Mainboard Rules
Past version: Effective up to 30 Mar 2017
901
The objective of this Chapter is to guard against the risk that interested persons could influence the issuer, its subsidiaries or associated companies, to enter into transactions with interested persons that may adversely affect the interests of the issuer or its shareholders.
902
In applying these rules, regard must be given to:—
(1) the objective of this Chapter; and
(2) the economic and commercial substance of the interested person transaction, instead of legal form and technicality.
903
Apart from the rules in this Chapter, an issuer must also observe applicable requirements in Chapter 10.
904
For the purposes of this Chapter, the following definitions apply:—
(1) "approved exchange" means a stock exchange that has rules which safeguard the interests of shareholders against interested person transactions according to similar principles to this Chapter.
(2) "entity at risk" means:
(a) the issuer;
(b) a subsidiary of the issuer that is not listed on the Exchange or an approved exchange; or
(c) an associated company of the issuer that is not listed on the Exchange or an approved exchange, provided that the listed group, or the listed group and its interested person(s), has control over the associated company.
(3) [Deleted]
(4)
(a) In the case of a company, "interested person" means:—
(i) a director, chief executive officer, or controlling shareholder of the issuer; or
(ii) an associate of any such director, chief executive officer, or controlling shareholder.
(b) In the case of a REIT, "interested person" shall have the meaning ascribed to the term "interested party" in the Code on Collective Investment Schemes, namely:—
(i) a director, chief executive officer or controlling shareholder of the REIT manager;
(ii) the REIT manager, trustee or controlling unitholder of the REIT; or
(iii) an associate of any of the persons or entities in (i) or (ii) above,
as each such term is defined in the Code on Collective Investment Schemes.
(c) In the case of a business trust, "interested person" means:—
(i) a director, chief executive officer, or controlling shareholder of the trustee-manager of the business trust;
(ii) the trustee-manager or controlling unitholder of the business trust; or
(iii) an associate of any of the persons or entities in (i) or (ii) above.
(d) In the case of an investment fund which is not a REIT or business trust, "interested person" means:—
(i) a director, chief executive officer or controlling shareholder of the investment manager(s) (or any equivalent) of the investment fund;
(ii) the investment manager(s) (or any equivalent), the trustee or controlling unitholder of the investment fund; or
(iii) an associate of any of the persons or entities in (i) or (ii) above.
(4A) The Exchange may deem any person or entity to be an interested person if the person or entity has entered into, or proposes to enter into: (a) a transaction with an entity at risk; and (b) an agreement or arrangement with an interested person in connection with that transaction.
(4B) "primary interested person" means a person or an entity in Rule 904(4)(a)(i), Rule 904(4)(b)(i), Rule 904(4)(b)(ii), Rule 904(4)(c)(i), Rule 904(4)(c)(ii), Rule 904(4)(d)(i) or Rule 904(4)(d)(ii).
(5) "interested person transaction" means a transaction between an entity at risk and an interested person.
(6) "transaction" includes:—
(a) the provision or receipt of financial assistance;
(b) the acquisition, disposal or leasing of assets;
(c) the provision or receipt of goods or services;
(d) the issuance or subscription of securities;
(e) the granting of or being granted options; and
(f) the establishment of joint ventures or joint investments;
whether or not in the ordinary course of business, and whether or not entered into directly or indirectly (for example, through one or more interposed entities).
(7) “defence funding” means:
(a) The provision of a loan to a director or a chief executive officer of an entity at risk to meet expenditure incurred or to be incurred:
(i) in defending any criminal or civil proceedings in connection with any alleged negligence, default, breach of duty or breach of trust by that person in relation to the entity at risk; or
(ii) in connection with an application for relief; or
(iii) in defending himself in an investigation by a regulatory authority or against any action proposed to be taken by a regulatory authority, in connection with any alleged negligence, default, breach of duty or breach of trust in relation to the entity at risk; or
(b) any action to enable such director or chief executive officer to avoid incurring such expenditure.
(8) "net profits" means profit or loss including discontinued operations that have not been disposed and before income tax and non-controlling interests.
Amended on 31 March 201731 March 2017 and 7 February 20207 February 2020.
905
(1) An issuer must make an immediate announcement of any interested person transaction of a value equal to, or more than, 3% of the group's latest audited net tangible assets.
(2) If the aggregate value of all transactions entered into with the same interested person during the same financial year amounts to 3% or more of the group's latest audited net tangible assets, the issuer must make an immediate announcement of the latest transaction and all future transactions entered into with that same interested person during that financial year.
(3) Rule 905(1) and (2) does not apply to any transaction below $100,000.
(4) If the group's latest audited net tangible assets is negative, the issuer should consult the Exchange on the appropriate benchmark to calculate the relevant thresholds in Rule 905(1) and 905(2), which may be based on its market capitalisation.
(5) While transactions below $100,000 are not normally aggregated under Rule 905(3), the Exchange may aggregate any such transaction entered into during the same financial year and treat them as if they were one transaction in accordance with Rule 902.
Amended on 7 February 20207 February 2020.
906
(1) An issuer must obtain shareholder approval for any interested person transaction of a value equal to, or more than:—
(a) 5% of the group's latest audited net tangible assets; or
(b) 5% of the group's latest audited net tangible assets, when aggregated with other transactions entered into with the same interested person during the same financial year. However, a transaction which has been approved by shareholders, or is the subject of aggregation with another transaction that has been approved by shareholders, need not be included in any subsequent aggregation.
(2) Rule 906(1) does not apply to any transaction below $100,000.
(3) If the group's latest audited net tangible assets is negative, the issuer should consult the Exchange on the appropriate benchmark to calculate the relevant threshold in Rule 906(1), which may be based on its market capitalisation.
(4) While transactions below $100,000 are not normally aggregated under Rule 906(2), the Exchange may aggregate any such transaction entered into during the same financial year and treat them as if they were one transaction in accordance with Rule 902.
Amended on 7 February 20207 February 2020.
907
An issuer must disclose the aggregate value of interested person transactions entered into during the financial year under review in its annual report. The name of the interested person, nature of relationship and the corresponding aggregate value of the interested person transactions entered into with the same interested person must be presented in the following format:—
| Name of interested person | Nature of relationship | Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders' mandate pursuant to Rule 920) | Aggregate value of all interested person transactions conducted under shareholders' mandate pursuant to Rule 920 (excluding transactions less than $100,000) |
Amended on 7 February 20207 February 2020.
908
In interpreting the term "same interested person" for the purpose of aggregation in Rules 905, 906 and 907, the following applies:—
(1) Transactions between (a) an entity at risk and a primary interested person; and (b) an entity at risk and an associate of that primary interested person, are deemed to be transactions between an entity at risk with the same interested person.
Transactions between (i) an entity at risk and a primary interested person; and (ii) an entity at risk and another primary interested person, are deemed to be transactions between an entity at risk with the same interested person if the primary interested person is also an associate of the other primary interested person.
Transactions between (i) an entity at risk and a primary interested person; and (ii) an entity at risk and another primary interested person, are deemed to be transactions between an entity at risk with the same interested person if the primary interested person is also an associate of the other primary interested person.
(2) Transactions between an entity at risk and interested persons who are members of the same group are deemed to be transactions between the entity at risk with the same interested person.
If an interested person (which is a member of a group) is listed, its transactions with the entity at risk need not be aggregated with transactions between the entity at risk and other interested persons of the same group, provided that the listed interested person and other listed interested persons have boards the majority of whose directors are different and are not accustomed to act on the instructions of the other interested person and have audit committees whose members are completely different.
As an example, Entity-At-Risk A, Listed B, Listed C and Unlisted D are all subsidiaries of Ultimate E. Listed B, Listed C and Ultimate E have boards, the majority of whose directors are different and are not accustomed to act on the instructions of Ultimate E and its associates and have audit committees whose members are completely different. Transactions between Entity-At-Risk A and Listed B need not be aggregated with transactions between Entity-At-Risk A and Listed C or with transactions between Entity-At-Risk A and Ultimate E. Transactions between Entity-At-Risk A and Ultimate E must be aggregated with transactions between Entity-At-Risk A and Unlisted D.
If an interested person (which is a member of a group) is listed, its transactions with the entity at risk need not be aggregated with transactions between the entity at risk and other interested persons of the same group, provided that the listed interested person and other listed interested persons have boards the majority of whose directors are different and are not accustomed to act on the instructions of the other interested person and have audit committees whose members are completely different.
As an example, Entity-At-Risk A, Listed B, Listed C and Unlisted D are all subsidiaries of Ultimate E. Listed B, Listed C and Ultimate E have boards, the majority of whose directors are different and are not accustomed to act on the instructions of Ultimate E and its associates and have audit committees whose members are completely different. Transactions between Entity-At-Risk A and Listed B need not be aggregated with transactions between Entity-At-Risk A and Listed C or with transactions between Entity-At-Risk A and Ultimate E. Transactions between Entity-At-Risk A and Ultimate E must be aggregated with transactions between Entity-At-Risk A and Unlisted D.
Amended on 7 February 20207 February 2020.
909
The value of a transaction is the amount at risk to the issuer. This is illustrated by the following examples:—
(1) In the case of a partly-owned subsidiary or associated company, the value of the transaction is the issuer's effective interest in that transaction;
(2) In the case of a joint venture, the value of the transaction includes the equity participation, shareholders' loans and guarantees given by the entity at risk;
(3) In the case of borrowing of funds from an interested person, the value of the transaction is the interest payable on the borrowing. In the case of lending of funds to an interested person, the value of the transaction is the interest payable on the loan and the value of the loan; and
(4) In the case that the market value or book value of the asset to be disposed of is higher than the consideration from an interested person, the value of the transaction is the higher of the market value or book value of the asset.
Amended on 7 February 20207 February 2020.
910
(1) An issuer must announce a sale or proposed sale of any units of its local property projects or those of its entity at risk to an interested person or a relative of a director, chief executive officer or controlling shareholder within two weeks of the sale or proposed sale, regardless of whether the sale or proposed sale is required to be announced under Rule 905.
(2) An issuer is required to comply with Rule 905 for a sale or proposed sale of any units of its non-local property projects, or those of its entity at risk, to its interested person.
911
An announcement relating to any sale or proposed sale of units of the issuer or those of its entity at risk's property projects must state the name of the project, the name of each purchaser, the unit number, the sale price and the percentage discount given.
912
In deciding on any sale of units of its property projects to an issuer's interested persons or a relative of a director, chief executive officer or controlling shareholder, an issuer's board of directors must be satisfied that the terms of the sale(s) are not prejudicial to the interests of the issuer and its minority shareholders. The audit committee must review and approve the sale(s) and satisfy itself that the number and terms of the sale(s) are fair and reasonable and are not prejudicial to the interests of the issuer and its minority shareholders.
913
Where a sale or proposed sale to an issuer's interested person requires shareholder approval, the issuer must obtain the approval within six weeks of the date of the sale or proposed sale.
914
An interested person and any nominee of the interested person must abstain from voting on all resolutions to approve the sales or proposed sales to the interested persons.
915
The following transactions are not required to comply with Rules 905, 906 and 907:—
(1) A payment of dividends, a subdivision or consolidation of shares, an issue of securities by way of a bonus issue, a preferential offer, or an off-market acquisition of the issuer's shares, made to all shareholders on a pro-rata basis, including the exercise of rights, options or company warrants granted under the preferential offer.
(2) The grant of options, and the issue of securities pursuant to the exercise of options, under an employees' share option scheme approved by the Exchange.
(3) A transaction between an entity at risk and an investee company, where the interested person's interest in the investee company, other than that held through the issuer, is less than 5%.
(4) A transaction in marketable securities carried out in the open market where the counterparty's identity is unknown to the issuer at the time of the transaction.
(5) A transaction between an entity at risk and an interested person for the provision of goods or services if:—
(a) the goods or services are sold or rendered based on a fixed or graduated scale, which is publicly quoted; and
(b) the sale prices are applied consistently to all customers or class of customers.
Such transactions include telecommunication and postal services, public utility services, and sale of fixed price goods at retail outlets.
(6) The provision of financial assistance or services by a financial institution that is licensed or approved by the Monetary Authority of Singapore, on normal commercial terms and in the ordinary course of business.
(7) The receipt of financial assistance or services from a financial institution that is licensed or approved by the Monetary Authority of Singapore, on normal commercial terms and in the ordinary course of business.
(8) Director's fees and remuneration, and employment remuneration (excluding "golden parachute" payments).
(9) Insurance coverage and indemnities for directors and chief executive officers against liabilities attaching to them in relation to their duties as officers of the entity at risk, to the extent permitted under the Companies Act, and regardless of whether the entity at risk is subject to the Companies Act.
(10) Defence funding for directors and chief executive officers of the entity at risk to the extent permitted under sections 163A and 163B of the Companies Act, regardless of whether the entity at risk is subject to the Companies Act, provided that in the case of defence funding permitted under section 163B of the Companies Act, such defence funding is to be repaid upon any action taken by a regulatory authority against him. For this purpose, references to "director" in sections 163A and 163B of the Companies Act shall be read as references to "director or chief executive officer".
In the case of defence funding under section 163A of the Companies Act, defence funding shall be repaid in accordance with the timeline stipulated in section 163A(2)(b) of the Companies Act.
In the case of defence funding under section 163A of the Companies Act, defence funding shall be repaid in accordance with the timeline stipulated in section 163A(2)(b) of the Companies Act.
Amended on 31 March 201731 March 2017 and 7 February 20207 February 2020.
916
The following transactions are not required to comply with Rule 906:—
(1) The entering into, or renewal of a lease or tenancy of real property of not more than 3 years if the terms are supported by a valuation carried out by a property valuer.
(2) Investment in a joint venture with an interested person if:—
(a) the risks and rewards are in proportion to the equity of each joint venture partner;
(b) the issuer confirms by an announcement that its audit committee is of the view that the risks and rewards of the joint venture are in proportion to the equity of each joint venture partner and the terms of the joint venture are not prejudicial to the interests of the issuer and its minority shareholders; and
(c) the interested person does not have an existing equity interest in the joint venture prior to the participation of the entity at risk in the joint venture.
(3) The provision of a loan to a joint venture with an interested person if:—
(a) the loan is extended by all joint venture partners in proportion to their equity and on the same terms;
(b) the interested person does not have an existing equity interest in the joint venture prior to the participation of the entity at risk in the joint venture; and
(c) the issuer confirms by an announcement that its audit committee is of the view that:—
(i) the provision of the loan is not prejudicial to the interests of the issuer and its minority shareholders; and
(ii) the risks and rewards of the joint venture are in proportion to the equity of each joint venture partner and the terms of the joint venture are not prejudicial to the interests of the issuer and its minority shareholders.
(4) The award of a contract by way of public tender to an interested person if:—
(a) the awarder entity at risk announces following information:—
(i) the prices of all bids submitted;
(ii) an explanation of the basis for selection of the winning bid; and
(b) both the listed bidder (or if the bidder is unlisted, its listed parent company) and listed awarder (or if the awarder is unlisted, its listed parent company) have boards, the majority of whose directors are different and are not accustomed to act on the instructions of the interested person or its associates and have audit committees whose members are completely different.
(5) The receipt of a contract which was awarded by way of public tender, by an interested person if:—
(a) the bidder entity at risk announces the prices of all bids submitted; and
(b) both the listed bidder (or if the bidder is unlisted, its listed parent company) and listed awarder (or if the awarder is unlisted, the listed parent company) have boards, the majority of whose directors are different and are not accustomed to act on the instructions of the interested person or its associates and have audit committees whose members are completely different.
Amended on 12 February 2021.
917
An announcement under Rule 905 must contain all of the following information:—
(1) Details of the interested person transacting with the entity at risk, and the nature of that person's interest in the transaction.
(2) Details of the transaction including, where applicable, the book value, the net profits attributable to the assets and the latest available open market value, relevant terms of the transaction, and the bases on which the terms were arrived at.
(3) The rationale for, and benefit to, the entity at risk.
(4)
(a) A statement:—
(i) whether or not the audit committee of the issuer is of the view that the transaction is on normal commercial terms, and is not prejudicial to the interests of the issuer and its minority shareholders; or
(ii) that the audit committee is obtaining an opinion from an independent financial adviser before forming its view, which will be announced subsequently.
(b) Transactions that satisfy Rule 916(1), (2) and (3) are not required to comply with Rule 917(4)(a).
(5) The current total for the financial year of all transactions with the particular interested person whose transaction is the subject of the announcement and the current total of all interested person transactions for the same financial year.
(6) Where the issuer accepts a profit guarantee or a profit forecast (or any covenant which quantifies the anticipated level of future profits) from the vendor of businesses/assets, the information required in Rule 1013(1). The issuer must also comply with Rule 1013(3).
Amended on 7 February 20207 February 2020.
918
If a transaction requires shareholder approval, it must be obtained either prior to the transaction being entered into or, if the transaction is expressed to be conditional on such approval, prior to the completion of the transaction.
919
In a meeting to obtain shareholder approval, the interested person and any associate of the interested person must not vote on the resolution, nor accept appointments as proxies unless specific instructions as to voting are given.
Amended on 29 September 201129 September 2011.
920
(1) An issuer may seek a general mandate from shareholders for recurrent transactions of a revenue or trading nature or those necessary for its day-to-day operations such as the purchase and sale of supplies and materials, but not in respect of the purchase or sale of assets, undertakings or businesses. A general mandate is subject to annual renewal.
(a) An issuer must:—
(i) disclose the general mandate in the annual report, giving details of the aggregate value of transactions conducted pursuant to the general mandate during the financial year. The disclosure must be in the form set out in Rule 907; and
(b) A circular to shareholders seeking a general mandate must include:—
(i) unless the Exchange requires otherwise, the names of the interested persons with whom the entity at risk will be transacting;
(ii) the nature of the transactions contemplated under the mandate;
(iii) the rationale for, and benefit to, the entity at risk;
(iv) the methods or procedures for determining transaction prices;
(v) the independent financial adviser's opinion on whether the methods or procedures in (iv) are sufficient to ensure that the transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the issuer and its minority shareholders;
(vi) an opinion from the audit committee if it takes a different view to the independent financial adviser;
(vii) a statement from the issuer that it will obtain a fresh mandate from shareholders if the methods or procedures in (iv) become inappropriate; and
(viii) a statement that the interested person will abstain, and has undertaken to ensure that its associates will abstain, from voting on the resolution approving the transaction.
(c) An independent financial adviser's opinion is not required for the renewal of a general mandate provided that the audit committee confirms that:—
(i) the methods or procedures for determining the transaction prices have not changed since last shareholder approval; and
(ii) the methods or procedures in Rule 920(1)(c)(i) are sufficient to ensure that the transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the issuer and its minority shareholders.
(d) Transactions conducted under a general mandate are not separately subject to Rules 905 and 906.
(2) If the information in Rule 920(1)(b) is included in a prospectus issued in connection with a listing of an issuer, the issuer may treat a general mandate as having been given. The mandate will be effective until the earlier of the following:—
(a) The first annual general meeting of the issuer following listing; or
(b) The first anniversary of the listing date.
Amended on 7 February 20207 February 2020.
921
Except in the case of a general mandate, if shareholder approval is required, the circular to shareholders must include:—
(1) details of the interested person transacting with the entity at risk, and the nature of that person's interest in the transaction.
(2) details of the transaction (and all other transactions which are the subject of aggregation pursuant to Rule 906) including relevant terms of the transaction, and the bases on which the terms were arrived at.
(3) the rationale for, and benefit to, the entity at risk.
(4)
(a) an opinion in a separate letter from an independent financial adviser who is acceptable to the Exchange stating whether the transaction (and all other transactions which are the subject of aggregation pursuant to Rule 906):—
(i) is on normal commercial terms, and
(ii) is prejudicial to the interests of the issuer and its minority shareholders.
(b) however, the opinion from an independent financial adviser is not required for the following transactions. Instead, an opinion from the audit committee in the form required in Rule 917(4)(a) must be disclosed:—
(i) the issue of shares pursuant to Part IV of Chapter 8, or the issue of other securities of a class that is already listed, for cash.
(ii) purchase or sale of any real property where:—
• the consideration for the purchase or sale is in cash;
• a property valuation report has been obtained for the purpose of the purchase or sale of such property; and
• the summary property valuation report of such property is disclosed in the circular.
(5) an opinion from the audit committee, if it takes a different view to the independent financial adviser.
(6) all other information known to the issuer or any of its directors, that is material to shareholders in deciding whether it is in the interests of the issuer to approve the transaction. Such information includes, from an economic and commercial point of view, the true potential costs and detriments of, or resulting from, the transaction, including opportunity costs, taxation consequences, and benefits forgone by the entity at risk.
(7) a statement that the interested person will abstain, and has undertaken to ensure that its associates will abstain, from voting on the resolution approving the transaction.
(8) Where the issuer accepts a profit guarantee or a profit forecast (or any covenant which quantifies the anticipated level of future profits) from the vendor of businesses/assets, the information required in Rules 1013(1) and 1013(2), and a statement confirming that it will comply with Rule 1013(3).
Amended on 12 February 2021.