3 January, 2013

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

Listed companies whose shares have been suspended from trading for a long time shall take the responsibility to take constructive steps to resume trading of its shares and in the meantime, keep the investors informed of such plans and progress, as highlighted by the Singapore Exchange (SGX or Exchange) on its website’s Regulator’s Column – where regulatory concerns are raised to the public investors – on 19 October 2012.

The matter was initially brought up to the public attention by the SGX in August 2008 that prolonged suspension may drain the listed company’s assets thus minimising the return of cash to the shareholders in respect of their holdings in the company. Investors have recently raised their concerns about insufficient updates on company’s state and affairs from listed companies whose shares have been under suspension from trading for a long time, which might adversely affect shareholders’ position in those companies. 

In its Regulator’s Column, the SGX emphasized the importance of timely and adequate disclosure from the listed companies (especially those facing difficulties) to the investors, and summarised the various requirements in place including but not limited to quarterly updates from companies on the SGX’s watch-list (Watch-List), monthly disclosures from companies suspended for over six months and the timely disclosure of material information from all listed companies.

Quarterly updates required from companies on Watch-List

Where a listed company is placed on the Watch-List, it is required by the listing rules of the SGX to provide quarterly updates on its financial situation, including its future direction, or other material development that may have a significant impact on its financial position as long as it remains on the Watch-List. Any material development occurs between the quarterly updates shall be immediately announced to the public as well. Such additional requirement to the quarterly or half-yearly announcement of its financial statements is to keep shareholders informed of the efforts made by the company to improve its financial situation and exit from the Watch-List. This is especially essential to shareholders of watch-listed companies whose shares remain active and traded on the market, who can then make informed investment decisions in relation to such securities.

Monthly disclosures from companies suspended for over six months

The Exchange may at any time as it sees fit suspend trading of the securities of a listed company in certain circumstances as prescribed in the listing rules. Although shareholders are unable to execute investment decisions on a suspended stock, they shall nonetheless be continuously updated on the state, developments and progress of the company while its shares are suspended from trading, so that they will be able to assess the status of their investments and once the trading resumes thereafter, the same information as disclosed by the company can be relied upon for making informed investment decisions. In particular, where the shares of the listed company are suspended for a period of more than six (6) months, the SGX would expect regular updates to be provided by the company to its investors and the market on a monthly basis.

Timely disclosure of material information from all listed companies

Under the existing listing rules, companies listed on the SGX are required to disclose all material information in respect thereof to their shareholders and the market in a timely manner. Regular updates are necessary for a more transparent market whereby investors are well informed of the listed company’s progress, or the lack thereof, in resolving the issues with a view to resume trading. Timely disclosure of material information is especially essential for shareholders of listed companies which have been suspended for a period of over twelve (12) months, as such companies may be removed by the Exchange from the Official List and delisted from the SGX if the issues faced are not satisfactorily resolved.

In view of the above disclosure requirements implemented by the SGX, all listed companies, without limitation to those whose shares are suspended from trading, are therefore encouraged to take efforts in making necessary arrangements to ensure the timely and adequate disclosure to the investors and the market with respect to the company’s financial situation, developments, progress or any other material information omit of which would adversely affect shareholders’ interests