5 December, 2012

Legal News & Analysis – Asia Pacific – Singapore – Capital Markets

On 1 October 2012, Singapore Exchange (SGX) opened a new public consultation on new share allocations for retail investors participating in Initial Public Offers (IPOs) and listings on the mainboard of the SGX. SGX is proposing revisions to its rules to raise the proportion of IPO shares available for retail investment for IPOs with high retail demand. It is stated that not only will retail investors have more opportunities to participate in IPO subscription, their increased activity in the secondary market will add to liquidity.

Following are the proposed new rules:

• Introduction of a prescribed minimum allotment of 5% of the total invitation shares to the public subscription tranche. For example, when 100 million new shares are issued in the IPO, at least 5 million shares must be offered for public subscription.
• Introduction of a claw-back mechanism that increases the number of shares allocated to the public subscription tranche when the total demand for shares in the tranche exceeds prescribed thresholds.
• When the demand through public subscription is below the prescribed thresholds, a reverse claw-back mechanism can be introduced to transfer shares from the public subscription tranche to the placement tranche. 

No mention had been made on the application of these rules to the Catalist board of the SGX.