Any scheme which enables shareholders to elect to receive shares in lieu of the cash amount of any dividend must comply with the following :—
(1) The scheme must be approved by the issuer's shareholders in general meeting. The shareholder circular must state the following:—
(a) Any tax advantage if a shareholder elects to receive shares in lieu of cash, or an appropriate negative statement;
(b) Whether a shareholder who elects to receive shares may receive odd lots;
(c) That a shareholder who will breach any shareholding restriction imposed by Singapore law or prescribed in the Articles of Association of the issuer by receiving shares is not eligible to participate in the scheme for that dividend;
(d) That a person receiving shares under the scheme may be required to comply with the Takeover Code; and
(e) The treatment of fractional entitlements arising from the allotment of new shares pursuant to the scheme.
(2) All shareholders must be eligible to participate in the scheme, subject to any shareholding restriction imposed by any statute, law or regulation in Singapore or prescribed in the Articles of Association of the issuer. The scheme may provide that shareholders may make a permanent election to participate in the scheme for all future dividends or may elect for each dividend.
(3) Notwithstanding Rule 862(2), an issuer may determine that foreign shareholders will not be eligible to participate if (i) they have not supplied CDP or the issuer (as the case may be), addresses in Singapore for services of notices, or (ii) the participation of foreign shareholders will result in a breach of regulations or is not permitted by the relevant authorities of the jurisdictions in which the foreign shareholders are located. In addition, if any foreign shareholding limit computed as at the Books Closure Date ("BCD") will be breached (assuming that all foreign shareholders elect for shares), the scheme shall not apply for that dividend and the cash amount of the dividend declared will be paid in the usual way.
(4) The issue price of shares allotted pursuant to the scheme must be determined in accordance with a formula based on the market price, but any discount must not exceed 10% of the market price.
(5) The dividend payment date for a dividend where a share alternative is offered must be not less than 30 market days, but not more than 35 market days, after the BCD.