Jurisdiction - Singapore
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Singapore – SGX Proposes Introduction Of Mainboard Listing Rules For Mineral, Oil And Gas Companies.

31 July, 2012

 

Legal News & Analysis – Asia Pacific – Singapore  Capital Markets

 

On 20 June 2012, the Singapore Exchange Securities Trading Limited (“SGX”) published its Consultation Paper on proposed amendments to the initial listing rules and listing obligations for mineral, oil and gas (“MOG”) companies on the SGX Mainboard.This aims to strengthen Singapore’s position as the leading commodities hub in Asia, and to take into account the unique requirements of MOG companies.

 
Initial listing requirements
 
Pursuant to the proposed amendments, all MOG companies must satisfy the listing requirements in Rule 210 (that is, including the rules on profit criteria and the positive operating cash flow requirements in Rules 210(2)(a), (b), (3) and/or 4(a)). However, an MOG company that does not meet the main-board profit criteria or does not satisfy the positive operating cash flow requirements, is nonetheless eligible for listing if it has market capitalisation of not less than S$300 million, based on issue price and post-invitation issued share capital and is prepared 
to disclose its plans and milestones to production stage with the anticipated capital expenditure for each stage. These plans must be substantiated by an independent Qualified Person’s opinion.  It must also have sufficient working capital for at least 18 months after listing. 
 
The SGX proposes that an MOG company should have at least one independent director with appropriate industry experience and expertise. Due to the technical nature of the industry, the MOG company must also appoint an auditing firm with an international name and reputation, and relevant industry experience.
 
The MOG company must be able to establish the existence of an adequate resource and/or reserve. In relation to minerals, the resource and/or reserve must be an Indicated Resource (as defined in the proposed rules) and in relation to oil and gas, categorised as a Contingent Resource (as defined in the proposed rules). This must be substantiated by the opinion of an independent Qualified Person.
 
The proposed minimum qualifications for an independent Qualified Person are given in the definitions and in the proposed Rule 210(9)(b). A ‘Qualified Person’ must be professionally qualified and have had five years’ professional experience in the relevant field. He must also be a member or licensee in good standing of a relevant Recognised Professional Association and not have committed any breach of relevant rules or laws.The report must have been done by or supervised by the partner or director of the auditing firm, and sole practitioners are not allowed to be considered ‘Qualified Persons’ for the purposes of such opinions. Moreover, remuneration for the report must not be dependent on its findings.
 
Under Section 3.1 of Practice Note 6.3, the MOG company should disclose a legal opinion with the offer document prospectus. It should include statements of compliance by the listing applicant with relevant laws and regulations, as well as the validity and enforceability of any rights to assets. This legal adviser must have relevant experience in this field and be authorised to practice and advise in Singapore.
 
The offer document prospectus must also include a valuation report with effective date not more than six months from lodgement. It must be prepared by an independent qualified person who meets the qualification requirements with the VALMIN Code or an equivalent standard – at least ten years of industry experience and at least five years of experience in the relevant field.
 
Issuers should also take note of the additional obligations in Rule 229(2), which proposes that the existing moratorium period for SGX Mainboard issuers be extended to include MOG companies. Thus there will be an imposed moratorium on the entire shareholding of promoters for the first six months after listing, and on at least 50% of their original shareholdings for the next six months afterward.
 
Continuing listing obligations
 
Rule 750 proposes that the MOG company must immediately announce material changes in its eserves or resources, and that this must be substantiated by a Qualified Person’s report. An immediate announcement must also be made if there is a change in the Standard (as defined in the proposed rules) adopted. 
 
An issuer must also comply with the initial listing requirement of having on its board of directors, an independent director with the appropriate industry experience and expertise on an ongoing basis. 
 
SGX ready to trade RMB-denominated securities
 
Singapore Exchange (SGX) announced on 6 July 2012 that it is ready to list, quote, trade, clear and settle securities denominated in Chinese Renminbi (RMB).
 
The initiative enhances opportunities for issuers and investors keen to participate in the internationalisation of the RMB and the robust Chinese economy. SGX’s addition of RMB securities trading complements the offshore RMB bonds already listed on the exchange. SGX is also the world’s first exchange to offer the clearing of OTC FX forwards for RMB.
 
Issuers listing RMB securities on SGX can also choose to offer dual currency trading, giving their investors the flexibility to trade the security either in RMB or Singapore dollars.
 
The initiative expands the suite of foreign currencies supported by SGX which currently includes the Australian Dollar, Hong Kong Dollar and US Dollar.
 

 

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