of certain unfavourable key facts.
      6.2 In particular, paragraph 27 of Appendix 7A states that issuers should avoid the use of promotional jargon in their announcements. This does not mean that issuers should avoid disclosing developments or presenting forward looking information that are positive in nature. For example, a property development company may announce updates of its key projects attaining certain sales milestones; a technology company may announce the launch of a breakthrough product. Such announcements enable investors to assess the impact of such developments on the issuer's business and future prospects. In this regard, issuers should refer to the specific guidance provided in Appendix 7A, to ensure that their disclosures meet the requirements of being balanced and fair.
      6.3 Issuers should also avoid using SGXNET to publish third party research reports that present a favourable valuation of the issuer's shares, with the aim of driving up the share price. The publication of research reports by an issuer could be interpreted as tacit representation that its results will be close to the estimate and will likely be considered by the Exchange as a prospect statement. The report will also be subject to the same requirements as any other announcement from the issuer (for example, it must not mislead investors and must be presented in a balanced and fair manner). In addition, as stated in paragraph 12 of Appendix 7A, estimates or projections should be prepared carefully, be soundly based and should be realistic.
      Negative example:

      An issuer announced a third party research analyst's projected valuation of the issuer's securities. Upon investigation, the Exchange found that the issuer had omitted key facts from the research report in its announcement. In particular, the issuer only presented the most optimistic scenario of the analyst's valuation in the announcement, without sufficient qualification or explanation. The issuer had failed to highlight the range of possible valuation scenarios and key assumptions for each scenario that had been included in the research report.

      The Exchange took the view that the issuer was in breach of the Listing Rule requirements for announcements to be balanced and fair and took disciplinary action against the issuer.
      Sufficient information
      6.4 Announcements should contain sufficient detail to allow investors to evaluate the relative importance of the announced information to the issuer. When announcing the award of any contract or new business arrangements, for example distributorships, joint ventures and strategic alliances, an issuer must state clearly the financial impact arising from the transaction or, if there is no material impact, provide a statement to that effect. By providing the financial impact on the issuer, investors will be able to put the announcement in perspective.
      6.5 The Exchange recognises that there may be some instances where an issuer is prevented from disclosing the financial impact with certainty. One example may be the existence of certain variables that are outside the issuer's control, such as fulfillment of a contract on an ad-hoc basis or poor visibility as to when revenue is generated. Under these circumstances, the issuer should provide an explanation for the non-disclosure and sufficient information to enable investors to independently assess the financial impact taking into consideration the variables disclosed.
      6.6 The inclusion of generic or boilerplate statements is of limited use to investors. For example, vague statements such as “the issuer expects to remain profitable” or imprecise terms such as “double digit performance” do not provide useful information to investors as to the possible scale of performance expected. As another example, if a transaction will only be conducted in the next financial year, a statement merely stating that the transaction is not expected to have a material impact for the current financial year will not be meaningful. In this regard, issuers should set out the specific facts or circumstances that has affected or may affect performance, and provide insightful analysis on the impact for investors to make an informed assessment of the issuer's prospects.

      7. Other issues

      Information from third parties
      7.1 Announcements by third parties, such as industry regulators, may be considered material information. If the issuer assesses that there is material impact from these developments, it should make the necessary disclosure, with an assessment of the impact of the event.
      7.2 There may be instances where a third party releases information on behalf of, or relevant to, an issuer, for example in the case of a takeover. Where possible, issuers should ensure that the announcement provided by the third parties is made under the issuer's name, so that investors can locate all announcements relating to an issuer when they access SGXNET. Third parties and professional advisers who do not represent the issuer are also encouraged to liaise with the issuer and make necessary arrangements to release any material announcement pertaining to the issuer under the issuer's name.

      Publication on the issuer's website
      7.3 The Exchange does not prohibit issuers from disseminating information through other media such as the Internet. Issuers are reminded that any material information released on the Internet, including posting of information on its own website, should have been previously released via SGXNET, or should be simultaneously released via SGXNET.

      Analyst briefings
      7.4 The Exchange does not prohibit issuers from conducting briefings with analysts and holding meetings with groups of investors and the media. However, such meetings might create a perception that analysts, institutional investors, fund managers or media have access to information that is not generally available to the public and this may undermine investors' confidence in the existence of a level playing field. Hence, an issuer should have in place policies to minimise the risk of being perceived to be practising selective disclosure. Such policies might include pre-release of any prepared information intended for the briefings and meetings, for example slides or speeches, via SGXNET. Alternatively, as such information must not be material, non-public information, it could be released on the issuer's website with an accompanying SGXNET announcement to inform investors that additional information is available on the issuer's website. The second alternative may be preferred if the issuer intends to release large-sized files or provide a webcast of the briefing.
      7.5 Where an issuer inadvertently discloses material, non-public information during these briefings or meetings, the issuer must disseminate the information via SGXNET as promptly as possible. An issuer may, if necessary, request a trading halt in its securities.

      Response to queries from the Exchange
      7.6 The Exchange may suspend the trading of an issuer's securities if an issuer fails to respond to a query issued by the Exchange before the commencement of trading or where there is unusual market activity upon commencement of trading. The issuance of a holding announcement by the issuer stating that the Exchange is querying the issuer is not acceptable, as the investing public would still be trading on an uninformed basis. Issuers may request a trading halt to facilitate the release of announcements.

      Amended on 7 February 20207 February 2020 and 1 August 2021.

    • Practice Note 7B Monitoring and Querying Unusual Trading Activity

      Cross-referenced from Rule 703, Appendix 7A and Practice Note 7A

      Part I Introduction

      1. This Practice Note provides information on the role of the surveillance function ("Surveillance") and the procedures normally employed when an issuer is queried regarding trading in its securities.
      2. Surveillance continues to monitor price and volume movements on all Catalist securities, even though an issuer's sponsor is also responsible for having arrangements to monitor trading.

      Part II Unusual Trading Activity

      3. As set out under paragraph 20 of Appendix 7A, unusual trading activity in an issuer's securities, without it being apparent that publicly available information could account for the activity, may signify trading by persons who are acting on unannounced material information or on a rumour or report, whether true or false.
      4. The unusual market activity may not be traceable directly to unannounced information or to a rumour or report. Nevertheless, the market activity itself may be misleading to investors, who may assume that a sudden and appreciable change in the price of, or volume traded in, the issuer's securities reflects a corresponding change in its business or prospects.

      Part III Role of Surveillance

      5. Surveillance utilizes a real-time market surveillance system which employs the latest technology to automatically alert the Surveillance officers to market behaviour such as unusual price and volume movements of an issuer's securities. The Surveillance officer then examines whether public information, company specific news, counter-specific trends, industry trends, economic factors or prevailing market sentiment, can explain the market activity. If no explanation is apparent, the Exchange requires the issuer to inform the public whether it is aware of any material information that might reasonably be expected to have a significant effect on the trading volume or price of its securities.
      6. Surveillance will issue a query, depending on the extent of the unusual trading activity, measured against pre-determined thresholds set by the Exchange from time to time.
      7. Query by Surveillance
      (a) All queries will be posted on SGXNET by the Exchange immediately. The Surveillance officer will make every effort to contact the issuer's authorized representatives to alert the issuer to the Exchange's query.
      (b) The query will be emailed to the issuer and its sponsor.

      Part IV Response on Receiving a Query on Unusual Trading Activity

      8. If the issuer does not have undisclosed material information it must inform its sponsor. The sponsor is responsible for advising it regarding the response it should give to the Exchange.
      9. If the issuer has undisclosed material information it must inform its sponsor. The sponsor should advise the issuer on the response it should give to the Exchange's query and where necessary, advise the issuer to request for a trading halt or suspension.
      10. An issuer is expected to respond to a query as soon as possible. Issuers should, therefore, ensure that they are operationally ready to respond promptly. In view of the importance of maintaining a fair, orderly and transparent market, issuers and sponsors must, upon receiving a query from the Exchange, immediately undertake an enquiry to ascertain the cause of the unusual trading activity. Issuers and sponsors should have in place, procedures to ensure that the enquiry or information gathering is carried out efficiently, systematically and promptly, so that the issuer is able to disseminate all material information as soon as possible.
      11. Paragraph 22 of Appendix 7A sets out some possible causes for unusual trading and how issuers should respond to the queries based on different causes.
      12. An issuer may wish to, where appropriate, request for a trading halt or suspension of trading in its securities. If so, the issuer should contact Securities Market Control and provide a SGXNET announcement requesting for a trading halt or suspension, stating the reason for the trading halt or suspension. Where possible, it would be useful for issuers to inform investors when the issuer can respond to the Exchange's query and when the trading halt or suspension of its securities is expected to be lifted.
      13. The person providing the reply to the Exchange must be authorised by the Board to do so. The directors of the issuer must collectively and individually take responsibility for the accuracy of the replies provided to the Exchange with regards to the query raised by Surveillance.

      Part V: Keeping Track of Persons With Access to Material Information

      14. Paragraph 13 of Appendix 7A explains that material information, which is otherwise required to be disclosed under Rule 703(1), may be temporarily withheld under Rule 703(3), provided that the strictest confidentiality is maintained.
      15. To ensure the confidentiality of the information and as a matter of good corporate governance, where an issuer relies on Rule 703(3) to withhold material information, the issuer must be able to keep track of persons who gained access to the information. These persons may include internal staff or external advisers. The issuer's supervision aids in the control of information flow, as well as assists in investigations in case of information “leaks”.
      16. Unusual trading activity observed in an issuer's securities could indicate possible “leaks” of material information. In this circumstance, the Exchange may request the issuer to submit a list of persons who have access to the information (“privy persons list”). The privy persons list should typically include information on the identity of the privy persons, the circumstances under which these persons gained access to the information (i.e. became aware or involved in the transaction), and the dates on which these persons first gained access to the information. The Exchange may also ask for related information reasonably required for the proper discharge of its regulatory function.
      17. The issuer must have proper procedures in place to provide the privy persons list expeditiously to the Exchange upon request. Such procedures may include the maintenance of the privy persons list from the date the issuer first started withholding information under Rule 703(3).

      Part VI Conclusion

      18. This Practice Note sets out the normal procedures which Surveillance undertakes when querying issuers on unusual trading activities. However, there may be instances when a different approach is warranted.
      19. Issuers should also familiarize themselves with the Exchange's Continuing Obligations, Corporate Disclosure Policy and any other relevant Practice Notes.
      20. Issuers should consult their sponsors if they have queries on this matter.

      Amended on 3 March 20143 March 2014, 1 December 20151 December 2015 and 15 September 201715 September 2017.

    • Practice Note 7C Guide for Operating and Financial Review

      Cross-referenced from Rule 1204(4)

      Part I Introduction

      1. This Practice Note publishes the guide provided by the Council on Corporate Disclosure and Governance on the Operating and Financial Review in an annual report.
      2. Issuers are encouraged to follow the OFR Guide, but it is not compulsory.

      Part II OFR Guide

      3. The OFR Guide is enclosed.

      Guide for Operating and Financial Review

      INTRODUCTION

      1. The objective of the Operating and Financial Review ("OFR") in annual reports is to provide users with an understanding of the company by providing an analysis of the company's businesses as seen through the eyes of the directors and management. The OFR serves to facilitate assessment of the company's business and business objectives, its principal drivers of performance, the dynamics of the business, and the performance and financial condition of the company.
      2. Companies listed on the Singapore Exchange ("SGX") are currently required to include a discussion of their operating and financial performance and business outlook under the SGX listing rules1. This Guide provides a set of best practice guidance to listed companies in the preparation of the OFR in their annual reports, which will complement and supplement the financial statements.
      3. The approach taken in this Guide is to set out general guidance, in the form of Principles and Guidelines, on the OFR, rather than to prescribe a set of mandatory rules or requirements. Adherence with the Guide is voluntary. The Principles set out in the Guide should be regarded as fundamental to the preparation of a good OFR. The Guidelines elaborate on how those principles can be applied.
      4. Listed companies are encouraged to apply these best practices for disclosure of information in their OFRs. It is recognised that not all items in the guidelines may be relevant to all companies, as companies vary by size, industry group and other factors. The guidance should also not be regarded as a comprehensive list of the matters that might be considered by the directors and management to be relevant to an assessment of the company. The OFR should focus on those matters that are considered significant to that company as a whole. It is for the directors and management to decide how best to apply the framework of this Guide to the particular circumstances of the company.

      OBJECTIVES AND TENETS OF THE OPERATING AND FINANCIAL REVIEW

      1. The objective of the OFR is to provide users with a good understanding of the company by providing a historical and prospective analysis of the company's businesses as seen through the eyes of the directors and management. The OFR should assist the user's assessment of its performance and understanding of the future direction of the company. The OFR should focus on matters of significance to the company as a whole.
      2. The focus of the OFR is on explanations and analysis. It should contain analytical description, rather than replicate information in the financial statements. It should discuss and interpret the performance and financial condition of the company, in the context of opportunities and risks impacting the operations of the company and known or reasonably expected changes in the environment in which it operates. The OFR should discuss known trends and factors relevant to forming a view as to likely future performance. An explanation of the trends and uncertainties known to be facing the company would not require a forecast of the outcome of such uncertainties. Rather, the explanation should be sufficient to permit readers of the financial report to form their own judgements of the outcomes of such uncertainties.
      3. The benefits of particular disclosures should be balanced against any potential commercial risks to the company from the disclosure of commercially sensitive information. This Guide does not expect that disclosure be made by listed companies of information of a commercially prejudicial or sensitive nature that a reasonable person would not expect to be disclosed, for example where:—
      (a) the information concerns a trade secret;
      (b) the information concerns an incomplete proposal or negotiation; or
      (c) information comprises matters of supposition and is insufficiently definite to warrant disclosure.
      4 Information and analysis contained in the OFR should, as far as possible, be neutral and free from bias, dealing even-handedly with both good and bad aspects. The directors and management should ensure that material information is not omitted. Where the information in the OFR relates to financial information, it should be consistent with information in the audited financial statements. This should not be taken to mean that an audit of the OFR is required.

      PRINCIPLES AND GUIDELINES

      (A) Presentation of the OFR

      Principle 1
      1 The OFR should focus on matters that are relevant to investors. It should be easy for users of financial reports to understand.

      Guidelines
      1.1 The OFR should be written in a style that is clear and readily understood. It should avoid the use of technical language as far as possible. Figures and graphics may be useful to assist understanding of discussions in the OFR.
      1.2 To facilitate reference to OFR disclosures by users of the annual report, it could be useful to include the key discussions of the OFR in a distinct, stand-alone section of the annual report. However, companies may decide that, in the context of the format of their annual report, it would be preferable to incorporate some of the discussion within other sections of the annual report, such as the Chairman's statement or the Chief Executive Officer's statement.
      1.3 While the approach adopted for the presentation of the OFR may evolve over time, or differ from that adopted by other companies, disclosure should be sufficient for the user to be able to compare the information presented in the OFR of the company with that in previous periods, and with information about other companies in the same industry or sectors, where practical.
      (B) Company Overview, Objectives and Strategy

      Principle 2
      2 The OFR should describe the nature of the company, its objectives and broad strategies, and explain the main areas of operation of the company's business, as context for the discussion and analysis of performance and financial position. The discussion in the OFR should cover the group business of the listed company, including its principal subsidiaries.

      Guidelines
      2.1 The OFR should discuss the objectives for the business and broadly, management's strategy for achieving them. Objectives may be defined in terms of financial performance. Non-financial objectives may also be discussed, where relevant.
      2.2 Depending on the nature of the business, discussion of the company's business and operations might cover areas such as:—
      •   the industries, locations and markets in which the company operates;
      •   its main products and services, business processes and distribution methods, and intellectual property;
      •   the structure of the company and main operating facilities; and
      •   any significant changes to the legal, social, political and regulatory environments that influence the company.
      Principle 3
      3 The key financial and non-financial performance indicators used by management to assess the company and its performance should be discussed.

      Guidelines
      3.1 The OFR would normally include a range of financial and non-financial measures used to measure the company's performance. Comparability would be enhanced if the measures disclosed are accepted and widely used within the industry sector or more generally. Where practical, performance indicators should be compared with previous periods to outline trends.
      3.2 The measures used should be defined, and the basis for calculation explained. Comparative amounts should be disclosed. Material changes in the financial measures disclosed, including significant changes in the underlying accounting policies applied, should be identified and explained. Comparative amounts should be restated on the new basis, where practical.
      (C) Operating Review

      Principle 4
      4 The OFR should discuss the significant features of performance for the period covered by the financial report, focusing on the overall company as well as those business or geographic segments that are relevant to an understanding of the performance as a whole.

      Guidelines
      4.1 The OFR should identify and explain the main factors that affect the activities and performance of the company, and in particular discuss those that either have varied in the past or are expected to change in the future. Discussion of past performance should be supplemented by known trends and factors that are likely to affect future performance.
      4.2 Key components of the result of operations should be discussed, including major sources of revenues, where appropriate. The OFR should also discuss any significant changes in capital employed. The OFR should discuss the results in comparison with prior periods and any projections publicly disclosed by the company.
      4.3 The OFR should set out the analysis of any significant effect on performance of changes in the industry or the environment in which the company operates and of developments within the company, for example:—
      •   changes in market conditions;
      •   the introduction or announcement of new products and services;
      •   new activities, discontinued activities and other acquisitions and disposals;
      •   asset impairments; and
      •   results of any material acquisition, and extent to which published expectations at the time of acquisition have been realised.
      4.4 The analysis should cover any other special factors that have affected performance in the period under review, even where the effect cannot be quantified. Where unusual or infrequent events or transactions have affected the result for a period, the OFR should discuss their nature and impact on the company. The discussion should comment on the impact on future operations of significant post-balance sheet events. The OFR should enable users to assess the significance of the ongoing and core activities of the company and the sustainability of performance relating to those activities.
      Principle 5
      5 The OFR should discuss the dynamics and risk factors of the business. Guidelines
      5.1 This should include a discussion identifying the significant opportunities, risks and threats facing the business, together with a commentary on the strategies and processes applied to managing them, and in qualitative terms, the nature of their potential impact on performance. Known factors and influences that may have a material effect on future performance and financial position, particularly within the 12 months from the date when the financial statements are authorised for issue, should be discussed.
      5.2 A commentary on the strengths and resources of the business that should assist the company in the pursuit of its objectives would be useful. This could include items that are not reflected in the balance sheet, e.g corporate reputation and brand equity, licences, patents, copyrights and trademarks, and research and development.
      Principle 6
      6 The OFR should comment on investments and measures to maintain and enhance the position and profitability of the company.

      Guidelines
      6.1 The nature of activities and expenditure by the company to maintain and enhance the position and profitability of the company should be discussed. It could include description of major projects that involve capital expenditure being undertaken by the company. Qualitative information as to the benefits expected from such activities and expenditure could be given.
      (D) Financial Review

      Principle 7
      7 The OFR should identify and explain significant matters which affect the company's financial condition. It should discuss the capital structure and capital management policies of the company, its treasury policy, the dynamics of the company's financial position and its funding and liquidity position.

      Guidelines
      7.1 The OFR should contain a discussion of the capital structure of the company, including the maturity profile of its debt, type of financial instruments used and currency and interest rate exposures. This could include comments on the company's debt rating and relevant ratios such as interest cover and debt/equity ratios. The purpose and effect of major financing transactions undertaken up to the date the financial statements are authorised for issue should be explained.
      7.2 The discussion should cover the capital funding and treasury policies and objectives that are significant to the company's performance. The types of items that might be discussed include:—
      •   the currencies in which borrowings are made and in which cash and cash equivalents are held;
      •   maturity profile of borrowings and extent of fixed-rate borrowings;
      •   mix between equity and debt financing;
      •   significant investments held;
      •   risk management policies;
      •   hedging policies and the use of financial instruments for hedging;
      •   use of special purpose entities and other off-balance sheet arrangements; and
      •   capital management, including share buy-backs and capital restructuring.
      7.3 To assist understanding of the cash flow and liquidity position of the company, the cash generated from operations, and other cash flows during the period under review should be discussed. The OFR should comment on any special factors that influenced cash flows in the current period and any known factors that may have a significant effect on future cash flows.
      7.4 The company's liquidity and funding at the end of the period under review should be discussed. Discussion of significant funding requirements for capital expenditure and servicing of borrowings would be useful. The OFR could also comment on the level of borrowings, the seasonality of borrowing requirements, undrawn financing facilities and the maturity profile of both borrowings and undrawn committed borrowing facilities.
      7.5 Where the company has entered into covenants with lenders which could have the effect of restricting the use of credit facilities and a material breach of a covenant has occurred or is expected to occur, the measures taken or proposed to remedy the situation should be disclosed.
      7.6 To facilitate the user's understanding of the financial statements, it would be useful for the OFR to identify and discuss the critical accounting policies, estimates and judgements made that are key to the interpretation of the company's financial statements. Such information would be particularly relevant for areas where subjective judgements are involved or for companies with complex financial structures.
      Principle 8
      8 The OFR should discuss the overall return attributable to shareholders, including distributions and share repurchases.

      Guidelines
      8.1 All forms of shareholder returns, including share buy-backs, dividend distribution, other forms of return of capital and shareholder plans should be discussed and their effects should be explained. The OFR should also include a commentary on the various factors (including profitability) contributing to the dividend for the financial year, including the overall dividend policy.

      1 Rule 1204(4).

    • Practice Note 7D Corporate Actions Requiring the Engagement of a Sponsor

      Cross-referenced from Rule 746(3) and definition of "corporate finance advisory work"

      Added on 30 March 200930 March 2009.

      Part I Introduction

      1. This Practice Note provides guidance on when the engagement of a sponsor would be required pursuant to Rule 746(3).
      2. Issuers should consult with their sponsors with respect to the application of the rules. When in doubt, sponsors must consult the Exchange.
      3. Rule 746(3) states that where an issuer requires a professional to provide corporate finance advice in relation to any corporate action, it may engage its sponsor or any other sponsor authorised by the Exchange to provide such advice. Arising from this Rule, a sponsor is generally required for the provision of corporate finance advice, having regard to their obligations to advise the issuer on compliance with Catalist Rules.
      4. A sponsor is however not required in situations where the Rules to be complied with are procedural in nature and thus expected to pose less regulatory risks. Non-sponsor professionals providing corporate finance advice in such situations should nevertheless have an established track record of discharging their responsibilities properly in similar roles.

      Part II Corporate Actions that Require a Sponsor

      5. For the purpose of complying with Rule 746(3), an issuer is required to engage a sponsor to provide corporate finance advice in relation to the following corporate actions or transactions:—
      a. transfer of listing to SGX Main Board pursuant to Rule 408;
      b. issue of securities, including rights issue or placement of shares; company warrants; or other convertible securities, for cash or as consideration for an acquisition notwithstanding that the acquisition is not a Major Transaction, except where the issue of securities falls under paragraph 6(c) below;
      c. issue of shares or convertible securities or options by a principal subsidiary pursuant to Rule 805(2);
      d. approval of a share option scheme or share scheme pursuant to Rule 842(3) where the terms of the scheme may be prejudicial to the interest of shareholders;
      e. capital reduction or distribution;
      f. approval of a scrip dividend scheme where the terms of the scheme may be prejudicial to shareholders;
      g. Interested Person Transaction ("IPT") requiring specific shareholders' approval pursuant to Chapter 9 of the Catalist Rules, including the provision of independent financial advice;
      h. Major Transaction under Rule 1014 ("Major Transaction");
      i. Very Substantial Acquisition or Reverse Takeover under Rule 1015, in which case a Full Sponsor is required;
      j. independent financial advice in relation to a whitewash resolution or an issuer which is the subject of a takeover, as required pursuant to the Singapore Code of Takeovers and Mergers;
      k. Scheme of Arrangement; and
      l. delisting pursuant to Rule 1305 or 1307, including the provision of independent financial advice pursuant to Rule 1308(2) on the exit offer.
      6. An issuer is not required to engage a sponsor for corporate finance advice in relation to the following corporate action or transactions:—
      a. approval or renewal of a General Share Issue Mandate pursuant to Rule 806;
      b. approval or renewal of a Share Buy-Back Mandate pursuant to Rule 866;
      c. issue of securities pursuant to an employee or performance share/share option plan, bonus issue, scrip dividend, or stock/share split or consolidation;
      d. approval or renewal of a share or share option scheme, except where the scheme falls under paragraph 5(d) above;
      e. approval of a scrip dividend scheme, except where the scheme falls under paragraph 5(f) above;
      f. approval or renewal of an IPT Mandate pursuant to Chapter 9 of the Catalist Rules, including the provision of independent financial advice; and
      g. alteration of its memorandum or articles of association.
      7. The corporate actions or transactions which are set out in this Practice Note are not exhaustive. Where a particular corporate action or transaction being contemplated by an issuer does not fall within paragraphs 5 or 6 above, the issuer must consult with its sponsor. When in doubt, sponsors must consult the Exchange.

      Part III Engagement of Financial Advisors by Issuers and Sponsors

      8. Rule 746(3) allows an issuer to engage its sponsor or any other sponsor authorised by the Exchange to provide corporate finance advice. Where another sponsor is appointed, the continuing sponsor of the issuer shall retain overall management and responsibility for the corporate action or transaction, principally with regards to advising the issuer on compliance with Catalist Rules and the proper discharge of the sponsor's obligations pursuant to Rule 226(4).
      9. Where a sponsor is engaged to provide corporate finance advice, such sponsor may choose to outsource part of its work to other financial advisors, which need not also be a sponsor. The continuing sponsor of the issuer shall retain overall management and responsibility for the corporate action or transaction including the work done by such outsourced advisor(s).
      10. While such outsourced advisors may be named in documents, announcements and circulars as appropriate for the roles in which they performed for the corporate action or transaction, for avoidance of doubt, such document, announcement or circular should also state clearly that the continuing sponsor of the issuer retains overall responsibility for the corporate action or transaction.
    • Practice Note 7E General Meetings

      Cross-referenced from Rule 704(15) and 730A

      1. Introduction

      1.1 This Practice Note provides guidance on the conduct of general meetings.

      2. Location of general meeting

      2.1 An issuer shall hold all its general meetings in Singapore, unless prohibited by relevant laws and regulations in the jurisdiction of its incorporation.
      2.2 General meetings are important avenues for shareholders to voice their opinion and seek clarifications from the Board and management on matters relating to an issuer. At these meetings, shareholders are given the opportunity to meet with the management team, the external auditors and key members of the Board, such as the Chairman, the Audit Committee Chairman and the independent directors. This enhances the quality of communication between the issuer and its shareholders.
      2.3 Issuers may be required by the laws and regulations of their country of incorporation to hold general meetings within their jurisdictions. Such issuers will be required to demonstrate to the Exchange the restrictions in their jurisdictions that prohibit general meetings from being held outside their country of incorporation.
      2.4 Issuers who hold general meetings outside Singapore should hold information meetings for the shareholders in Singapore. These provide an avenue for the shareholders in Singapore to interact directly with the Board and management of the issuers as they would at the general meetings. Where the general meetings are held in jurisdictions other than Singapore, the issuers should make arrangements such as video conference or webcast to enable the shareholders based in Singapore to follow the proceedings during the general meetings.
      2.5 The Exchange recognizes that there could be other circumstances which call for an issuer to hold its general meetings outside Singapore, such as to reach a larger public shareholder base, if most of its shareholders are based outside Singapore. The Exchange is prepared to consider these circumstances on a case-by-case basis. Issuers should consult the Exchange on the applicability of Rule 730A(1) in the event of any doubt.
      2.6 An issuer is required to disclose the circumstances under which its general meetings are convened outside Singapore in the following:—
      (a) offer document, shareholder circular or relevant document if the arrangement to hold the general meetings outside Singapore is known at the time of listing; and
      (b) SGXNET announcement when the arrangement to hold the general meetings outside Singapore is approved by the Exchange after listing.

      3. Proxy voting

      3.1 An issuer should encourage its shareholders to attend, speak and vote at its general meetings in person. If shareholders are unable to attend in person, they should be allowed to appoint proxies to represent them.
      3.2 Proxy forms must be designed clearly to allow a shareholder appointing a proxy to indicate how the shareholder would like the proxy to vote in relation to each resolution.
      3.3 If a shareholder submits a proxy form and subsequently attends the meeting in person and votes, the appointment of the proxy should be revoked. There must be sufficient systems or processes in place at the meeting to identify and cancel the appointment of the proxy at the point when the shareholder attends the meeting.

      Added on 1 January 20141 January 2014.

    • Practice Note 7F Sustainability Reporting Guide

      Cross-referenced from Rules 711A and 711B

      1. Introduction

      1.1 Listing Rule 711A requires every issuer to prepare an annual sustainability report, which must describe the issuer's sustainability practices with reference to the primary components set out in Listing Rule 711B on a 'comply or explain' basis (other than as required under Listing Rule 711B(2)). This Practice Note contains the Sustainability Reporting Guide (the "Guide"), which provides guidance on the expected structure and contents and the preparation of the sustainability report.
      1.2 Sustainability reporting disclosure does not detract from the issuer's obligation to disclose any information that is necessary to avoid the establishment of a false market in the issuer's securities or would be likely to materially affect the price or value of its securities pursuant to Listing Rule 703.
      1.3 A glossary of the common terms used in the Guide is set out in paragraph 8 of this Guide.

      2. Policy Statement on Sustainability Reporting

      2.1 Issuers make regular financial reports to their investors that are used for assessment of the likelihood of repayment (in the case of debt securities) and the returns on investment (in the case of equity securities). Increasingly, investors are demanding that issuers also disclose sustainability information.
      2.2 Reflecting these expectations, financial reports increasingly need to be supplemented by descriptive and quantitative information on how business is conducted and the sustainability of the current business into the future.
      2.3 SGX believes that the addition of sustainability reporting to financial reporting provides a more comprehensive picture of the issuer: statements of financial position and comprehensive income provide a snapshot of the present and an account of the past year, while sustainability reports of environmental, social and governance (“ESG”) factors show the risks and opportunities within sight, managed for future returns. Taken together, the combined financial and sustainability reports enable a better assessment of the issuer's financial prospects and quality of management.
      2.4 To achieve the additional transparency which encourages efficiency and innovation, SGX-ST requires each issuer to publish an annual sustainability report, describing the primary components on a 'comply or explain' basis, and in relation to the primary component in Listing Rule 711B(1)(aa) where the issuer is in any of the industries identified in paragraph 4.9 of this Guide, on a mandatory basis, in accordance with the Listing Rules. This Guide provides guidance to the issuer on compliance with the requirements under the Listing Rules.

      3. Principles

      Board responsibility

      3.1 The Code states as its preamble that sustainability, together with accountability and transparency, is a tenet of good governance. It provides that the Board is collectively responsible for the long-term success of the issuer, and the Board's role includes setting strategic objectives which should include appropriate focus on sustainability. The Board has ultimate responsibility for the issuer's sustainability reporting. Consistent with its role, the Board should determine the ESG factors identified as material to the business and see to it that they are monitored and managed. Management has responsibility to ensure that the ESG factors are monitored on an ongoing basis and properly managed. The Board's close interaction with management will enable the Board to satisfy itself on the way sustainability governance is structured and functioning through the various levels of management. If any question is raised regarding the issuer's sustainability reporting, the Board and management should make sure it is addressed.

      'Comply or explain'

      3.2 Each issuer is required to prepare an annual sustainability report. The sustainability report must include the primary components as set out in Listing Rule 711B on a 'comply or explain' basis (other than as required under Listing Rule 711B(2)). Where the issuer cannot report on any primary component, the issuer must state so and explain what it does instead and the reasons for doing so. As set out in Listing Rule 711B(2), an issuer in any of the industries identified in paragraph 4.9 of this Guide may not exclude the primary component in Listing Rule 711B(1)(aa).

      Report risks as well as opportunities

      3.3 In identifying material ESG factors, the issuer should consider both risks and opportunities. In addition, it is conceptually sound, and validated by experience, that risks well-managed represent strengths which can be applied to fulfill opportunities. The risks and opportunities within sight have direct bearing on strategies and operations and should be reported for clearer understanding of the issuer's performance, prospects and management quality. To facilitate understanding, issuers should give the whole explanation in a concise manner.

      Balanced reporting

      3.4 In reporting on sustainability, care should be taken to give an accurate and balanced view. There may be a tendency to give more prominence to what is favourable and understate what is negative. Both situations require comprehensive explanations. In reporting performance, factors beyond the issuer's control are as relevant to exceeding the target as to a performance shortfall. In the event of underperformance, the issuer's response is also important and should be included to bring about confidence in its longer term sustainability objectives.

      Global standards and comparability

      3.5 The issuer needs to give priority to using globally-recognised frameworks and disclosure practices to guide its reporting. The recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) have gained widespread acceptance in international markets as a common framework to disclose climate-related financial information. The increasingly borderless markets for funds as well as for goods and services mean that corporate reporting standards tend to gravitate toward global best practice. Added to this is the international character of SGX-ST both in terms of issuers as well as investors. The individual issuer should take care that its disclosure efforts not be considered inadequate by stakeholders. Where the issuer is applying a portion of a particular framework, the issuer should provide a general description of the extent of the issuer's application of the framework.

      Stakeholder engagement

      3.6 The issuer's responsibility on disclosure, including annual reports and sustainability reports, is first and foremost to current and potential shareholders, i.e. the investing public. Interaction of the issuer with its other stakeholders is also of interest to investors for its relevance to sustainability across the value chain of the issuer. The views of stakeholders also contribute to inform the issuer's identification of material ESG factors. On a continuing basis, regular and sustained engagement with stakeholders provides the issuer with an up-to-date picture of its sustainability within both its business and physical environments. The material outcomes of such engagement should be included in the sustainability report.

      4. Contents of Sustainability Reporting

      Primary components

      4.1 The sustainability report should comprise the following primary components:
       
      (a) Material ESG factors. The sustainability report should identify the material ESG factors, and describe both the reasons for and the process of selection, taking into consideration their relevance or impact to the business, strategy, financial planning, business model and key stakeholders.
      (b) Climate-related disclosures. The sustainability report should contain disclosures related to climate risks and opportunities, consistent with the TCFD recommendations.
      (c) Policies, practices and performance. The sustainability report should set out the issuer's policies, practices and performance in relation to the material ESG factors identified, providing descriptive and quantitative information on each of the identified material ESG factors for the reporting period. Performance should be described in the context of previously disclosed targets.
      (d) Targets. The sustainability report should set out the issuer's targets for the forthcoming year in relation to each material ESG factor identified. Targets should be considered for defined short, medium and long term horizons, and if not consistent with those used for strategic planning and financial reporting, the reasons for the inconsistency should be disclosed.
      (e) Sustainability reporting framework. The issuer should select a sustainability reporting framework (or frameworks) to guide its reporting and disclosure. For climate-related disclosures, the issuer should report based on the TCFD recommendations. The sustainability reporting framework(s) selected should be appropriate for and suited to its industry and business model. The issuer should state the name of the framework(s), explain its reasons for choosing the framework(s) and provide a general description of the extent of the issuer's application of the framework(s).
      (f) Board statement. The sustainability report should contain a statement of the Board that it has considered sustainability issues in the issuer’s business and strategy, determined the material ESG factors and overseen the management and monitoring of the material ESG factors. In addition, the sustainability report should describe the roles of the Board and the management in the governance of sustainability issues.

      Identification of material ESG factors

      4.2 The issuer should review its business in the context of the value chain and determine what 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 the issuer.
      4.3 In broad terms, environmental factors would include materials, energy, biodiversity, water, greenhouse gas (“GHG”) emissions, effluents and waste as well as environmental complaint mechanisms. Social factors would include health and safety, employment practices and labour rights such as collective bargaining, product responsibility, anti-corruption, supplier assessments and impact of direct and supply chain activities on local communities. The framework chosen is likely to have additional factors that the issuer would report on.
      4.4 Corruption is a factor on which many investors require reassurance, whether inducement is being offered to employees or by employees to others. Where corruption has been addressed in the Corporate Governance report, the issuer may refer to that report. If corruption is not assessed to be a material ESG factor by the issuer, where stakeholders express sufficient interest in the information, the issuer is advised to state its policy and safeguards on its website.
      4.5 Gender, skills and experience have been highlighted as diversity indicators material to business sustainability. Diversity greatly enhances the issuer's capacity for breadth of input and perspectives into decision making, risk alertness and responsiveness to change. The issuer should be aware of this trend and assess whether diversity is a material social factor in its business. It should engage stakeholders in assessing the necessity of reporting on this matter. In satisfying investors and other stakeholders, diversity should be examined through broad levels of staff and also importantly, in the Board. Where other sections of the annual report sufficiently address stakeholders’ interest in diversity, the issuer may refer to those sections.
      4.6 The issuer should consider not just its internal circle of operations but also widen that circle to include persons and processes in the value chain that contribute to the issuer's product or service. Parts of the business outsourced to third parties (for example, freight and logistics), as well as downstream processes (for example, product defect response), constitute an integral part of the issuer's business and need to be included in the sustainability report.

      Climate-related disclosures

      4.7 Climate change threatens to disrupt businesses in a precipitous and potentially devastating manner, with consequential detrimental effects on their stakeholders and providers of capital. Conversely, it also opens up new markets for solutions that respond to the threat. Investors need to properly understand the climate-related risks and opportunities of their portfolio in order to price or value their investments.
      4.8 Securities markets promote the ready availability of decision-useful information so that it may be reflected in the price discovery process. In doing so, exchanges facilitate the allocation of capital to its most efficient use and the transfer of risks to those most willing to bear them.
      4.9 The issuer should provide climate-related disclosures, consistent with the TCFD recommendations. An issuer in any of the following industries identified by the TCFD as most affected by climate change and the transition to a lower-carbon economy will be prioritised to provide mandatory climate-related disclosures, consistent with the TCFD recommendations:
       
      For All Financial Years Commencing Industry (as identified by TCFD)
      1 January 2023 Financial
      Agriculture, Food and Forest Products
      Energy
      1 January 2024 Materials and Buildings
      Transportation
      4.10 Climate-related risks and opportunities are likely to impact the issuer’s future financial position and performance, as reflected in its income statement, cash flow statement and balance sheet. The TCFD sets out recommendations to help organisations disclose climate-related financial information that would be useful to investors, lenders and insurance underwriters. More broadly, this information may also be of interest to other stakeholders.
       
      Figure 1: Climate-related risks, opportunities, and financial impact
      Source: TCFD
      4.11 The TCFD developed recommended disclosures across four pillars: governance, strategy, risk management, and metrics and targets. The recommended disclosures provide an explanation on the requisite disclosures to fulfil the requirements of the four pillars.
       
      Figure 2: TCFD recommendations and supporting recommended disclosures
      Source: TCFD
      4.12 The TCFD recommendations are consistent with the requirements in the Listing Rules and this Guide. A mapping table is set out below:
       
      TCFD Recommendations Listing Rules and Guide
      Governance
      Describe the board’s oversight of climate-related risks and opportunities. The sustainability report should contain a statement of the Board that it has considered sustainability issues in the issuer’s business and strategy, determined the material ESG factors and overseen the management and monitoring of the material ESG factors. Listing Rule 711B(1)(e) and paragraph 4.1(f) of this Guide
      Describe management’s role in assessing and managing climate-related risks and opportunities. The sustainability report should describe the roles of the management in the governance of sustainability issues. Listing Rule 711B(1)(e) and paragraph 4.1(f) of this Guide
      Strategy
      Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term. The sustainability report should contain the material ESG factors, which are the most important ESG risks and opportunities that will act as barriers or enablers to achieving business goals in the short, medium and long term. Listing Rule 711B(1)(a) and paragraph 4.18 of this Guide
      Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning. The sustainability report should describe both the reasons for and the process of selection of the material ESG factors, taking into consideration their relevance or impact to the business, strategy, financial planning, business model and key stakeholders. Paragraph 4.1(a) of this Guide
      Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. The sustainability report should describe how resilient the issuer’s strategies are to climate-related risks and opportunities, taking into consideration a transition to a lower-carbon economy consistent with a 2°C or lower scenario and, where relevant, scenarios consistent with increased physical climate-related risks. Paragraph 4.15 of this Guide
      Risk Management
      Describe the organisation’s processes for identifying and assessing climate-related risks. The issuer is expected to report the criteria and process by which it has made its selection with reference to how the material ESG factors contribute to the creation of value for the issuer. Paragraph 4.2 of this Guide
      Describe the organisation’s processes for managing climate-related risks. The issuer should devise policies and processes to adequately and effectively manage the risks associated with the identified material ESG factors, and describe key features of mitigation. Paragraph 4.26 of this Guide
      Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management. The issuer should use risk ranking and prioritisation to distil the material ESG factors. This process is similar to the widely-practised Enterprise Risk Management (“ERM”) process. The issuer should expand the breadth of the assessment to integrate ESG risk management structures into existing ERM structures or apply existing ERM structures to ESG risk management structures. Paragraph 4.21 of this Guide
      Metrics and Targets
      Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. A description of the ESG practices and performance across historical and the current reporting periods allows investors and the issuer itself to track its progress. These metrics also form the baseline from which the issuer chooses to set its targets, as informed by its strategic plan and financial reporting. Paragraph 4.27 of this Guide
      Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions, and the related risks. The sustainability report should provide climate-related disclosures, consistent with the TCFD recommendations. TCFD recommends disclosure of the issuer’s Scope 1 and Scope 2, and if appropriate, Scope 3 GHG emissions. An internationally accepted GHG accounting system, such as the GHG Protocol should be used to measure the GHG emissions. These disclosures should include the methodologies and emission factors used. Listing Rule 711B(1)(aa) and paragraph 4.14 of this Guide
      Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. The sustainability report should set out the issuer's targets for the forthcoming year in relation to each material ESG factor identified. Targets should be considered for defined short, medium and long term horizons, and if not consistent with those used for strategic planning and financial reporting, the reasons for the inconsistency should be disclosed.

      The sustainability report should set out the issuer's performance in relation to the material ESG factors identified, providing descriptive and quantitative information on each of the identified material ESG factors for the reporting period. Performance should be described in the context of previously disclosed targets.
      Listing Rules 711B(1)(b) and 711B(1)(c) and paragraphs 4.1(c) and 4.1(d) of this Guide
      4.13 TCFD has issued both general and sector-specific guidance, as well as additional supporting materials, on implementing the TCFD recommendations. The sector-specific guidance highlights important considerations for the financial sector and non-financial sectors potentially most affected by climate change, and provides a fuller picture of potential climate-related financial impact in those sectors. The additional supporting materials provide guidance on specific topics intended to help address identified challenges in the preparer’s implementation of key components of the TCFD recommendations, such as on scenario analysis, and metrics and targets. The Sustainable Stock Exchanges initiative has also developed a checklist in its model guidance (“SSE Model Guidance”) on the implementation of the TCFD recommendations. The issuer is encouraged to refer to the TCFD’s supplemental guidance and additional supporting materials to guide its disclosure consistent with the TCFD recommendations, and use the checklist in the SSE Model Guidance to determine whether the information recommended for disclosure by the TCFD are contained in its sustainability report.
      4.14 TCFD recommends disclosure of the issuer’s Scope 1 and Scope 2, and if appropriate, Scope 3 GHG emissions. An internationally accepted GHG accounting system, such as the GHG Protocol should be used to measure the GHG emissions. These disclosures should include the methodologies and emission factors used. For industries with high energy consumption, it may also be important to provide emission intensity per unit of economic output (for example, unit of production or revenue).
      4.15 TCFD also recommends conducting scenario analysis to identify and effectively assess the potential implications of a range of plausible future conditions due to the uncertainty of climate-related changes. Conducting scenario analysis is not an exercise in forecasts, predictions or sensitivity analyses, but rather in evaluating resilience to different possible future scenarios. To reduce the risks and impacts of climate change, almost all countries have agreed to take action in limiting global warming to well below 2°C above pre-industrial levels, while pursuing efforts to arrest the increase to 1.5°C above pre-industrial levels. The issuer should describe how resilient its strategies are to climate-related risks and opportunities, taking into consideration a transition to a lower-carbon economy consistent with a 2°C or lower scenario and, where relevant, scenarios consistent with increased physical climate-related risks.
      4.16 An issuer new to scenario analysis can consider starting with qualitative scenario narratives to explore the potential range of implications. As it gains more experience, it can consider using quantitative information to describe the potential outcomes, and to enhance the rigour of that analysis.
      4.17 The SSE Model Guidance sets out a simplified three stage process to the conduct of scenario analysis. First, the issuer should identify appropriate scenarios that align with its underlying assumptions and the key risks and opportunities of its sector or industry, and clearly explain the scenarios used. Second, the issuer may set boundaries of its scenario analysis with sufficient disclosure of the reasons for exclusion and inclusion. A smaller issuer may feel that an analysis of the direct operations sufficiently covers the climate-related risks and opportunities within each scenario, while a larger issuer and those in the financial sector should expand their analysis beyond their direct operations to include indirect GHG emissions (i.e. Scope 3 GHG emissions). Third, an issuer should evaluate its physical and transitional risks within the scenarios chosen. Mapping the severity and likelihood of the risks enables the issuer to develop a strategic plan for future scenarios.

      Materiality

      4.18 As guidance, sustainability reporting relates to the most important ESG risks and opportunities that will act as barriers or enablers to achieving business goals in the short, medium and long term. The omission or misstatement of these risks or opportunities could influence the decisions of investors. The sustainability reporting framework selected by the issuer may also contain a definition of materiality that the issuer should consider.
      4.19 Generally, what is material in sustainability reporting would also be considered material in financial terms, if not in the immediate period, then over time.
      4.20 In assessing materiality of the ESG factors on which it reports, the issuer should first satisfy itself of the relevance of selected factors to its business strategy and outcomes. This has the benefit of focusing both executives and employees on uniform key risks and opportunities that deliver (or impede) desired outcomes.
      4.21 The issuer should use risk ranking and prioritisation to distil the material ESG factors. This process is similar to the widely-practised Enterprise Risk Management ("ERM") process. The issuer should expand the breadth of the assessment to integrate ESG risk management structures into existing ERM structures or apply existing ERM structures to ESG risk management structures.
      4.22 The Board should determine the material ESG factors and the issuer's response to the attendant risks and opportunities. Discussion with stakeholders contributes to an accurate appreciation of what is important in the business on an ongoing basis.

      Possible process and tools

      4.23 A possible process for assessing ESG factors with material relevance to the business and business model are set out in the following paragraphs.
      4.24 In assessing materiality of the ESG factors on which it reports, the issuer may consider:
       
      (a) Value drivers
      (b) Stakeholder engagement
      (c) Risk management
      (d) External factors, for example sector, geography, economics, market, social, environment
      (e) Internal factors, for example business model, business cycle, strategy
      (f) Qualitative perspectives, for example operational, strategic, reputational and regulatory
      (g) Timeframe of these considerations
      4.25 The issuer may use the following Materiality Determination Process: Identify — Rate — Prioritise — Validate. The issuer should disclose the outcomes of this process in its sustainability report.
       
      (a) STEP 1: IDENTIFY. The issuer should identify the most pressing (material) factors (impact/opportunities) for the issuer (or for each subsidiary in the group). It will also help formulate management's approach and response, and identify where data collection needs to be strengthened.
      (b) STEP 2: RATE. Once the issues of the issuer and its subsidiaries have been explored, the issuer will need to cluster similar issues e.g. safety and health issues can be clustered together. If the issuer is a holding company, a rating process can be done to assess what issues are pervasive/most common across the group.
      (c) STEP 3: PRIORITISE. Once the issues of the issuer and its subsidiaries have been clustered and rated, the issuer will need to prioritise them using a matrix based on likelihood and impact.
      (d) STEP 4: VALIDATE. Once the issuer has prioritised its factors, they need to be internally validated and signed off by leadership.

      Policies, practices and performance

      4.26 The issuer should devise policies and processes to adequately and effectively manage the risks associated with the identified material ESG factors, and describe key features of mitigation.
      4.27 A description of the ESG practices and performance across historical and the current reporting periods allows investors and the issuer itself to track its progress. These metrics also form the baseline from which the issuer chooses to set its targets, as informed by its strategic plan and financial reporting.
      4.28 An effective policy and operational response to sustainability risks and opportunities requires performance measurement and its linkage to performance incentives. Having a good performance measurement system allows the issuer to benchmark performance against stated objectives and facilitates comparison over time and across entities. Clearly linking sustainability risks and opportunities with strategy, other organisational risks, operational indicators, performance measures and performance incentives not only enhances understanding but provides an engine for improvement, innovation and accountability.
      4.29 A clear description of the issuer’s substantive response to ESG risks and opportunities, with a focus on its policies, practices and performance against targets, will bolster investors’ confidence in the Board and management.

      Sustainability reporting framework

      4.30 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 for its wider acceptance in an increasingly global marketplace. The issuer can be more easily understood and compared with its peers in Singapore as well as in other jurisdictions across the world. The issuer should exercise considerable caution if it chooses to deviate from generally-accepted frameworks.
      4.31 Among the well-known and globally-recognised sustainability reporting frameworks, the Global Reporting Initiative (“GRI”) Sustainability Reporting Guidelines set out generic sustainability factors and general principles and indicators that an issuer can use to report sustainability policies, practices, performance and targets. The International Integrated Reporting Council's (“IIRC”) Framework (“<IR>”) also sets out a general framework for reporting. An issuer using <IR> should consider ESG factors when determining their material factors for inclusion in the integrated report. The issuer may also consider referring to the Sustainability Accounting Standards Board's (“SASB”) standards which adopt an industry-specific approach to material ESG factors. IIRC and SASB have merged to form the Value Reporting Foundation. More than one sustainability reporting framework may be chosen as relevant to the issuer's business.
      4.32 For climate-related disclosures, the issuer should provide such disclosures consistent with the TCFD recommendations. Some issuers have used the Science Based Targets initiative to guide their GHG emissions reduction targets.
      4.33 The issuer is expected to follow the chosen framework(s) from year to year and build up its knowledge and understanding of how to report effectively. In turn, it can expect to be building up investors' and stakeholders' understanding, leading to increased confidence. In the absence of regulatory changes, only major changes in business strategy and/or model are likely to require change in sustainability reporting framework. This does not preclude examination of framework relevance from time to time.

      Time horizons used in the sustainability report

      4.34 In making its sustainability report, the issuer should consider whether it would be useful to report matters for their relevance in the short, medium and long term. Accordingly, sustainability policies, practices, performance and targets would be considered along the same time horizons. The time horizons should be internally consistent with those used for strategic planning and financial reporting (e.g. useful life of assets, impairment testing etc.). Where they are not consistent, the reasons for the inconsistency should be disclosed. Typically the short-term is considered less than one year for banking and financial instruments. For the medium term, the issuer may wish to take reference from their typical planning horizon, investment cycle or plant renewal or other considerations relevant to its business. The long-term should be a useful time horizon over which expectations can be formed and efforts planned.

      Stakeholder engagement

      4.35 Stakeholder engagement is integral to any business and would be conducted regularly. The issuer should consider ESG factors in their engagement with stakeholders, not just with investors, but also customers, staff, suppliers, regulators, local communities and others in the value chain. The issuer should monitor carefully its communication with stakeholders so as to avoid any information asymmetry as it may lead to unfair trading in the securities market.

      Group and investment holding company reporting

      4.36 Where holding companies and operating subsidiaries are both listed and have to undertake sustainability reporting, the operating entities can report on the ESG factors within their scope of operations. If the ESG factors are also material to the holding company, the holding company may make reference in its sustainability report to the sustainability reports of the operating subsidiaries. If the holding company has material investee companies which are not subsidiaries, its sustainability report should include the selection and management of these investee companies.

      5. Internal Reviews and External Assurance

      5.1 Internal reviews and external assurance increase stakeholder confidence in the accuracy and reliability of the sustainability information disclosed.
      5.2 These procedures over sustainability disclosures should be aligned with the issuer’s existing internal review or external assurance frameworks for other management information, such as financial information or production data.
      5.3 An internal review of the sustainability reporting process builds on the issuer’s existing governance structure, buttressed by adequate and effective internal controls and risk management systems. The internal audit function conducts the internal review, and may involve relevant functions, such as risk management, sustainability or other specialist functions. The identified processes relating to sustainability reporting should be incorporated into the internal audit plan, which should cover key aspects of the sustainability report; the review may take place over an audit cycle, which may span one or a few years in accordance with risk-based planning, as approved by the Audit Committee. The expectations of the Board, management and other stakeholders should be considered as part of the prioritisation. The internal review should be conducted in accordance with the International Standards for the Professional Practice of Internal Auditing issued by The Institute of Internal Auditors.
      5.4 An issuer whose sustainability reporting has already matured after several annual exercises would want to undertake external assurance by independent professional bodies to add credibility to the information disclosed and analysis undertaken. The issuer is encouraged to consider independent external assurance on selected important aspects of its sustainability report even in its initial years, expanding coverage in succeeding years.
      5.5 External assurance involves the engagement of a third party. The scope of the assurance may include a materiality assessment, and cover different aspects of the sustainability disclosures, for example:
       
      (a) data and its associated data collection process;
      (b) narratives;
      (c) compliance with the specified sustainability reporting framework;
      (d) process to identify sustainability information reported; and
      (e) compliance with the Listing Rules.
      5.6 External assurance should be performed in accordance with recognised assurance standards, for example the International Standard on Assurance Engagements (ISAE) 3000, the Singapore Standards on Assurance Engagement (SSAE) 3000, the AA 1000 Assurance Standards or the ISO.
      5.7 An issuer that has conducted external assurance should disclose, in the sustainability report, that external assurance has been conducted, including the scope covered, the identity of the external assurer, the standards used and key findings.

      6. Form and Frequency of Sustainability Reporting

      6.1 The issuer should report on sustainability at least once a year. The issuer's sustainability disclosure may be done in its annual report. The inclusion of sustainability risks and opportunities with the businesses' other risks and strategy in the same document presents advantages to the user. Sustainability reports contained within annual reports would observe annual report deadlines. Alternatively, if more appropriate for the circumstances of the issuer, the issuer may include a summary in its annual report and issue a full standalone sustainability report within 4 months of the end of the financial year, or where the issuer has conducted external assurance on the sustainability report, within 5 months of the end of the financial year.
      6.2 In either case, the issuer should make available its sustainability reports on SGXNet and on its company website. After a few years of sustainability reporting, the issuer may wish to maintain static information, such as, policies and historical sustainability information, on its website while presenting the current year's changes as well as performance in the annual sustainability report.
      6.3 To provide sufficient time for preparation, an issuer in its first year of reporting may report within 12 months of the end of its financial year.

      7. Phased Approach

      7.1 For the first year of sustainability reporting, the issuer should have at least the assessment of material ESG factors, policies and/or practices to address the factors; but if their reporting is lacking in qualitative or quantitative descriptions, they need only state progressive targets for reaching maturity of reporting and do their best to meet them in subsequent years. Compliance with the TCFD recommendations may also take place progressively.
      7.2 An example of a phased implementation approach is illustrated in the table below:
       

      Illustration of Possible Phased Approach

      Primary Components Adoption
      Year 1 Year 2 Year 3
      Material ESG factors Addressed most critical factors Reviewed factor assessment and added factors which have become material and removed existing factors which are no longer material Reviewed factor assessment and added factors which have become material and removed existing factors which are no longer material
      Material ESG factors would be dependent on current business strategy, market conditions, stakeholder concerns etc., therefore the number of material ESG factors may vary year-on-year.
      Climate-related disclosures consistent with the TCFD recommendations Described the governance structures, including Board oversight and management’s role

      Identified the climate-related risks and opportunities

      Described the processes for identifying and managing climate-related risks

      Impacts in qualitative terms

      Scope 1 and Scope 2 GHG emissions
      Metrics used for assessment

      Impacts in more quantitative terms

      Scope 3 GHG emissions

      Targets in qualitative terms

      Conducted qualitative scenario analysis
      Scenario analysis with more quantitative outcomes

      Targets in quantitative terms
      Policies, practices and performance Minimal description of how issuer manages material factors

      No previous targets for comparison of performance

      One metric per factor

      Plans for improved reporting in future
      Description includes specific policies, practices per material factor

      More quantitative metrics and qualitative description per factor

      Comparison against previously disclosed qualitative commitments and targets with explanation of overachievement and shortfall
      Description includes specific policies, practices per material factor

      Qualitative and quantitative description per factor

      Comparison against previously disclosed targets and commitments with explanation of overachievement and shortfall
      Targets Qualitative commitments if no quantitative targets Short and long term qualitative targets and some quantitative targets Short and long term qualitative and quantitative targets

      Include peer/sector benchmarks

      Targets linked to management performance incentives
      Sustainability reporting framework GRI

      TCFD
      GRI

      TCFD
      GRI

      TCFD
      Board statement and associated governance structure for sustainability practices Complied Complied Complied

      8. Glossary

      ESG factors Environmental, social and governance factors that affects the issuer's performance and prospects. Also referred to as sustainability issues, or sustainability risks and opportunities. Does not mean philanthropy or other charitable activities.
      Sustainability reporting The publication of information on material ESG factors in a comprehensive and strategic manner.
      Materiality In relation to ESG factors, the most important ESG risks and opportunities that will act as barriers or enablers to achieving business goals in short, medium and long term. The omission or misstatement of these risks or opportunities could influence the decisions of investors.

      Added on 20 July 201620 July 2016 and amended on 7 February 20207 February 2020 and 1 January 2022.

    • Practice Note 7G Announcement of dividends and other corporate actions

      Cross-referenced from Rule 106 and Rule 704(24)

      1. Introduction

      1.1 Rule 704(24) states that after the end of the first three quarters of its financial year, half year or financial year, as the case may be, an issuer must not make specific corporate action announcements (i.e., dividend, bonus issue or rights issue, record date, capital return or passing of a dividend), unless it is accompanied by the financial statements for the quarter, half year or financial year (as set out in Appendix 7C), as the case may be, or the financial statements (as set out in Appendix 7C) have been announced
      1.2 Rule 106 states that the Exchange may waive or modify compliance with a Rule. This Practice Note sets out guidance on the restricted periods in which an issuer may not make specific corporate action announcements (the “Restricted Periods”). Additionally, this Practice Note sets out guidance on a waiver in respect of announcement of dividend or passing of dividend, subject to certain conditions.

      2. Restricted Period on announcements of bonus issue or rights issue, record date or capital return

      2.1 In relation to announcements of bonus issue or rights issue, record date or capital return, the Restricted Periods set out in 704(24) shall commence from such time after the end of the relevant financial period in which an issuer is announcing its financial statements in accordance with Rule 705, until such time when such financial statements have been announced.
      2.2 For an issuer that announces its financial statements for its half year in accordance with Rule 705(3)(b)(ii) and its full financial year in accordance with Rule 705(1), the Restricted Periods for announcements of bonus issue or rights issue, record date or capital return shall commence from after the end of the issuer's half year and full financial year until the financial statements for these financial periods have been announced.
      2.3 On the other hand, for an issuer that announces its financial statements for each of the first three quarters of its financial year in accordance with Rule 705(2) or Rule 705(3)(b)(i) and its full financial year in accordance with Rule 705(1), the Restricted Periods for such announcements shall commence from after the end of the first three quarters of the financial year and the full financial year, as the case may be, until the financial statements for these financial periods have been announced.
      2.4 Other than for the Restricted Periods set out in paragraphs 2.1 to 2.3, Rule 704(24) does not prohibit issuers from making announcements of bonus issue or rights issue, record date or capital return at all other periods.

      3. Announcements of dividend or passing of dividend

      3.1 The announcement of dividend or passing of dividend without it being accompanied by the release of the results may send signals on a company's financial performance for the relevant period.
      3.2 Thus, the Restricted Periods for announcements of dividend or passing of dividend shall commence from after the end of the first three quarters of the financial year and the full financial year, until the financial statements for the first three quarters, half year or full financial year have been announced in accordance with Appendix 7C. This approach applies regardless of whether the issuer performs financial reporting on a quarterly basis or a half-yearly basis.
      3.3 Therefore, an issuer must not announce dividend or passing of dividend in relation to the first or third quarters of the financial year, unless the issuer has announced its quarterly financial statements in accordance with Appendix 7C (whether required by the Exchange or otherwise) for the first or third quarters of the financial year.
      3.4 However, dividend announcements are permissible without being accompanied by the results for the relevant period if the issuer is able to fulfill the following conditions: —
      (i) the issuer must have a committed dividend policy to announce dividends on a quarterly basis and such policy must have been communicated to shareholders;
      (ii) the issuer must confirm, for each dividend announced for the first or third quarter of the financial year, that after making payment of the dividend, the issuer has sufficient financial resources to fulfill its liabilities as and when they fall due; and
      (iii) in the case of an issuer that is a corporation, the issuer must confirm, for each dividend announced for the first or third quarter of the financial year, that the corporation complies with or will comply with section 403 of the Companies Act or similar statutory requirements in its place of incorporation.
      3.5 Notwithstanding this exemption, all issuers are reminded of their obligation to make immediate disclosures of material information under Rule 703, which will include a material development that will cause dividends to significantly deviate from expectations based on previous announcements, or if no dividend is paid. The exemption set out in paragraph 3.4 will cease to apply once an issuer is unable to fulfill its commitment to the dividend policy.
      3.6 Other than for the Restricted Periods set out in paragraph 3.2, Rule 704(24) does not prohibit issuers from making announcements of dividend or passing of dividend at all other periods.

      4. Announcements of record date for previously announced bonus issues or rights issues, capital return or dividend

      4.1 Rule 704(24) does not prohibit the announcement of a record date during the Restricted Period if such record date is relating to a dividend, capital return, bonus issue or rights issue which has been previously announced outside the Restricted Periods for such announcements as set out in this Practice Note.

      Added on 7 February 20207 February 2020.

    • Practice Note 8A Rights Issue Timetable

      Cross-referenced from Rule 823

      The following is the expected timetable for a renounceable rights issue:—

          No of market days after record date (D)
      (a) To dispatch SRAFs to shareholders who hold shares in their securities accounts with CDP, and to dispatch PALs to CDP and to shareholders whose names appear on the register D+3
      (b) Commencement of trading of nil-paid rights D+3
      (c) Latest day for trading of nil-paid rights On or after D+9
      (d) Last day for receipt and acceptance of SRAFs On or after D+13

      The following is the expected timetable for a non-renounceable rights issue:—

          No of market days after record date (D)
      (a) To dispatch SRAFs to shareholders who hold shares in their securities accounts with CDP, and to dispatch PALs to CDP and to shareholders whose names appear on the register D+3
      (b) Last day for receipt and acceptance of SRAFs On or after D+9

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

    • Practice Note 8B Sub-Underwriting Arrangements

      Cross-referenced from Part V of Chapter 8

      Added on 1 January 20111 January 2011.

      Part I Introduction

      1. The objective of this Practice Note is to provide guidance on sub-underwriting arrangements entered into with controlling shareholders and substantial shareholders where sub-underwriting fees will be paid. Payment of sub-underwriting fees to controlling shareholders and substantial shareholders to take up their rights entitlement and/or sub-underwrite a portion of the excess rights shares translates to a larger price discount for the rights shares for such shareholders.
      2. This Practice Note sets out the requirement for all sub-underwriting arrangements, entered into with controlling shareholders and substantial shareholders where sub-underwriting fees are paid, to be subject to specific shareholders' approval. To protect the interest of other shareholders, we are also requiring specific conditions to be met by issuers and underwriters.

      Part II Shareholders' Approval

      1. For issuers seeking shareholders' approval for the rights issue, a separate resolution is needed where sub-underwriting fees will be paid to controlling shareholders and substantial shareholders.
      2. Issuers that intend to utilise the general mandate for the issue of rights shares will have to seek specific shareholders' approval for the sub-underwriting arrangements where a sub-underwriting fee will be paid.

      Part III Conditions to be Satisfied by Issuers and Underwriters

      1. To increase the transparency and accountability of these sub-underwriting arrangements, the Exchange will allow sub-underwriting arrangements with a fee to be entered into with controlling shareholders and substantial shareholders, where specific conditions are satisfied by issuers and underwriters:—
      (a) The issuer's Board of Directors ("Board") provides assurance that the terms of the sub-underwriting arrangement are fair and not prejudicial to the issuer and to other shareholders. The Board must provide the basis for their opinion;
      (b) The issuer's Board provides a confirmation in the circular to shareholders that the terms agreed between the issuer and the underwriter (including the commission payable to the underwriter and the controlling and/or substantial shareholder) are on arms' length and normal commercial terms;
      (c) The underwriter must be a financial institution licensed by the Monetary Authority of Singapore to conduct underwriting activities;
      (d) The Board's opinion (including the basis thereof) and the confirmation referred to in paragraphs (a) and (b) above, together with a statement whether there are any dissenting views of the Board members (and if so, details of the dissenting views), must be disclosed in the circular to shareholders;
      (e) The underwriters confirm to the Board that:—
      (i) the discussion on the sub-writing arrangement with the sub-underwriters was initiated by the underwriters and not by the sub-underwriters; and
      (ii) the underwriters will not underwrite the rights issue unless the sub-underwriters enter into the sub-underwriting arrangement.
      (f) The commission that the sub-underwriters earn shall not be higher than, and must be part of, the commission paid to the underwriters; and
      (g) The fee earned by the underwriters and sub-underwriters must be disclosed in the circular to shareholders.
    • Practice Note 10A Acquisitions and Realisations

      Cross-referenced from Chapter 10

      1. Introduction

      1.1 This Practice Note sets out, in relation to acquisitions and realisations, the following:
      (a) the types of acquisitions and disposals that are regarded to be in, or in connection with, the ordinary course of an issuer's business;
      (b) the considerations to apply in computing the relative figures under Rule 1006;
      (c) the applicability of Chapter 10 where any of the relative figures computed pursuant to Rule 1006 involves a negative figure;
      (d) the factors to be taken into account in arriving at the consideration value of a transaction for the purposes of Chapter 10;
      (e) the considerations to apply where a transaction requires shareholders' approvals for inter-conditional proposals; and
      (f) the circumstances under which the Exchange may grant a waiver of the requirement for shareholders' approval of any major transactions.
      1.2 Issuers should consult their sponsors as early as possible about particular transactions if there are questions on the rules. Sponsors may consult the Exchange on the application of the rules in respect of a particular transaction, if necessary. Sponsors are required to furnish the Exchange with the full facts and information on the matters consulted.
      1.3 Notwithstanding the classification of the transaction, the Exchange may, in appropriate circumstances, exercise its powers under Chapter 3 to impose additional requirements on the transaction, including to require that the issuer appoint an independent professional, or that the transaction be made conditional upon the approval of shareholders or the Exchange.
      1.4 In this Practice Note, "issuer" refers to the issuer or a subsidiary that is not listed on the Exchange or primary listed on an approved exchange, unless the context otherwise requires.

      2. Acquisitions and Disposals in, or in Connection with, the Ordinary Course of an Issuer's Business

      2.1 Rule 1002(1) states, among others, that, unless the context otherwise requires, "transaction" refers to the acquisition or disposal of assets by an issuer or a subsidiary that is not listed on the Exchange or on an approved exchange, including an option to acquire or dispose of assets. It excludes an acquisition or disposal which is in, or in connection with, the ordinary course of its business or of a revenue nature.
      2.2 An acquisition that is regarded to be in, or in connection with, the ordinary course of an issuer's business, is not subject to the requirements under Chapter 10 (except for Part VIII on very substantial acquisitions or reverse takeovers).
      2.3 An acquisition can be regarded to be in, or in connection with, the ordinary course of an issuer's business, if:
      (a) the asset to be acquired is part of the issuer's existing principal business; and
      (b) the acquisition does not change the issuer's risk profile.
      2.4 Existing principal business: An asset is part of the issuer's existing principal business if the acquisition of the asset is required to be reported under the applicable accounting standards within a specific reportable operating segment (excluding any miscellaneous "any other segment" category) that:
      (a) contributes more than 20% of the issuer's net profits or total assets; and
      (b) has been reported in the issuer's latest audited financial statements.
      2.5 Change of risk profile: The following are indications that an acquisition would change the risk profile of an issuer:
      (a) notwithstanding Rule 1002(3)(c), a proposed acquisition will result in reduction of the issuer's net profits or net asset value by 20% or more, based on the latest audited financial statements, and assuming that the proposed acquisition had been effected at the end of that financial year;
      (b) the asset proposed to be acquired is loss-making or is in a net liability position;
      (c) the proposed acquisition will have a significant adverse impact on the issuer's gearing;
      (d) the proposed acquisition will result in an expansion into a new jurisdiction that will expose the issuer to significant new risks; or
      (e) in the case of a mineral, oil and gas company, a proposed acquisition will result in an expansion into a new resource or commodity type, or into a new jurisdiction. The exploration and extraction methods of different types of minerals, oil and gas are different. Minerals, oil and gas resources are also necessarily situated in specific geographical areas, which may be subject to specific licensing or regulatory regimes. An expansion into a new resource or commodity type, or into a new jurisdiction, is likely to require a reconsideration of the applicable risks.
      These indicators are neither exhaustive nor conclusive.
      2.6 A disposal of an issuer's business (or a substantial part of its business) will usually not be considered to be in the ordinary course of business.

      3. Computation of Relative Figures under Rule 1006

      3.1 Rule 1006 sets out the following bases for computing the relative size of a transaction:
      (a) Rule 1006(a): The net asset value of the assets to be disposed of, compared with the group's net asset value. This basis is not applicable to an acquisition of assets;
      (b) Rule 1006(b): The net profits attributable to the assets acquired or disposed of, compared with the group's net profits;
      (c) Rule 1006(c): The aggregate value of the consideration given or received, compared with the issuer's market capitalisation based on the total number of issued shares excluding treasury shares;
      (d) Rule 1006(d): The number of equity securities issued by the issuer as consideration for an acquisition, compared with the number of equity securities previously in issue; and
      (e) Rule 1006(e): The aggregate volume or amount of proved and probable reserves to be disposed of, compared with the aggregate of the group's proved and probable reserves. This basis is applicable to a disposal of mineral, oil or gas assets by a mineral, oil and gas company, but not to an acquisition of such assets.
      3.2 For the purposes of computing the relative figures of Rule 1006, an issuer shall consider the following:
      (a) in computing the net asset value of a business to be disposed of under Rule 1006(a), if there is a capitalisation, or a waiver or write-off of a loan (in full or in part) extended by the issuer to the business, the amount of the loan, waiver or write-off shall be added to the net asset value of the business; and
      (b) in computing the aggregate value of consideration given or received under Rule 1006(c):
      (i) any deferred consideration that may be payable or receivable by the issuer in the future shall be included in the aggregate value of consideration (i.e., the consideration is the maximum total consideration payable or receivable under the agreement);
      (ii) any additional amounts related to the transaction, including loans or guarantees extended by the purchaser or the provision of other forms of security, shall be included in the aggregated value of consideration;
      (iii) any additional liabilities (whether actual or contingent) to be assumed by the purchaser or waived by the seller under the terms of the transaction shall be included in computing the aggregate value of consideration. For example, in the case of a disposal of a business at a nominal consideration but which obliges the purchaser to repay a loan, or the seller to waive or write-off a loan, that was extended to the business, the value of consideration shall include the amount of the loan; and
      (iv) if a business to be acquired has negative net asset value, the absolute value of the negative net asset value shall be taken into account in computing the aggregate value of consideration. For example, in the case of an acquisition at a nominal value of a business with negative net asset value, the value of consideration shall include the absolute value of the negative net asset value of the business.

      4. Negative Relative Figures under Rule 1006

      4.1 In some cases, tests based on assets under Rule 1006(a) and profits under Rule 1006(b) may involve a negative figure in the numerator, denominator or both, which may not give a meaningful indication of the significance of the transaction to the issuer. Such situations arise where a transaction concerns any of the following:
      (a) an issuer with a negative net asset value;
      (b) a disposal of an asset with negative net asset value;
      (c) a loss-making issuer; and
      (d) an acquisition or a disposal of a loss-making asset.

      By way of example, (i) the disposal of an asset with negative net asset value by an issuer with a negative net asset value; or (ii) the acquisition or disposal of a loss-making asset by a loss-making issuer, will result in a negative relative figure computed pursuant to Rule 1006(a) and Rule 1006(b) respectively.
      4.2 Under Rule 1007(1), if any of the relative figures computed pursuant to Rule 1006 involves a negative figure, Chapter 10 may still be applicable to the transaction in accordance with the applicable circumstances in this Practice Note 10A.
      4.3 In the following situations, unless Rule 703, Rule 905 or Rule 1009 applies, no announcement and shareholders' approval of the transaction is required:
      (a) the acquisition of a loss-making asset by an issuer (whether profitable or loss-making), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(c) and Rule 1006(d) amounts to 5% or less; and
      (ii) the net loss attributable to the asset to be acquired amounts to 5% or less of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values);
      (b) the acquisition of a profitable asset by a loss-making issuer, where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(c) and Rule 1006(d) amounts to 5% or less; and
      (ii) the net profit attributable to the asset to be acquired amounts to 5% or less of the consolidated net loss of the issuer (taking into account only the absolute value);
      (c) the disposal of an asset by an issuer (where either or both the asset or the issuer has negative net asset value), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(b), Rule 1006(c) and (if applicable) Rule 1006(e), amounts to 5% or less; and
      (ii) if the disposal will result in a loss on disposal, the loss on disposal amounts to 5% or less of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values);
      (d) the disposal of a profitable asset by a loss-making issuer, where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(a), Rule 1006(c) and (if applicable) Rule 1006(e) amounts to 5% or less; and
      (ii) the net profit attributable to the asset to be disposed of and, if the disposal will result in a loss on disposal, the sum of such net profit and the loss on disposal, amounts to 5% or less of the consolidated net loss of the issuer (in each case taking into account only the absolute value); and
      (e) the disposal of a loss-making asset by an issuer (whether profitable or loss-making), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(a), Rule 1006(c) and (if applicable) Rule 1006(e) amounts to 5% or less; and
      (ii) if the disposal will result in a loss on disposal, the loss on disposal amounts to 5% or less of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values).
      However, if the issuer wishes to announce the transaction, the announcement must include the information required under Rule 1008(2).
      4.4 In the following situations, an issuer must, in relation to the transaction, immediately announce the information required in Rule 1010, Rule 1011, Rule 1012 and Rule 1013, where applicable:
      (a) the acquisition of a loss-making asset by an issuer (whether profitable or loss-making), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(c) and Rule 1006(d) does not exceed 75%; and
      (ii) the net loss attributable to the asset to be acquired exceeds 5% but does not exceed 10% of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values);
      (b) the acquisition of a profitable asset by a loss-making issuer, where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(c) and Rule 1006(d) does not exceed 75%; and
      (ii) the net profit attributable to the asset to be acquired exceeds 5% of the consolidated net loss of the issuer (taking into account only the absolute value);
      (c) the disposal of an asset by an issuer (where either or both the asset or the issuer has negative net asset value), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(b), Rule 1006(c) and (if applicable) Rule 1006(e) does not exceed 50%; and
      (ii) if the disposal will result in a loss on disposal, the loss on disposal exceeds 5% but does not exceed 10% of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values);
      (d) the disposal of a profitable asset by a loss-making issuer, where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(a), Rule 1006(c) and (if applicable) Rule 1006(e) does not exceed 50%; and
      (ii) the net profit attributable to the asset to be disposed of and, if the disposal will result in a loss on disposal, the sum of such net profit and the loss on disposal, exceeds 5% but does not exceed 10% of the consolidated net loss of the issuer (in each case taking into account only the absolute value); and
      (e) the disposal of a loss-making asset by an issuer (whether profitable or loss-making), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(a), Rule 1006(c) and (if applicable) Rule 1006(e) does not exceed 50%; and
      (ii) if the disposal will result in a loss on disposal, the loss on disposal exceeds 5% but does not exceed 10% of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values).
      4.5 In relation to Rule 1010(13), notwithstanding that a relative figure computed on the bases set out in Rule 1006 is negative, the issuer must still announce its value.
      4.6 If the transaction does not fall within all the situations in paragraphs 4.3 and 4.4, Rule 1014 shall apply to the transaction. By way of example, unless the disposal of a loss-making asset with negative net asset value falls within paragraphs 4.3(c), 4.3(e), 4.4(c) and 4.4(e), Rule 1014 shall apply to the transaction.

      5. Factors taken into Account in Arriving at Consideration Value

      5.1 Where the relative figures under Rule 1006 exceeds 5%, Rule 1010, Rule 1014 and Rule 1015 require the issuer to announce certain information about the transaction. Among others, the issuer must announce the aggregate value of the consideration, stating the factors taken into account in arriving at it and how it will be satisfied.
      5.2 Substantive factors should be disclosed to justify the aggregate value of the consideration. The mere fact that the consideration was arrived at on a "willing buyer willing seller" basis is not a sufficient factor.

      6. Shareholders' Approvals for Inter-conditional Proposals

      6.1 If a transaction requires shareholders' approvals for inter-conditional proposals, the issuer should consider whether separate resolutions on the different aspects of the proposal are to be voted on by shareholders.
      6.2 In reviewing circulars to be sent to shareholders, the Exchange will consider whether the resolutions have been constructed in a manner that allows shareholders to properly exercise their voting rights.

      7. Waiver of Shareholders' Approval for Major Transactions

      7.1 A major transaction is one where any of the relative figures as computed on the bases set out in Rule 1006 (a) for an acquisition, exceeds 75% but is less than 100%; or (b) for a disposal, exceeds 50%. Under Rule 1014, a major transaction must be made conditional upon approval by shareholders in general meeting and a circular containing the information in Rule 1010, Rule 1011, Rule 1012 and Rule 1013 must be sent to all shareholders.
      7.2 Where an issuer seeks a waiver from the requirement for shareholders' approval, the issuer must submit an opinion to the sponsor from its board of directors that there has been or will be no material change in the risk profile of the issuer arising from the transaction, including the basis for its opinion.
      7.3 The Exchange may grant the waiver in the following circumstances:
      (a) a proposed transaction has been foreshadowed or investors have had the opportunity to consider and vote in favour of the proposal at a previous general meeting; and
      (b) a proposed disposal involves a non-core asset. This is because a non-core asset is not likely to affect the nature of the issuer's principal business. A non-core asset is one that meets all of the following criteria:
      (i) it is not critical to the principal business activity of the issuer;
      (ii) it is ancillary to the principal business activity of the issuer; and
      (iii) it is not an existing principal business (as described in paragraph 2.4) of the issuer.
      7.4 The Exchange will not grant a waiver from the requirement for shareholders' approval solely on the basis that the substantial shareholders of the issuer have undertaken to vote in favour of the transaction. As a general rule, shareholders should be given the opportunity to vote on the issuer's proposal.
      7.5 The Exchange would not in normal circumstances regard only the cost and inconvenience of convening a meeting as sufficient reasons to grant a waiver.
      7.6 Under Rule 106, where a waiver is granted, the issuer must announce the waiver, the reasons for seeking the waiver and the conditions, if any, upon which the waiver is granted as soon as practicable.

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

    • Practice Note 12A Responsibility Statements For Directors And Financial Advisers

      Cross-referenced from Rules 407(4)(a), 1015(4)(b), 1202, 1203(7) and Appendix 8A

      1. This Practice Note provides guidance on the wordings for the responsibility statements for directors, vendors and financial advisers.

      2. Responsibility Statement for Directors and Vendors

      2.1 For the purposes of Rule 407(4)(a) and Rule 1202, the following directors' [or vendors'] responsibility statement should be included in circulars:

      "The [directors/vendors] collectively and individually accept full responsibility for the accuracy of the information given in this circular and confirm after making all reasonable enquiries, that to the best of their knowledge and belief, this circular constitutes full and true disclosure of all material facts about the [describe proposed action], the issuer and its subsidiaries, and the [directors/vendors] are not aware of any facts the omission of which would make any statement in this circular misleading, [and where the circular contains a profit forecast, the directors are satisfied that the profit forecast has been stated after due and careful enquiry]. Where information in the circular has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the [directors/vendors] has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the circular in its proper form and context."

      3. Responsibility Statement for Sponsors and/or Financial Advisers

      3.1 For the purposes of Rule 1015(4)(b), Rule 1203(7) and Appendix 8A, the following financial adviser's responsibility statement should be included in circulars:

      "To the best of the sponsor's and / or financial adviser's knowledge and belief, this circular constitutes full and true disclosure of all material facts about the [describe proposed action], the issuer and its subsidiaries, and the financial adviser is not aware of any facts the omission of which would make any statement in the document misleading; [and where the document contains a profit forecast, it is satisfied that the profit forecast has been stated by the directors after due and careful enquiry]."

      Added on 29 September 201129 September 2011 and amended on 7 February 20207 February 2020.

    • Practice Note 12B Internal Controls and Risk Management Systems

      Cross-referenced from Rules 407(4)(b) and 1204(10)

      1. Introduction

      1.1 This Practice Note provides guidance on the application of Rules 407(4)(b) and 1204(10).
      1.2 In its offer document and annual reports, the issuer's board must comment on the adequacy and effectiveness of the internal controls (including financial, operational, compliance and information technology controls) and risk management systems. A statement on whether the audit committee concurs with the board's comments must also be provided.

      Rule 407(4)(b) requires the disclosure to be made in the offer document whereas Rule 1204(10) requires the disclosure to be in the annual reports.

      2. Intent of Rules 407(4)(b) and 1204(10)

      2.1 Internal controls (including financial, operational, compliance and information technology controls) and risk management systems serve to safeguard shareholders' investments and company's assets.
      2.2 A board committee, for example, the audit committee is usually responsible for overseeing internal controls and risk management. The board, which includes executive directors, is also responsible for assessing the adequacy and effectiveness of these internal controls and risk management systems.
      2.3 The objective of Rules 407(4)(b) and 1204(10) is to increase transparency and accountability. In providing this comment, the board and the audit committee are required to demonstrate that they have rigorously assessed the (i) internal controls (including financial, operational, compliance and information technology controls) and (ii) risk management systems.

      3. Compliance with Rules 407(4)(b) and 1204(10)

      3.1 In satisfying Rules 407(4)(b) and 1204(10), the board and the audit committee may ask for an independent audit on internal controls or risk management systems to assure themselves on the adequacy and effectiveness of the systems of internal controls and risk management, or if they are not satisfied with the systems of internal controls or risk management.
      3.2 The issuer should maintain proper record of the discussions and decisions of the board and the audit committee.
      3.3 Compliance with Rules 407(4)(b) and 1204(10) involve the following disclosures:-
      (i) Where the board and the audit committee are satisfied that the issuer has adequate and effective systems of internal controls and risk management, the disclosure must include the basis for such comment.

      To avoid doubt, under Rule 225(1)(e), a full sponsor, in preparing a listing applicant for admission or advising an issuer in a very substantial acquisition or reverse takeover, must satisfy itself that the listing applicant or enlarged group has sufficient systems, procedures, controls and resources to comply with the Rules and that its directors understand and intend to fulfil their obligations at all times for as long as the securities of the issuer remain listed on Catalist. This is in addition to Rule 407(4)(b) which requires the board and audit committee to disclose the basis for their comments on the adequacy and effectiveness of the issuer's systems of internal controls and risk management.
      (ii) In relation to Rule 1204(10), where the board and/or the audit committee has commented that internal controls or risk management systems need to be strengthened, or has concerns that internal controls or risk management systems are inadequate, the board must disclose the issues and how it seeks to address and monitor the areas of concerns.

      4. Format of Disclosure

      4.1 There is no prescribed format of disclosure.
      4.2 As the board and audit committee are obliged by Rules 407(4)(b) and 1204(10) to provide the specific disclosures in Paragraph 3.3 above, the Exchange recommends the comment be provided in the following ways:-
      (i) Disclosure to be made in the section on "Audit Committee", "Internal Controls" or "Risk Management" of the offer document for compliance with Rule 407(4)(b).
      (ii) Disclosure to be made in the Directors' Report or Corporate Governance section of the annual report for compliance with Rule 1204(10).

      5. General Principle

      5.1 Good disclosures which comply with Rules 407(4)(b) and 1204(10) comprise the following:
      (i) The board's comment on the Group's internal controls (including financial, operational, compliance and information technology controls) and risk management systems. A statement on whether the audit committee concurs with the board's comment must also be provided; and
      (ii) The basis for the board's comment and if the audit committee does not concur with the board, the basis for the audit committee's comment.
      5.2 Should the board or the audit committee comment that the Group's internal controls or risk management systems have material weaknesses, then clear disclosure of these weaknesses and the steps taken to address them is necessary for investors to make an informed decision about the issuer.

      Added on 2 April 20132 April 2013 and amended on 1 January 20191 January 2019.

    • Practice Note 13A Trading Halt and Suspension

      Cross-referenced from Rules 1301, 1302 and 1303 and paragraph 23 of Appendix 7A

      Part I Introduction

      1. This Practice Note provides guidance in connection with trading halts and suspensions.
      2. A trading halt is a short term trading stoppage requested by an issuer to disclose material information. It is generally requested for a minimum of thirty minutes to a maximum of three market days. When a trading halt is being lifted, a stock will enter into the phase that the market is then in.
      3. A suspension is generally a longer term trading stoppage that can be requested either by an issuer or imposed by the Exchange. When a suspension is being lifted, a stock will enter into an adjust phase for a minimum duration of 15 minutes before normal trading commences.
      4. In a trading halt, orders in the system are not purged until the end of the market day while for a suspension, all orders are purged at the time of the suspension.
      5. The Exchange will normally only halt or suspend the trading of an issuer's securities at the request of the issuer. The sponsor is responsible to advise the issuer and notify the Exchange if it forms the view that a trading halt or suspension is warranted. Where there is a difference in opinion between the sponsor and the issuer, the Exchange will take into account both the sponsor's and the issuer's views when acting on such requests.

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

      Part II Trading Hours

      6. For normal day trading, our trading hours are from 9.00 am to 12.00 pm and 1.00 pm to 5.00 pm. There is a mid-day break from 12.00 pm to 1.00 pm. Opening Routine is a 30-minute session before trading commences at 9.00 am, i.e. 8.30 am to 9.00 am. Closing Routine will run for 6 minutes after 5.00 pm, i.e. 5.00 pm to 5.06 pm. Trade at Close Phase will run for 10 minutes after the Closing Routine ends at 5.06 pm, i.e. 5.06 pm to 5.16 pm. Trade at Close Phase will run for 10 minutes after the Closing Routine ends at 5.06 pm, i.e. 5.06 pm to 5.16 pm.
      7. For half day trading, our trading hours are from 9:00 am to 12:00 pm. Opening Routine is a 30-minute session before trading commences at 9.00 am, i.e. 8.30 am to 9.00 am. Closing Routine will run for 6 minutes after 12.00 pm, i.e. 12.00 pm to 12.06 pm. Trade at Close Phase will run for 10 minutes after the Closing Routine ends at 12.06 pm, i.e. 12.06 pm to 12.16 pm. Trade at Close Phase will run for 10 minutes after the Closing Routine ends at 12.06 pm, i.e. 12.06 pm to 12.16 pm.

      Amended on 1 August 20111 August 2011, 13 November 201713 November 2017 and 3 June 20193 June 2019.

      Part III Procedures for Trading Halt and Suspension

      8. A trading halt or suspension can be applied at any time. When an issuer wishes to request for a trading halt or suspension in its securities during trading hours and the mid-day break, it must first contact the officers in Market Control ("MC"). After alerting the MC officer, the issuer can then send the SGXNET announcement to request for a trading halt or suspension.
      9. In the SGXNET announcement, issuers should state the reason for requesting the trading halt or suspension. The announcement should include the statement required under Rule 753(2).
      10. Issuers are to observe the following guidelines when requesting for a trading halt or suspension:
      (a) During trading hours and mid-day break

      Please call and alert Market Control before releasing the request via SGXNET.
      (b) Before or after trading hours

      Please call and alert Market Control between 7.30 am and 8.30am although the SGXNET request can be released anytime after the close of the previous market day and before 8.30am on the day of the trading halt or suspension.

      Amended on 1 August 20111 August 2011, 29 September 201129 September 2011, 13 November 201713 November 2017 and 3 June 20193 June 2019.

      Part IV Procedures for Lifting of Trading Halt and Resumption of Trading From Suspension

      11. For both trading halt and suspension, trading can resume only on the quarter-hour between 8.30 am to 4.45pm for lifting of trading halt and between 9.00 am to 4.45pm for resumption of trading from suspension.
      12. Issuers must allow at least 30 minutes of dissemination time after a material announcement is made and before trading resumes.
      13. For trading halt, issuers must allow at least 15 minutes of dissemination time for an announcement on the request for the lifting of trading halt, before trading resumes. By way of example, if an issuer makes a request for trading halt announcement at 10:00 am and releases the material information at 10:16 am, if there is no further release of material information, the issuer may also make a request for lifting of trading halt announcement at 10:16 am. However, trading may only resume at 11:00 am. If an issuer wishes to resume trading at 11:00 am, the latest time which the issuer is required to make the request for lifting of trading halt announcement is 10:45 am.
      14. For suspension, issuers must allow at least 30 minutes of dissemination time for an announcement on the request for the resumption of trading from suspension, before trading resumes. By way of example, if an issuer makes a request for suspension announcement at 3:00 pm and releases the material information at 3:14 pm, if there is no further release of material information, the issuer may also make a request for the resumption of trading from suspension announcement at 3:14 pm. However, trading may only resume at 3:45 pm. If an issuer wishes to resume trading at 3:45 pm, the latest time which the issuer is required to make the request for the resumption of trading from suspension announcement is 3:15 pm.
      15. Issuers are to observe the following guidelines when requesting for a lifting of trading halt or resumption of trading from suspension:
      (a) During trading hours and mid-day break

      Please call and alert Market Control before releasing the request via SGXNET.
      (b) Before or after trading hours

      Please call and alert Market Control between 7.30 am and 8.30 am although the SGXNET request can be released anytime after the close of the previous market day and before 8.30 am on the day of the lifting of trading halt or resumption of trading from suspension.

      Amended on 1 August 20111 August 2011, 29 September 201129 September 2011, 13 November 201713 November 2017, 3 June 20193 June 2019 and 7 February 20207 February 2020.

      Part V SGXNET Templates

      16. Issuers whose securities have been halted or suspended and wish to resume trading upon commencement of trading on a market day are advised to disclose both their material announcement and SGXNET request for resumption of trading pursuant to paragraphs 12, 13 and 14 of this Practice Note.
      17. Issuers must use the correct template when sending in the above requests. Issuers can choose from the following four templates:
      a. Request for Trading Halt;
      b. Request for Suspension;
      c. Request for Lifting of Trading Halt; or
      d. Request for Resumption of Trading from Suspension.

      Amended on 29 September 201129 September 2011, 13 November 201713 November 2017 and 7 February 20207 February 2020.

      Part VI Disclosure Obligations

      18. While the listed securities of an issuer is suspended from trading, shareholders must be kept updated regularly on material developments, particularly on efforts undertaken to allow the listed securities to resume trading. Accordingly, except as provided in Rule 1303(2) and Rule 1303(3), issuers whose listed securities are suspended from trading should provide half-yearly updates on their developments via SGXNET. If there has been no material updates since the previous update, it is still salutary to state so in the issuer's subsequent update. Such announcements inform shareholders that the circumstances in the last material update continue to apply and that there is no material development of which they should take note.

      Added on 7 February 20207 February 2020.

    • Practice Note 14A Catalist Transition Process and Timetable

      Cross-referenced from Rule 1402

      Added on 1 September 20081 September 2008 and amended on 24 July 200924 July 2009.

      1. Introduction

      (a) This Practice Note sets out the details and timetable on the transition measures to bring Catalist issuers into compliance with Catalist Rules by the Transition Date.
      (b) All Catalist Non-Sponsored issuers, except those suspended pursuant to Rule 1303 of the Listing Manual, must comply with the transition requirements set out in this Practice Note.

      2. Transition Measures

      (a) Quarterly Progress Report to SGX

      By 1 November 2008, Catalist Non-Sponsored issuers must submit the first progress report to SGX Catalist Regulation. Thereafter from 1 January 2009, a progress report must be submitted to SGX Catalist Regulation within 45 days after the end of each of the first three quarters and 60 days after the end of the financial year. Such progress reports must be copied to the issuer's Board of Directors and incorporate the following information:
      (i) Name of issuer;
      (ii) Reporting period;
      (iii) Name, designation and contact details of Director or person in charge of the search and appointment of sponsor
      (iv) Updated timetable of milestones, including but not limited to estimated time periods allocated for the search for a suitable sponsor, negotiation of terms, as well as the estimated dates for the board approval of and the appointment of sponsor;
      (v) If applicable, description of any plans that the company will implement as an alternative to appointing a sponsor, such as undergoing a reverse takeover, merger & acquisition, or transferring to Mainboard;
      (vi) List of sponsors approached to date; and
      (vii) Any other relevant information
      (b) Quarterly Progress Update to shareholders and investors

      From 1 January 2009, Catalist Non-Sponsored issuers must also announce via SGXNET, within 45 days after the end of each of the first three quarters and 60 days after the end of the financial year, the following information:
      (i) as required in 2(a)(i) to (iv);
      (ii) as required in 2(a)(v), if such information has been announced by the company, and
      (iii) any other relevant information.
      (c) Requirement to appoint Sponsors for corporate actions

      From 1 January 2009, Catalist Non-Sponsored issuers must appoint a sponsor and comply with Catalist Rules when undertaking any of the following corporate actions:
      (i) Rights issue or placement of shares, company warrants or other convertible securities for cash, excluding shares issued pursuant to an employee or performance share/share option plan;
      (ii) Major transaction as defined under Rule 1013 of the Listing Manual of the former SESDAQ rules;
      (iii) Transaction that will require shareholders' approval pursuant to Chapter 9 of the Listing Manual of the former SESDAQ rules; and
      (iv) Scheme of Arrangement.
      (d) Suspension of Catalist Non-Sponsored issuers after the Transition Date
      (i) From 6 February 2010, trading of securities of Catalist Non-Sponsored issuers that have not appointed a sponsor on or before the Transition Date and announced the date from which they will comply with Catalist Rules as agreed with the Exchange, will be suspended.
      (ii) The suspended Catalist Non-Sponsored issuers must submit quarterly progress reports to SGX and announce quarterly progress updates via SGXNet as required in 2(a) and 2(b) respectively.
      (iii) The suspension will only be lifted and the issuers' trading status reinstated if the Catalist Non-Sponsored issuers appoint a Sponsor in accordance with Rule 1403(3) and comply with Catalist Rules before 31 December 2010.
      (e) Delisting of Catalist Non-Sponsored issuers after 31 December 2010

      After 31 December 2010, Catalist Non-Sponsored issuers will be delisted and removed from the Official List. Pursuant to Rule 1404(2), issuers will be required to offer a reasonable exit alternative, which should normally be in cash, to:
      (i) Its shareholders; and
      (ii) Holders of any other classes of listed securities to be delisted.
      The issuers should normally appoint an independent financial adviser which need not be an approved sponsor to advise on the exit offer.

      The delisting will take effect after completion of the exit offer.

      3. Catalist Transition Timetable

      No. Transition Measure Implementation Date
      1. Quarterly progress report to SGX 1 November 2008
      2. Quarterly progress update to investors 1 January 2009
      3. Requirement to appoint a sponsor when undertaking certain corporate actions 1 January 2009
      4. Transition Date 5 February 2010
      5. Date of Suspension of Catalist Non-Sponsored issuers 6 February 2010
      6. Date of Delisting After 31 December 2010, subject to completion of exit offer
    • Transitional Practice Note 1 Transitional Arrangements Regarding Accounting Standards

      Cross-referenced from Rule 415

      1. Introduction

      1.1 On 26 March 2018, the Exchange replaced the reference to Singapore Financial Reporting Standards ("SFRS") with Singapore Financial Reporting Standards (International) ("SFRS(I)s") in Rule 415.
      1.2 Rule 108(2) states that the Exchange may, from time to time, publish transitional arrangements in relation to any amended or new rule.
      1.3 This Practice Note is published to clarify the transitional arrangements that will have effect under Rule 108(2).
      1.4 Rule 415 has been replaced by Rule 406A with effect from 12 February 2021.

      2. Transitional Arrangements for Listing Applicants

      2.1 Rule 415 requires that the financial statements submitted with the listing application by listing applicants must be prepared in accordance with SFRS(I)s, or International Financial Reporting Standard, or US Generally Accepted Accounting Principles.
      2.2 For the purpose of paragraph 2.1, if a listing applicant submits the financial statements for financial years that begin before 1 January 2018, Rule 415 in respect of the financial statements submitted with the listing application will be deemed satisfied if the listing applicant satisfies the relevant requirements under Part 9 of the Fifth Schedule of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.

      3. Transitional Arrangements for Existing Issuers

      3.1 For existing issuers, periodic financial reports for financial years that begin before 1 January 2018 may be prepared in accordance with SFRS, or International Financial Reporting Standard, or US Generally Accepted Accounting Principles.

      4. SGX may amend, modify or supplement the above transitional arrangements.

      Added on 26 March 201826 March 2018 and amended on 7 February 20207 February 2020 and 12 February 2021.

    • Transitional Practice Note 2 Transitional Arrangements Regarding Code of Corporate Governance 2018

      Details Cross References
      Issue Date: 28 November 2018

      Effective Date: 1 January2019
                                1 January 2022
      Rules 108(2), 406(3)(a), 406(3)(c), 406(3)(d)(i), 406(3)(d)(ii), 406(3)(d)(iii), 710, 720(4) and 1204(10)
      1. Introduction
      1.1 On 6 August 2018, the Exchange amended the SGX-ST Listing Rules (Catalist) following the publication of the Code of Corporate Governance 2018 by the Monetary Authority of Singapore ("MAS"). The Code of Corporate Governance 2018 applies to annual reports covering financial years commencing from 1 January 2019.
      1.2. As part of the amendments to the Code of Corporate Governance 2018, certain guidelines from the Code of Corporate Governance 2012 were shifted into the SGX-ST Listing Rules (Catalist) for mandatory compliance.
      1.3. This Transitional Practice Note is published to establish transitional arrangements for certain of the guidelines shifted into the SGX-ST Listing Rules (Catalist).
      2. Arrangements
      2.1. The following transitional arrangements will apply:—
      Listing Rule
      Subject
      Effective Date
      Transitional Arrangement
      710 Issuer to describe in its annual report its corporate governance practices with specific reference to the principles and provisions of the Code of Corporate Governance 2018 Financial year commencing on or after 1 January 2019 For any financial year commencing on or after 1 January 2019, an issuer must describe its corporate governance practices with specific reference to the principles and provisions of the Code of Corporate Governance 2018, in accordance with the amendments to Rule 710 ("Amended Rule 710"). The first batch of annual reports which would have to comply with Amended Rule 710 will likely be issued in 2020 or thereafter.

      For a financial year commencing prior to 1 January 2019, an issuer may describe its corporate governance practices with specific reference to the principles of the Code of Corporate Governance 2012, in accordance with Rule 710 prior to the relevant amendments.

      Alternatively, an issuer may elect to adopt Amended Rule 710 early, by describing its corporate governance practices with specific reference to the principles and provisions of the Code of Corporate Governance 2018, in accordance with Amended Rule 710. In this scenario, the issuer should state in its annual report that it is adopting Amended Rule 710 in advance, and would not need to make reference to the Code of Corporate Governance 2012.
      1204(10) The annual report must contain the board's comment on the adequacy and effectiveness of the issuer's internal controls (including financial, operational, compliance and information technology controls ) and risk management systems Financial year commencing on or after 1 January 2019 As the issuer may require time to establish its internal controls and risk management systems in accordance with the amendments to Rule 1204(10) ("Amended Rule 1204(10)"), the disclosures required in Amended Rule 1204(10) need only be provided in the annual report for financial years commencing on or after 1 January 2019. The first batch of annual reports which would have to comply with Amended Rule 1204(10) will likely be issued in 2020 or thereafter.
      720(4) All directors must submit themselves for re-nomination and re-appointment at least once every three years 1 January 2019 With effect from 1 January 2019, all directors, including executive directors, must submit themselves for re-nomination and re-appointment at least once every three years.
      (a) Existing directors appointed or re-appointed before 1 January 2019

      Within three years of the effective date of this rule, a director appointed or re-appointed before 1 January 2019 must submit himself for re-nomination and re-appointment to the board at a general meeting (i.e. no later than 31 December 2021).

      As an illustration, if a director was appointed or re-appointed on 30 April 2017, he will have to submit himself for re-nomination and re-appointment to the board by 31 December 2021. As another illustration, if a director has not been subject to re-nomination and re-appointment at least once every three years for any reason prior to 1 January 2019, he will have to submit himself for re-nomination and re-appointment to the board by 31 December 2021.
      -
      (b) Directors appointed or re-appointed on or after 1 January 2019

      A director appointed or re-appointed to the board on or after 1 January 2019 must submit himself for re-nomination and re-appointment to the board at a general meeting by the end of the calendar year of the third anniversary of his appointment or re-appointment.

      As an illustration, if a director was appointed or re-appointed on 30 April 2019, he will have to submit himself for re-nomination and re-appointment to the board at a general meeting in 2022.

      This rule will apply to any director appointed or re-appointed to the board including all executive directors.
      406(3)(a) A director who has no prior experience as a director of an issuer listed on the Exchange must undergo training in the roles and responsibilities of a director of a listed issuer as prescribed by the Exchange. 1 January 2019 A person with no prior experience as a director of an issuer listed on the Exchange (a "First-time Director") and whose date of appointment to the board of directors is on or after 1 January 2019, must undergo training in the roles and responsibilities of a director of a listed issuer as prescribed by the Exchange.

      Prior to 1 January 2019, Guideline 1.6 of the Code of Corporate Governance 2012 will operate on a comply-or-explain basis.

      Guideline 1.6 of the Code of Corporate Governance 2012 states that the issuer should provide training for first-time directors in areas such as accounting, legal and industry-specific knowledge as appropriate.
      406(3)(c) Independent directors must comprise at least one-third of the issuer's board 1 January 2022 The number of independent directors must comprise at least one-third of the issuer's board at any time on or after 1 January 2022.

      To ensure compliance with this requirement, the issuer must ensure that the requisite number of independent directors are appointed prior to 1 January 2022. For example, the issuer may do so at the issuer's annual general meeting in 2021.

      Issuers should also note the independence tests set out in Rule 406(3)(d) and for which transitional arrangements are set out in this Transitional Practice Note.

      Prior to 1 January 2022, Guideline 2.1 of the Code of Corporate Governance 2012 will operate on a comply-or-explain basis.

      Guideline 2.1 of the Code of Corporate Governance 2012 states that there should be a strong and independent element on the Board, with independent directors making up at least one-third of the Board.
      406(3)(d)(i) Director will not be independent if he is employed by the issuer or any of its related corporations for the current or any of the past three financial years 1 January 2019 On or after 1 January 2019, a director will not be independent under the circumstances set out in Rule 406(3)(d)(i).
      406(3)(d)(ii) Director will not be independent if he has an immediate family member who is employed or has been employed by the issuer or any of its related corporations for the past three financial years, and whose remuneration is determined by the remuneration committee of the issuer 1 January 2019 On or after 1 January 2019, a director will not be independent under the circumstances set out in Rule 406(3)(d)(ii).
      406(3)(d)(iii) Continued appointment as independent director, after an aggregate period of more than 9 years on the board, must be sought and approved in separate resolutions by (A) all shareholders and (B) shareholders excluding directors, chief executive officer, and their associates 1 January 2022 On or after 1 January 2022, a director who has served on the board for a cumulative period of 9 years will no longer be eligible to be designated as an independent director unless a resolution from shareholders present and voting at the general meeting is sought and approved in the manner described in Rule 406(3)(d)(iii).

      The issuer must, prior to 1 January 2022, consider if a director will not be considered independent against the circumstances set out in Rule 406(3)(d)(iii) at any time on and from 1 January 2022.

      For example, if a person has been a director (whether independent, executive or non-executive) for an aggregate period of more than 9 years as at 1 January 2022, then he will not be independent as at 1 January 2022, unless his continued appointment as an independent director has been sought and approved in separate resolutions (as required in Rule 406(3)(d)(iii)) prior to 1 January 2022.

      If a person had been a director (whether independent, executive or non-executive) for an aggregate period of more than 9 years and had retired from the board prior to 1 January 2022, he will not be eligible to be appointed as an independent director on or after 1 January 2022, unless his appointment as an independent director has been sought and approved in separate resolutions (as required in Rule 406(3)(d)(iii)). This is because he has already served on the board of the issuer for an aggregate period of more than 9 years prior to the proposed appointment.

      To ensure that the independence designation of a director who has served for more than 9 years as at and from 1 January 2022 is not affected, an issuer should seek and obtain approvals for his continued appointment as an independent director prior to 1 January 2022. For example, the issuer may do so at the issuer's annual general meeting in calendar year 2021. In accordance with Rule 406(3)(d)(iii), such approvals will remain valid until the conclusion of 3rd AGM from such approvals.

      Prior to 1 January 2022, Guideline 2.4 of the Code of Corporate Governance 2012 will operate on a comply-or explain basis.

      Guideline 2.4 of the Code of Corporate Governance 2012 states that "[t]he independence of any director who has served on the Board beyond nine years from the date of his first appointment should be subject to particularly rigorous review. In doing so, the Board should also take into account the need for progressive refreshing of the Board. The Board should also explain why any such director should be considered independent."
      3. SGX may amend, modify or supplement the above transitional arrangements.

      Added on 1 January 20221 January 2022.