Whole Section

  • Practice Notes

    • Practice Note 1.2 Oversight of Issuers

      Details Cross References
      Issue date: 25 February 2004

      Effective date: 1 March 2004
      Chapter 1

      1. Introduction

      1.1 This Practice Note discusses the Exchange's role in the current disclosure based regulatory regime and its approach to regulating issuers.

      2. Disclosure-Based Regulatory Regime and the Exchange's Role

      2.1 In October 1998, the Corporate Finance Committee ("CFC") initiated a shift from a merit-based regulatory regime to a predominantly disclosure-based regulatory regime. A disclosure-based regime is premised on the principle that, in general, informed investors can protect themselves. It recognizes that the market is better placed than regulators to decide on the merits of transactions.
      2.2 In a disclosure-based regime, the principal function of the Exchange is to provide a fair, orderly and efficient market for the trading of securities. In this regard, the Exchange considers disclosure as fundamentally important. The listing rules and the Exchange's regulation of issuers are aimed at promoting, among other things, full, accurate and timely disclosure. The underlying principles of the listing rules include:
      (i) issuers shall have minimum standards of quality, operations, management experience and expertise;
      (ii) investors and their professional advisers shall be given all information that they would reasonably require to make an informed assessment of the securities for which listing is sought;
      (iii) issuers shall disclose information if a reasonable person would expect that information to have a material effect on the price or value of their listed securities;
      (iv) all holders of listed securities shall be treated fairly and equitably; and
      (v) directors of an issuer shall act in the interests of shareholders as a whole, particularly where a director or substantial shareholder has a material interest in a transaction entered into by the issuer.

      3. Regulatory Objectives

      3.1 Oversight of listed companies is performed by Issuer Regulation ("IR"), part of the Risk Management and Regulation Group. IR aims to establish rules to promote a high standard of corporate governance and transparency by listed companies. IR monitors compliance with its rules.
      3.2 In considering applications for listing, IR reviews applications for listing, prospectus, offering memoranda, shareholders' circulars and other documents. IR's review is limited to ensuring that all relevant requirements for listing are satisfied. The directors of an issuer have primary responsibility for the accuracy and completeness of the document. While IR does not independently verify the information in the document, it may investigate if it has reason to believe that there is an omission from, or false or misleading disclosure in, the document.
      3.3 Where continuing disclosure obligations are concerned, IR aims to promote full and timely disclosure of all relevant information by the issuer to the market. The directors of an issuer have primary responsibility for the timeliness, accuracy and completeness of the announcement. While IR does not independently verify the information in the announcement, it may investigate if it has reason to believe that there is an omission from, or false or misleading disclosure in, the announcement.
      3.4 SGX has established SGX RegCo with effect from 15 September 2017. Functions previously performed by IR, part of the Risk Management and Regulation Group, and succeeding units or functions, will be performed by SGX RegCo.

      4. Regulatory Approach

      4.1 IR currently reviews every disclosure document prior to its issue. The objective of the review is to maintain the standard of disclosure (but not to exercise merit judgment on the transactions). IR also monitors reports by media and announcements made by issuers.
      4.2 However, responsibility for meeting the standard of disclosure rests on the issuer not IR. With effect from 1 March 2004, IR will adopt a more risk-based approach to regulating issuers. Under this approach, greater regulatory attention is focused on areas that pose significant risks and where market transparency, integrity or investor protection may be compromised if the risks materialize. In determining the low- and high-risk areas, IR has assessed the likelihood of a risk materializing and the impact it may have on IR's ability to meet its objectives. The Exchange will monitor the situation on an on-going basis, and if warranted, low-risk areas may be reclassified as high-risk areas and vice versa.
      4.3 Under this approach, IR will make the following changes to its functions:—

      Function Current Procedure New Procedure
      1. Review of shareholders' circulars Review every circular of every issuer before it is issued. Limited review of circulars where the disclosure is fairly standard (namely employee share option scheme, share buy-back, bonus issue, subdivision or consolidation of shares and scrip dividend). If, on limited review, the document is clearly deficient, a full review will be carried out.
      Full review for all other circulars.
      2. Review of takeover documents. Review every document of every issuer before it is issued. No review. IR may act on a complaint or if it believes there may be non- compliance.
      3. Review of offering memoranda for debt securities Review every document of every issuer before it is issued. No review if debt securities are offered, and the secondary market is limited, to institutional and sophisticated investors. IR may act on a complaint or if it believes there may be non-compliance.
      4. Review of quarterly, half-yearly and full year results announcements Review every results announcement of every issuer for every reporting period after it is issued. Selective review of results announcements. The decision to review will be based on the issuer's financial condition, past incidence of non-compliance or inadequate disclosure, and whether it is a newly-listed issuer.
      5. Review of annual report and Code of Corporate Governance Review every annual report of every issuer (including corporate governance disclosures) after it is issued. Limited review of every annual report, focusing on key areas such as audit qualifications, public float and interested person transactions.

      No review of corporate governance disclosures in the annual report. (This change has been implemented with effect from 6 May 2003.)
      6. Review of notification of directors' or substantial shareholders' interests Review every notification of every issuer after it is announced No review. IR may act on a complaint or if it believes there may be non-compliance
      4.4 If IR receives a complaint that a document referred to in paragraph 4.3 is deficient, it will review the document.
      4.5 This approach does not reduce the obligation to comply with the listing rules, but puts the responsibility for compliance squarely on the issuer.
      4.6 Remedial action may be taken against issuers for an omission, false or misleading disclosure, or non-compliance with listing rules; and advisers who are found not to have exercised due care and diligence.
      4.7 This approach will improve regulatory efficiency and effectiveness, and is consistent with a disclosure-based regime where the issuers are responsible for compliance with the rules and to make full and timely disclosure. It is also in line with the CFC's view that, in a disclosure-based regulatory regime, enforcement would be carried out by review of disclosure after the documents are issued and, where necessary, some pre-vetting of documents to maintain the standard of disclosure.

      Amended on 29 September 201129 September 2011, 15 September 201715 September 2017 and 7 February 20207 February 2020.

    • Practice Note 2.1 Equity Securities Listing Procedure

      Details Cross References
      Issue date: 7 January 2004
      17 May 2004
      7 June 2006

      Effective date: 8 January 2004
      1 June 2004
      1 September 2006
      Chapter 2

      1. Introduction

      1. This Practice Note explains:
      •   the Exchange's procedure in granting listing,
      •   the circumstances under which the Exchange may withdraw the eligibility-to-list letter,
      •   the principles in dealing with comments the Exchange occasionally receives from the public on listing applications,
      •   general duties regarding due diligence by sponsors and investigative reports,
      •   the sponsorship disclosure requirement post-listing,
      •   director's training and connection to Singapore.

      2. Exchange's Procedure

      2.1 When the Securities & Futures (Offers of Investments) (Shares and Debentures) Regulations 2002 came into effect on 1 July 2002, the Exchange's approach in reviewing new listing applications changed. The Exchange moved from a merit-based regime towards a disclosure-based regime. Hence, we now concentrate on reviewing the listing application for compliance with the listing requirements (including specific numerical standards and qualitative factors such as the integrity of the management and controlling shareholders of the listing applicants) and disclosure (for trading in the secondary market). The Exchange does not judge (and has never judged) whether the investment would be a good one for investors.
      2.2 Based solely on the information provided, including representations made at the time of application and in response to any queries from the Exchange, a conditional eligibility-to-list ("ETL") letter will be issued when it appears to the Exchange that the application satisfies the listing requirements. Listing will not be permitted until all conditions set out in the ETL letter have been satisfied.
      2.3 The Exchange may withdraw the ETL letter at any time and in its absolute discretion before the listing, if:—
      a. it subsequently becomes aware of any information that is likely to materially affect the issuer's eligibility for a listing. In particular, circumstances having that effect include those that have an adverse material impact on the operations and viability of the issuer or may cast doubt on the integrity of the directors, its management or controlling shareholders; or
      b. information submitted at the time of application was false or misleading or there is a material omission whether or not such omission was intentional; or
      c. any subsequent material adverse event occurs that renders the issuer not meeting the listing requirements.

      3. Comments Received

      3.1 The Exchange will give consideration to comments received on the listing application or prospectus from the public (whether anonymous or not).
      3.2 All comments will be forwarded to the issue manager.
      3.3 If the comments are anonymous, it would be up to the issue manager to take such actions as it deems fit. However, the Exchange may require the issue manager to investigate and report its findings to the Exchange if:—
      a. credible material comments regarding the financial information or operations of the issuer are supplied that may affect on the issuer's eligibility for a listing; or
      b credible material comments supported by evidence are supplied, in particular, comments regarding the integrity of the directors, management or controlling shareholders.
      3.4 If the comments are not anonymous and appear credible and material, the Exchange will normally expect the issue manager to investigate and report its findings to the Exchange. The Exchange may also carry out its own investigation and, where appropriate, enter into correspondence with the person who sent the comments.
      3.5 The Exchange may delay the listing until it is satisfied with the findings. The Exchange is not obliged to disclose any findings or its conclusion.
      3.6 Where the prospectus has been lodged with the Monetary Authority of Singapore ("MAS"), the Exchange will forward a copy of any comments and the issue manager's findings to the MAS for its consideration on whether to register the prospectus.

      4. Due Diligence

      4.1 Listing Rule 112B provides that an issue manager must:—
      a. discharge its obligations with due care, diligence and skill;
      b. in preparing an applicant for a new listing (including an initial public offering, a listing by way of an introduction or a reverse takeover), be satisfied of the various matters set out in Rule 112B(2)(a) and, conduct adequate due diligence; and
      c. inform the Exchange of all matters relevant to the listing application that should be brought to the Exchange's attention in a timely manner.
      4.2 Issue managers must exercise their own judgment on the nature and extent of due diligence work needed to satisfy themselves and the Exchange. As a sponsor, an issue manager must have knowledge of all relevant facts and circumstances concerning an applicant's ability to meet the Exchange's listing requirements. This means that the issue manager will have taken all reasonable steps to verify the facts and, if requested, will readily be able to confirm them to the Exchange. It also means that the issue manager must be in a position to confirm and substantiate its opinions, such as in respect of the integrity of the management and controlling shareholders, or the applicant's viability, or that the accounts are genuine and conform to applicable standards.
      4.3 Issue managers are also expected to continually review their due diligence processes and procedures to see how they might be refined or improved to meet their obligations under the relevant laws, regulations and SGX's listing requirements.
      4.4 [Deleted]

      5. Verification

      5.1 One aspect of an issue manager being able to satisfy the Exchange that it has conducted due diligence may be the existence of independently-sourced information, by a reputable agent, on the applicant or its management or controlling shareholders. The Exchange may request an issue manager to show it the results of any independent verification undertaken.
      5.2 Without affecting the issue manager's obligation to undertake due diligence, the Exchange may conduct checks using an agency it appoints. This would not normally increase the processing time for the application or add materially to the overall costs of the IPO. The cost would be borne by the applicant. If the Exchange undertook such a check, it would be likely to involve (as circumstances warranted) —
      a. 2 or 3 key persons, and their personal and business backgrounds and integrity, role in the applicant's business, interests in other companies, and any criminal or other records or links to money laundering or organized crime.
      b. the applicant's history, structure, accounts, business reputation and development, its related companies, its other businesses, and the influence of key persons.

      6. Foreign Applicants' Connection to Singapore

      6.1 The Exchange looks at the connection to Singapore of every foreign applicant. This is to ensure sufficient local representation and the ability to take steps in the event of a problem. Rule 221 requires a foreign issuer to have a certain minimum number of resident directors. To meet the objective of sufficient connection, residence means either citizenship or permanent residence status.
      6.2 The assessment of an applicant's connection to Singapore is made on a case-by-case basis, and depends on all the circumstances. In addition to Rule 221, the Exchange may ask the applicant also to install company secretarial functions here.

      7. Compliance Adviser

      7.1 The Exchange may require an applicant to appoint a compliance adviser for a specified period of time after listing.
      7.2 The Exchange may require an issuer to appoint a compliance adviser if it breaches the listing rules, particularly if the breaches are repeated or give rise to concerns about the issuer's compliance arrangements.
      7.3 The compliance adviser is expected to advise the board on the applicable rules and regulations. The Exchange would normally accept a lawyer, a corporate finance adviser or other professional parties, who are familiar with the rules and regulations applicable to a listed company, to be a compliance adviser.

      Amended on 29 September 201129 September 2011, 10 January 202010 January 2020 and 7 February 20207 February 2020.

    • Practice Note 2.1A Independence of Issue Managers

      Details Cross References
      Issue date: 10 January 2020

      Effective date: 10 January 2020
      Listing Rule 112A

      1. Introduction

      Issue managers play a major role in initial public offerings, listings by way of an introduction and reverse takeovers as they prepare listing applicants for the listing, lodge listing applications and deal with the Exchange on matters relating to listing applications.

      Rule 112A requires at least one issue manager to be independent of an applicant so that the interests of investors may be safeguarded. All issue managers are expected to provide impartial advice and discharge their professional duties fully and professionally.

      2. Independence of Issue Managers

      2.1 The Exchange will not normally consider an issue manager to be independent of an applicant if any of the following circumstances exist from the date of submission of the listing application up to the date of listing:—
      (i) more than 20% of the gross proceeds from the offering is or will be used to:—
      (a) reduce and/or retire any outstanding loan and/or available committed credit facility extended by the issue manager group to the applicant and/or its subsidiaries; and/or
      (b) discharge any guarantee given by the issue manager group on behalf of the applicant and/or its subsidiaries;
      (ii) the aggregate amount of:—
      (a) outstanding loans and/or available committed credit facilities extended by the issue manager group to the applicant and/or its subsidiaries; and
      (b) guarantees given by the issue manager group on behalf of the applicant and/or its subsidiaries,
      exceed 30% of:
      (A) the applicant's latest audited total assets or latest unaudited pro forma total assets (if applicable) prior to the submission of the application;
      (B) in the case of an applicant engaged principally in property investment and/or development, the latest valuation of the assets of the applicant and its subsidiaries as referred to in Listing Rule 222(2); or
      (C) in the case of a REIT or business trust that does not have audited financial statements, the latest unaudited pro forma total assets prior to the submission of the application; or
      (iii) the issue manager group has or will have an interest (direct or deemed) in 5% or more in the equity securities of the applicant, its principal subsidiaries and/or controlling shareholder(s) before or after the listing.
      2.2 References to "loans" and "guarantees" in paragraphs 2.1(i) and 2.1(ii) above exclude short-term financing facilities granted by the issue manager group to REITs, business trusts and/or their subsidiaries for the sole purpose of the acquisition of the assets for the proposed initial public offering or reverse takeover, where such short-term financing facilities are repaid on or around the time of completion of the listing.
      2.3 For the purposes of paragraphs 2.1(ii)(A), (B) and (C), where a loan provided by the issue manager group is drawn down for the purpose of the acquisition of an asset and such asset is not included in the applicant's latest audited total assets, unaudited pro forma total assets or valuation of the assets (where applicable), the valuation of the asset, for which the loan was based upon, may be included as part of the applicant's total asset figure as referred to in paragraph 2.1(ii)(A), (B) or (C).
      2.4 For the purposes of paragraph 2.1(ii)(B) above, the Exchange would consider the applicant to be engaged principally in property investment and/or development where the property investment and/or development activities of the applicant and/or its subsidiaries, based on the applicant's latest audited financial statements: (1) represents 50% or more of the total assets, revenue or operating expenses of the group; or (2) is the single largest contributor based on any of the tests in (1) above.
      2.5 For the purposes of paragraph 2.1(iii) above:—
      (i) reference to "equity securities" excludes equity interests:
      (a) held by an investment unit/entity in the issue manager group on behalf of, and for the benefit of, its independent and discretionary clients;
      (b) held by a fund management unit/entity in the issue manager group on behalf of its independent and non-discretionary clients;
      (c) held in a custodial capacity on behalf of independent clients; and
      (d) held by the issue manager group that arise as a result of an underwriting obligation; and
      (ii) an issue manager group would be deemed to have an interest in the equity securities of the applicant, its principal subsidiaries and/or controlling shareholder(s) if the issue manager group will be granted securities that may be convertible to shares in the applicant, its principal subsidiaries and/or controlling shareholder(s) before or after the listing.
      2.6 Notwithstanding that specific numerical limits have been provided in paragraphs 2.1(i), (ii) and (iii) above, the Exchange retains the discretion to deem the issue manager independent or otherwise having regard to the spirit and intent of Rule 112A.

      The issue manager must consider whether there are any circumstances other than those set out in paragraph 2.1 above that may materially affect its independence. In the event of any uncertainty, the applicant should consult and clarify with the Exchange as soon as possible.

      Added on 10 January 202010 January 2020 and 12 February 2021.

    • Practice Note 2.2 Global Depository Receipts

      Details Cross References
      Issue date: 21 June 2006

      Revised date: 26 March 2018

      Effective date: 22 June 2006

      26 March 2018

      Listing Rule
      Chapter 2 Part XII

      1. Introduction

      1.1 This Practice Note provides guidance on the documents to be submitted in connection to the issue of global depository receipts.

      2. Documents to be Submitted as Part of the Listing Application

      2.1 The offering memorandum, introductory document or a listing document ("listing documents"), whichever is applicable, in connection with an issue of global depository receipts for which listing is sought.
      2.2 Listing documents must contain the information that accredited and institutional investors and their professional advisors would reasonably require taking into account market practice. The listing document must include the following information:—
      (a) audited annual (consolidated) financial statements for the 3 most recent completed financial years or less where applicable, such as where the corporation exists for less than 3 years. Audited financial statements may be prepared in accordance to Singapore Financial Reporting Standards (International), International Financial Reporting Standards, US Generally Accepted Accounting Principles, or the foreign corporation's national law and national accounting standards;
      (b) any significant developments in the corporation's financial position or material information contained in the announcements made to the home exchange since the date of the latest audited financial statements; and
      (c) a description of the principal features of the global depository receipts.
      2.3 Confirmation by the corporation that it accepts responsibility for the information provided in the Listing documents, and the Listing documents contains the information that accredited and institutional investors and their professional advisors would reasonably require taking into account market practice.
      2.4 The memorandum and articles of association or other constituent documents, if any (incorporating all amendments made to date).

      3. Documents to be Submitted After Approval In-Principle

      3.1 After the corporation receives approval in-principle from the Exchange, the following documents must be submitted before the listing of the securities:—
      (a) The signed listing undertaking in the form set out in Appendix 2.3.1;
      (b) The signed issue documents, such as the depository agreement (as applicable);
      (c) The required number of copies of the listing documents; and
      (d) Such other documents (if any) as stipulated in the approval in-principle letter.

      Amended on 29 September 201129 September 2011 and 26 March 201826 March 2018.

    • Practice Note 2.3 Training for Directors with No Prior Experience

      Details Cross References
      Issue Date: 6 August 2018

      Effective Date: 1 January 2019
      Rule 210(5)(a)

      Appendix 7.4.1

      1 Introduction

      1.1 Rule 210(5)(a) provides that a director who has no prior experience as a director of an issuer listed on the Exchange (a "First-time Director") must undergo training in the roles and responsibilities of a director of a listed issuer as prescribed by the Exchange.
      1.2 This Practice Note prescribes the training that a First-time Director must undergo within one year from the date of his appointment to the board ("Mandatory Training"). If any director of an issuer which is newly listed on the Exchange has not attended any training as prescribed in paragraph 2 below, such director must attend Mandatory Training by the end of the first year of the issuer's listing.

      2 Mandatory Training

      2.1 To fulfil the Mandatory Training requirements, First-time Directors must attend the training programmes conducted by a training provider as specified in Schedule 1 to this Practice Note.

      3. Persons with Relevant Experience

      3.1 The Exchange expects all First-time Directors to attend Mandatory Training.
      3.2 In exceptional circumstances, First-time Directors assessed by the issuer's Nominating Committee to possess relevant experience need not attend Mandatory Training. In assessing the relevant experience, the Nominating Committee must have regard to whether the experience is comparable to the experience of a person who has served as a director of an issuer listed on the Exchange. The issuer's Nominating Committee must disclose its reasons for its assessment that the First-time Director possesses relevant experience. Such reasons shall be disclosed in the announcement of the appointment of the First-time Director as director of the issuer or in the prospectus, offering memorandum or introductory document.
      3.3 Notwithstanding paragraph 3.2 above, the Exchange has the discretion to direct a First-time Director to attend Mandatory Training.

      Schedule 1

      Training Provider Mandatory Training
      Singapore Institute of Directors Listed Entity Directors Programme
      LED 1 – Listed Entity Director Essentials
      LED 2 – Board Dynamics
      LED 3 – Board Performance
      LED 4 – Stakeholder Engagement
      Environmental, Social and Governance Essentials
      The First-Time Director must also attend the modules relevant to his appointment on the board of the issuer. The modules are:
      LED 5 – Audit Committee Essentials
      LED 6 – Board Risk Committee Essentials
      LED 7 – Nominating Committee Essentials
      LED 8 – Remuneration Committee Essentials

      Added on 1 January 20191 January 2019 and amended on 1 January 2022.

    • Practice Note 2.4 Summary Property Valuation Report

      Rule 222(3)(c) requires a summary property valuation report to contain the information required for prospectuses and circulars in accordance with the standards of the Singapore Institute of Surveyors and Valuers. The information required for prospectuses and circulars is set out in a Practice Guide published by the Singapore Institute of Surveyors and Valuers.

      Please click here to view the Practice Guide.

      Added on 12 February 2021.

    • Practice Note 3.1 Term Sheet For Debentures and Funds

      Details Cross References
      Issue date: 20 June 2011

      Effective date: 1 August 2011
      Chapter 3 and 4

      1. Introduction

      1.1 This Practice Note provides guidance on the information to be included in a term sheet issued in connection with a listing, where the offer is not accompanied by an MAS-registered prospectus, of:
      (1) debentures in the form of debentures or units of debentures issued pursuant to a securitisation transaction ("asset-backed securities"), exchange traded notes ("ETNs") and structured notes; and
      (2) funds (including collective investment schemes1 ("CIS") and exchange-traded funds ("ETFs")).

      2. Term sheets

      2.1 The term sheet should highlight key features and risks of the investment product to investors in a clear and concise manner in the formats provided below. The term sheets should not contain any information that is:
      (1) not included in the listing documents; or
      (2) false or misleading.
      2.2 An indicative term sheet should be submitted to SGX-ST at the time of the submission of the listing application and the final term sheet should form part of the listing documents to be made available to investors.
      3. Format for term sheets
      3.1 This section sets out the formats for the term sheets of listed debentures and funds (including collective investment schemes and exchange traded funds). Issuers are responsible for preparing the term sheets in accordance with the guidelines and formats provided in this Practice Note.
      3.2 Issuers should answer the questions provided in the templates in clear and simple language that investors can easily understand. Issuers should avoid using technical terms in the term sheet. Where technical terms are unavoidable, issuers should attach a glossary to the term sheet to explain these technical terms.
      3.3 The use of diagrams such as graphs, charts, flowcharts, tables or numerical explanations to explain structures or payoffs of the investment products to investors is encouraged.
      3.4 Information in the term sheets should be presented in a font size of at least 10-point Times New Roman. It should not be longer than four pages. Diagrams and a glossary, if included, would not count towards the four-page limit. However, the term sheet including diagrams and the glossary should not exceed eight pages.
      3.5 Where the investment product has different features, the format for term sheets provided in this Practice Note should be used with necessary adaptations. When changes are made to the offering documents such as the introductory document, offering circular or information memorandum, the term sheet should be updated if the change has a material effect on the key features and risks of the investment product.
      3.6 Format for term sheet of debentures in the form of asset-backed securities, exchange traded notes and structured notes:—

      KEY TERMS SHEET

      Issuer's
      Company
      Logo


      [Name of Issuer]

      [NAME OF PRODUCT]
      •   The terms set out in this term sheet are a summary of, and are subject to the terms and conditions set out in the Issuer's offering document dated [dd/mm/yyyy] ("Offering Document") and any other listing documents issued by the issuer for the purpose of this listing (the "Listing Documents").
      •   If you are in doubt whether the product is suitable for you, please consult your financial advisers or such advisers to the extent you consider necessary.
      •   Please read the Listing Documents and this term sheet carefully. You should not invest in the product if you do not understand the risks or are not willing to assume the risks.
      A. PRODUCT DETAILS
      SGX counter name (SGX stock code)   SGX-ST Listing Date dd/mm/yyyy
      Product Type   Maturity Date dd/mm/yyyy Issue Price
      Issue Price   Annualised Maximum loss [in % term]
      Name of Guarantor   Annualised Maximum gain [in % term]
      Capital Guaranteed [Yes/No] Callable by Issuer [Yes/No]
      Traded Currency SGD /USD / AUD Underlying Reference Asset  
      Board Lots   Name of Market Maker  


      B. INFORMATION ON THE ISSUER / GUARANTOR / KEY SWAP COUNTERPARTIES (IF APPLICABLE)
      Name of Issuer  
      Credit Rating of the Issuer Moody's Investors Service Inc.:
      Standard & Poor's Ratings Group:
      Fitch Ratings Ltd., London:
      Name of Guarantor (if any)  
      Credit Rating of Guarantor (if any) Moody's Investors Service Inc.:
      Standard & Poor's Ratings Group:
      Fitch Ratings Ltd., London:
      Issuer / Guarantor Regulated by  
      Issuer's / Guarantor's Website and any other Contact Information  
      Name of Key Swap Counterparties (if applicable)  
      Credit Rating of the Key Swap Counterparties (if applicable) Moody's Investors Service Inc.:
      Standard & Poor's Ratings Group:
      Fitch Ratings Ltd., London:


      C. INFORMATION ON THE TRUSTEE / CUSTODIAN
      Name of Trustee / Custodian  
      Regulated by  
      Trustee / Custodian's Website and any other Contact Information  


      D. PRODUCT SUITABILITY
      WHO IS THE PRODUCT SUITABLE FOR?
      •   This product is only suitable for investors who:
      •   [State return objectives (eg. capital growth/income/capital preservation) which the product will be suitable for]
      •   [State if the principal will be at risk]
      •   [State how long investors should be prepared to hold the investment for, and highlight any lock-in periods or issuer-callable features]
      •   [State other key characteristics of the product which will help investors determine whether the product is suitable for them]
      Example:
      •   The Notes are only suitable for investors who:
      •   want regular income rather than capital growth
      •   are prepared to lose their principal investment if the Issuer fails to repay the amount due under the Notes; and
      •   are prepared to hold their investment for the full X years. However, after Y years the product may be callable by the issuer.
      Further Information

      Refer to the "[Relevant Section]" on Pg XX of the Offering Document for further information on product suitability.
      E. KEY PRODUCT FEATURES
      WHAT ARE YOU INVESTING IN?

      [State key features of the product, such as the legal classification of the product, payoff and factors determining the payoff, underlying securities and whether and how they would affect the payoff, any capital guarantee, etc. Include a diagram of the structure of the product, if necessary.]

      Example:
      •   You are investing in a X-year equity-linked structured note in which you may receive quarterly coupons between W% and Y% p.a. issued by [name of issuer of the Notes].
      •   During the term of the investment, the issuer agrees to pay you quarterly coupons which depend on the share price performance of:
      •   Company A
      •   Company B
      •   Company C
      •   The amount of coupons is calculated as follows:
      •   [Formula for calculation of coupons]
      •   At maturity, the issuer agrees to pay you 100% of your principal investment, unless [list circumstances where investor may not receive 100% of principal investment]
      •   The product is secured by [type of underlying securities] issued by [name of issuer of underlying securities].
      Refer to the "[Relevant Section]" on Pg XX of the Offering Document for further information on features of the product, including how redemption amount is calculated.
      Possible Outcomes
      WHAT WOULD YOU GAIN OR LOSE IN DIFFERENT SITUATIONS?
      •   Best case scenario:
      •   [Describe payoff to investor in best case scenario and factors that could lead to this scenario.]
      •   Worst case scenario:
      •   [Describe payoff to investor in worst case scenario and factors that could lead to this scenario.]
      •   Other possible scenarios:
      •   [Describe payoff to investor in other possible scenarios and factors that could lead to this scenario. Include scenario where issuer calls the debenture if applicable.]
       
      F. KEY RISKS
      WHAT ARE THE KEY RISKS OF THIS INVESTMENT?

      [State key risks which are either commonly occurring events, or which may cause significant losses if they occur, or both. While the risks may overlap into multiple categories below, there is no need to repeat the same risk in more than one section. Product-specific market or liquidity risks should be included under the market or liquidity risks section respectively. Where there is a risk that an investor may lose all of his initial principal investment, emphasise this with bold or italicised formatting.]

      These risk factors may cause you to lose some or all of your investment:
      Refer to the "[Relevant Section]" on Pg XX of the Offering Document for further information on risks.
      Market and Credit Risks
      [State market risks (including currency risks) and counterparty risks which may result in the loss of capital or affect the payoff of the investment and their consequences.] Example:
      •   You are exposed to the credit risk of [name of issuer].
      •   The Notes are debt obligations of [name of issuer]. If [name of issuer] is unable to fulfil its obligations under the Notes, you may lose all your principal investment.
      Liquidity Risks
      [State the risks that an investor would face in trying to exit the product, eg: illiquid secondary market, limitations on redemption or factors that may delay the payment of redemption proceeds.]

      Example:
      •   The Notes may have limited liquidity.
      •   Trading market for the Notes may not exist at any time and the secondary market may not provide enough liquidity to trade or sell the Notes easily. If you exit from your investment before maturity, you may receive an amount which is substantially less than your principal.
       
      Product Specific Risks
      [State product structure-related risks which may result in capped upside potential, unfavourable pricing if redeemed before maturity, potential legal risks, etc] Example:
      •   The Issuer is established overseas.
      •   If the Issuer becomes insolvent or is the subject of a winding-up or liquidation order or similar proceedings, the insolvency laws in the country in which it is incorporated would apply. The process of making a claim under the foreign law may be complex and time-consuming.
      •   The underlying securities are held overseas.
      •   There may be difficulties realising the underlying securities which are held overseas. Even if the underlying securities are realised, the foreign law may not recognize that the payments to you should be made before other claimants and creditors.
      If the Issuer has to redeem the notes early, due to taxation and other reasons, you may receive less than your principal investment.
      G. FEES AND CHARGES
      WHAT ARE THE FEES AND CHARGES OF THIS INVESTMENT?

      [State all fees and charges paid/payable to the product providers. If product providers do not charge a fee, describe briefly how product providers will profit from the sale of the Notes. Indicate if the fees are payable once-off or on a recurring basis. If fees may later be increased or new fees introduced, such as fees related to the unwinding of investments, state so here.]

      Example:
      •   The fees for any series of the Notes is calculated using the formula below:
       
      •   The product providers make a profit through the structuring of the Notes. This profit is factored into the risk and return of the Notes.
      Refer to the "[Relevant Section]" on Pg XX of the Offering Document for further information on fees and charges.
      3.7 Format for term sheet of funds (including collective investment schemes and exchange traded funds):—

      KEY TERMS SHEET

      Issuer's
      Company
      Logo


      [Name of Issuer]

      [NAME OF PRODUCT]
      •   The terms set out in this term sheet are a summary of, and are subject to the terms and conditions set out in the Issuer's offering document dated [dd/mm/yyyy] ("Offering Document") and any other listing documents issued by the issuer for the purpose of this listing (the "Listing Documents").
      •   If you are in doubt whether the product is suitable for you, please consult your financial advisers or such advisers to the extent you consider necessary.
      •   Please read the Listing Documents and this term sheet carefully. You should not invest in the product if you do not understand the risks or are not willing to assume the risks.
      A. FUND DETAILS
      SGX counter name (SGX stock code) XX SGX-ST Listing Date dd/mm/yyyy
      Product Type Exchange-Traded Fund Underlying Reference Asset  
      Issuer   Investment Manager (if applicable)  
      Designated Market Maker   Expense Ratio (for Exchange-Traded Funds)  
      Traded Currency SGD /USD / AUD    


      B. INFORMATION ON THE ISSUER / KEY SWAP COUNTERPARTIES (IF APPLICABLE)
      Name of Issuer / Guarantor  
      Issuer / Guarantor Regulated by  
      Issuer's / Guarantor's Website and any other Contact Information  
      Name of Key Swap Counterparties (if applicable)  
      Credit Rating of the Key Swap Counterparties (if applicable)  


      C. INFORMATION ON THE TRUSTEE / CUSTODIAN
      Name of Trustee / Custodian  
      Regulated by by  
      Trustee / Custodian's Website and any other Contact Information  


      D. PRODUCT SUITABILITY
      WHO IS THE PRODUCT SUITABLE FOR?
      •   This product is only suitable for investors who:
      •   [State return objectives (eg. capital growth/income/capital preservation) which the product will be suitable for]
      •   [State if the principal will be at risk]
      •   [State other key characteristics of the product which will help investors determine whether the product is suitable for them, especially unique features eg: daily resetting of prices]
      Example:
      •   The Fund is only suitable for investors who:
      •   want capital growth rather than regular income;
      •   believe that the XXX Index will increase in value; and
      •   are comfortable with the greater volatility and risks of an equity fund.
      Further Information

      Refer to the "[Relevant Section]" on Pg XX of the Offering Document for further information on product suitability.
      E. KEY PRODUCT FEATURES
      WHAT ARE YOU INVESTING IN?

      [State key features of the product, such as the legal classification of the product, the broad investment objective of the product, whether it intends to offer regular dividends and when those are paid. Describe the underlying index, including how they would affect the payoff. Also describe how the payoff is calculated. Where the index has unique features of its construction or its payoff, describe these features, with the assistance of tables and diagrams if necessary.]

      Example:
      •   You are investing in an Exchange Traded Fund constituted in [Place of constitution] that aims to track the XXX index (the "Underlying Index") by entering into a derivative swap transaction with another party known as the swap counterparty.

      The Underlying Index is maintained by [Name of index sponsor] and represents the [eg: leading 500 large-cap companies in the U.S.] The index constituents are reviewed quarterly, and are diversified across all sectors.
      [Describe where an investor can find published figures for the value of the index eg: the index provider's website. Also describe where more details on the construction methodology or any unique features can be found.]
      Investment Objective / Strategy
      [Describe how the product intends to track the index/securities. For instance, if the product uses a representative sampling method or synthetic replication method, describe how this is carried out. If an investment strategy other than the direct investment method is used, explain why. Any processes and structures which introduce significant risk should be included in the description. Include diagrams of the structure of the product or pie charts of asset allocation as at a date near the date of the term sheet to show sectoral/country/asset type allocation, if applicable.]

      Example:
      •   In order to achieve the investment objective, the Fund may use either or both of the following methods:
      •   Method 1: Invest in a basket of securities (step 1 in the diagram on the next page) and exchange the performance of the basket of securities (step 2) with the swap counterparty for the performance of the Underlying Index (step 3). If the value of the basket of securities grows by 5% and the underlying index grows by 6%, the Fund will pay the swap counterparty 5% and the swap counterparty will pay the fund 6%. And/Or:

      •   Method 2: Pass the subscription proceeds received from investors to a swap counterparty (step 1 in the diagram below) in exchange for the performance of the Underlying Index (step 2). The counterparty will give collateral to the Fund which will be held by the Custodian (step 3).

      Refer to the "[Relevant Section]" on Pg XX of the Offering Document for the full diagrams of the structure of the Fund.
      F. KEY RISKS
      WHAT ARE THE KEY RISKS OF THIS INVESTMENT?

      [State key risks which are either commonly occurring events, or which may cause significant losses if they occur, or both. While the risks may overlap into multiple categories below, there is no need to repeat the same risk in more than one section. Product-specific market or liquidity risks should be included under the market or liquidity risks section respectively. Where there is a risk that an investor may lose all of his initial principal investment, emphasise this with bold or italicised formatting.]

      The value of the product and its dividends or coupons may rise or fall. These risk factors may cause you to lose some or all of your investment:
      Refer to the "[Relevant Section]" on Pg XX of the Offering Document for further information on risks of the product.
      Market and Credit Risks
      [State market risks (including currency risks) and counterparty risks which may affect the traded price of the product.]

      Example:
      •   Market prices for Units may be different from their Net Asset Value (NAV)
      •   The price of any Units traded on the SGX-ST will depend, amongst other factors, on market supply and demand, as well as the prevailing financial market, corporate, economic and political conditions, and their price may be different from the NAV of the Fund.
       
      Liquidity Risks
      [State the risks that an investor would face in trying to exit the product.]

      Example:
      •   You can redeem your Units with the manager only if you meet the minimum redemption amount of USD$100,000.
      •   The secondary market may be illiquid.
      •   You can sell your Units on the SGX. However, you may not be able to find a buyer on the SGX-ST when you wish to sell your Units. While the Fund intends to appoint at least one market maker to assist in creating liquidity for investors, liquidity is not guaranteed and trading of Units on the SGX-ST may be suspended in various situations.
      •   If the Units are delisted from the SGX-ST or if the CDP is no longer able to act as the depository for the Units listed on the SGX-ST, the Units in the investors' securities accounts with the CDP or held by the CDP will be compulsorily repurchased by the Market Maker at a price calculated by reference to the NAV of the Fund calculated as of the second Singapore trading day following the delisting date.
      Refer to the "[Relevant Section]" on Pg XX of the Offering Document for situations in which trading of units may be suspended.
      Product Specific Risks
      [State product-specific risks, which include structure-related risks, investment objective related risks, potential legal risks, potential risks leading to tracking errors etc]

      Example:
      •   You are exposed to counterparty risk related to derivative transactions
      •   The Fund may enter into derivative transactions (such as swap agreements) and be exposed to the risk that the counterparties to such transactions may default on their obligations. However, the Fund is required to limit its exposure to any single counterparty to 10% of its NAV.
      •   If the Swap Counterparty defaults on its obligations, you may sustain a loss on your investment in the Fund. The Fund limits its net exposure to the Swap Counterparty by obtaining collateral from the Swap Counterparty. In the event the Swap Counterparty defaults on its obligations, the value of the Fund will depend on the value of the collateral or basket of securities held.
      •   You are exposed to the risk that the USD will depreciate in value against the SGD.
      •   The Fund is denominated and traded in SGD whereas the underlying investments are denominated in USD. Therefore, investors may lose money if the USD were to depreciate against the SGD, even if the market value of the relevant underlying shares actually goes up.
      •   The Fund, Management Company and Custodian are not constituted in Singapore and are governed by foreign laws. Certain investments by the Fund such as swaps are also governed by foreign laws.
      •   Any winding up of these investments may involve delays and legal uncertainties for Singaporean investors.
      Refer to "[Relevant Section]" on Pg XX of the Offering Document for details on mitigating counterparty risk exposure in the swap agreements and what happens if the swap counterparty defaults.
      G. FEES AND CHARGES
      WHAT ARE THE FEES AND CHARGES OF THIS INVESTMENT?

      [State all fees and charges payable. This includes management fees, distribution fees, and any other substantial fees of more than 0.1% of NAV or of subscription value. Distinguish between fees payable via the investors' investments in the product and fees payable directly by the investors. Indicate if the fees are payable once-off or on a perannum basis. If fees may later be increased or new fees introduced, such as fees related to the unwinding of investments, state so here.]

      Example:

      Payable by the Fund from invested proceeds:

      Management Fee
      •   Up to 0.30% per annum; Currently 0.30% per annum
      Trustee Fee
      •   0.10% per annum
      Audit Fee, administrative expenses and other miscellaneous fees
      •   Up to 0.10% per annum


      Payable directly by you:
      •   For purchases and sales on the SGX-ST: Normal brokerage and other fees apply. Please contact your broker for further details.
      Refer to the "[Relevant Section]" on Pg XX of the Offering Document for further information on fees and charges.

      Added on 1 August 20111 August 2011.


      1 In the case of CIS where multiple sub-funds are covered in a single listing document, a separate term sheet should be prepared for each sub-fund.

    • Practice Note 3.2 Seasoning of Debt Securities

      Details Cross References
      Issue date: 19 May 2016

      Effective date: 19 May 2016
      Part VI of Chapter 3

      1. Introduction

      1.1 This Practice Note provides guidance on the procedures and disclosure requirements applicable to debt securities to be listed on the Exchange for trading by non-specified investors under Part VI of Chapter 3.

      2. Procedures Applicable to the Seasoning of Debt Securities

      Application to List the Initial Issuance of Debt Securities on the Exchange for Seasoning

      2.1 An issuer will be assessed by the Exchange on its compliance with Rule 308 and Part VI of Chapter 3 at the time of its application to list the initial issuance of its debt securities for seasoning.
      2.2 The offer documents issued to specified investors, under the requirements of Rule 320(3) must be announced via SGXNET before the start of trading on the market day prior to the listing of the initial issuance of debt securities.

      Application for Confirmation that the Debt Securities are Eligible for Trading by Non-Specified Investors

      2.3 5 market days before the end of the seasoning period, the issuer is to seek confirmation from the Exchange that the debt securities are eligible for trading on the Exchange by non-specified investors. In its application, the issuer is to submit an undertaking that it continues to comply with the eligibility criteria in Rule 318. If the application is approved by the Exchange, the Exchange will issue a confirmation to the issuer confirming that the debt securities are eligible for trading by non-specified investors. The issue of the confirmation letter is at the Exchange's discretion.
      2.4 The issuer is to immediately announce via SGXNET:
      (a) that the Exchange has given confirmation that the debt securities are eligible for trading on the Exchange by non-specified investors;
      (b) the date of commencement of trading by non-specified investors, which will be within 7-20 market days after the receipt of the Exchange's confirmation; and
      (c) the documents required under Rule 320(4),
      upon receiving confirmation from the Exchange.

      Application to List Additional Debt Securities for Offer to Non-Specified Investors through a Re-Tap in conjunction with the Commencement of Trading of the Debt Securities by Non-Specified Investors

      2.5 5 market days before the end of the seasoning period, the issuer is to:
      (a) seek confirmation from the Exchange that the debt securities are eligible for trading on the Exchange by non-specified investors. In its application, the issuer is to submit an undertaking that it continues to comply with the eligibility criteria in Rule 318; and
      (b) submit the listing application for the listing and quotation on the Exchange of additional debt securities for offers to non-specified investors through a re-tap.
      2.6 The issuer is to immediately announce via SGXNET:
      (a) that the Exchange has given confirmation that the debt securities are eligible for trading on the Exchange by non-specified investors;
      (b) that the Exchange has granted approval-in-principle for the listing and quotation of additional debt securities offered to non-specified investors issued through the re-tap;
      (c) the date of commencement of trading by non-specified investors, which will be within 7-20 market days after the receipt of the Exchange's confirmation and approval-in-principle; and
      (d) the documents required under Rule 320(4),
      upon receiving confirmation and approval-in-principle from the Exchange.

      Application to List Additional Debt Securities for Offer to Non-Specified Investors through a Re-Tap after the Commencement of Trading of the Debt Securities by Non-Specified Investors

      2.7 Issuers may submit applications to list additional debt securities for offer to non-specified investors via a re-tap at any time after the date of commencement of trading on Exchange by non-specified investors. In its application, the issuer is to submit an undertaking that it continues to comply with the eligibility criteria in Rule 318.
      2.8 The issuer is to immediately announce via SGXNET:
      (a) that the Exchange has granted approval-in-principle for the listing and quotation of additional debt securities offered to non-specified investors issued through a re-tap;
      (b) the date of commencement of trading for the additional debt securities; and
      (c) the documents required under Rule 320(4),
      upon receiving approval-in-principle from the Exchange.

      Withdrawing debt securities from the seasoning framework

      2.9 When an issuer decides to withdraw its debt securities from the seasoning framework prior to the commencement of trading of the debt securities on the Exchange by non-specified investors, the issuer must immediately inform the Exchange and announce such withdrawal via SGXNET. The announcement must also provide the reasons for the withdrawal.

      3. Assessment Criteria for Debt Securities to be Eligible for Trading by Non-Specified Investors

      3.1 The Exchange will take into account, amongst others, the following factors when assessing whether the issuer's debt securities are eligible for trading on the Exchange by non-specified investors:
      (a) material developments relating to the issuer since the commencement of the seasoning period; and
      (b) the issuer's track record of compliance with Part VI of Chapter 3 during the seasoning period,
      upon receiving the issuer's undertaking as required under paragraph 2.3, 2.5 and 2.7.
      3.2 The Exchange retains the discretion to determine if the debt securities are eligible for trading on the Exchange by non-specified investors.

      4. Disclosures

      4.1 As the initial issuance of debt securities are offered only to specified investors, there is no prescribed format for the offering memorandum or introductory document for such debt securities save that such offer documents must comply with the requirements under Rules 313 and 322. Issuers should also take note of the disclosure requirements in relation to the Product Highlights Sheet under the Securities and Futures (Offers of Investments) (Exemption for Offers of Post-Seasoning Debentures) Regulations 2016.

      Added on 19 May 201619 May 2016.

    • Practice Note 4.1 Profit Forecasts and Right of First Refusals

      Details Cross References
      Issue date: 14 September 2011

      Effective date: 29 September 2011
      Chapter 4

      1. Introduction

      1.1 This Practice Note provides guidance in connection with profit forecasts and right of first refusal arrangements for real estate investment trusts (REITs) and business trusts (the "Trusts")

      2. Profit Estimates, Forecasts and Projections

      2.1 Listing Rule 409(3) states that the annual accounts of the investment fund for each of the last 3 financial years, if applicable must be submitted when applying for a listing. In the event the investment fund is unable to provide the annual accounts for each of the last 3 financial years, the investment fund is expected to provide profit estimates, forecasts and/or projections.
      2.2 Listing Rule 609(b) further states that the proforma income statement or statement of comprehensive income should be presented for the latest 3 financial years and for the most recent interim period (if applicable) as if the restructured group had been in existence at the beginning of the period reported on. The proforma statement of financial position should be presented as at the date to which the most recent proforma income statement or statement of comprehensive income has been made up. In the event the issuer is unable to present the required proforma financial information, the Exchange may request for the provision of profit estimates, forecasts and projections.
      2.3 As a guide, the Exchange will normally expect up to 2 years of full year profit estimates, forecasts or projections to be provided in relation to Rule 409(3) and Rule 609(b).

      3. Right of First Refusals ("ROFRs")

      3.1 For any disposal of assets owned by the controlling unitholder and/or any of its subsidiaries that would fall within the investment mandate ("the competing assets"), a ROFR granted by the controlling unitholder to the Manager of the Trust will effectively mitigate conflicts of interest when the ROFR:—
      (a) gives the Trust the first right to acquire the competing assets from the controlling unitholder and/or any of its subsidiaries; and
      (b) is valid for as long as (i) the Manager remains the manager of the Trust; and (ii) the controlling unitholder together with its related corporations, remains a controlling shareholder of the Manager,
      where "related corporation" has the meaning ascribed to it under the Companies Act.

      Added on 29 September 201129 September 2011.

    • Practice Note 4.2 Corporate Governance Requirements for Real Estate Investment Trusts and Business Trusts

      Details Cross References
      Issue Date: 21 December 2018

      Effective Date: 1 January 2019
                              1 January 2022
      Rule 210(5)(d)(iii)
      Rule 210(5)(e)
      Rule 720(5)
      Transitional Practice Note 3

      1. Introduction

      1.1 Rule 210(5)(d)(iii) states that a director will not be independent if he has been a director for an aggregate period of more than 9 years (whether before or after listing) and his continued appointment as an independent director has not been sought and approved in separate resolutions by (A) all shareholders; and (B) shareholders, excluding the directors and the chief executive officer of the issuer, and associates of such directors and chief executive officer.
      1.2 Rule 210(5)(e) states that an issuer must establish one or more committees as may be necessary to perform the functions of an audit committee, a nominating committee and a remuneration committee, with written terms of reference which clearly set out the authority and duties of the committees.
      1.3 Rule 720(5) states that an issuer must have all directors submit themselves for re-nomination and re-appointment at least once every three years.
      1.4 This Practice Note provides guidance on the applicability of these Rules in relation to an issuer that is a Real Estate Investment Trust (REIT) or a Business Trust (BT).

      2. Real Estate Investment Trusts

      2.1 Under the Securities and Futures Act, the manager of an authorised REIT must act in the best interest of all unitholders as a whole and give priority to their interests over the manager's own interests and the interests of the shareholders of the manager in the event of a conflict. The Securities and Futures Act and regulations and notices made thereunder stipulate requirements for the composition of the board of a REIT manager, the establishment of an audit committee and the circumstances in which a director of the REIT manager is independent (the "SFA provisions").
      2.2 As the SFA provisions substantively address the corporate governance requirements stipulated in Rules 210(5)(d)(iii), 210(5)(e) and 720(5), these Rules do not apply to a REIT so long as the REIT continues to comply with the SFA provisions.

      3. Business Trusts

      3.1 Under the Business Trusts Act, the trustee-manager of a registered business trust must act in the best interests of all unitholders as a whole and give priority to their interests over its own interests in the event of a conflict. The Business Trusts Act and the regulations made thereunder stipulate requirements for the composition of the board of the trustee-manager, the establishment of an audit committee and the circumstances in which a director of the trustee-manager is independent (the "BT provisions").
      3.2 As the BT provisions made thereunder substantively address the corporate governance requirements stipulated in Rules 210(5)(d)(iii), 210(5)(e) and 720(5), these Rules do not apply to a business trust so long as the business trust continues to comply with the statutory stipulations.

      Added on 1 January 20191 January 2019.

    • Practice Note 5.1 Term Sheet for Structured Warrants

      Details Cross References
      Issue date: Jan 2003
      20 June 2011
      Effective date: Jan 2003
      1 August 2011
      Listing Rule 518

      1. Introduction

      1.1 This Practice Note provides guidance on the disclosure of information for a term sheet for structured warrants issuance.

      2. Listing Rule 518

      2.1 Listing Rule 518 states:—

      "When applying for the listing of structured warrants, an issuer must submit an indicative term sheet to the Exchange for its consideration. The indicative term sheet must set out the principal features of the structured warrants."

      3. Disclosure in Term Sheet

      3.1 As a guide, the term sheet submitted to the Exchange and used in connection with the marketing of the structured warrants should include the following information:—
      (1) The nature and amount of the structured warrants for which listing is sought.
      (2) A statement on the investment objective, experience or knowledge required of investors to invest in the structured warrants.
      (3) A summary of the principal terms of the structured warrants including the contract type, issue price, strike price or level, conversion ratio or multiplier, board lot size, the exercise period or date, the expiry or maturity date, and the expected listing date.
      (4) Whether the structured warrants will be physically settled or cash settled. If cash settled, the method or formula for calculating the cash settlement amount.
      (5) Key numerical measures such as the historical and implied volatility of the underlying financial instrument, gearing and premium.
      (6) Whether the structured warrants are at, in, or out of, the money.
      (7) The potential gains or losses from an investment in the structured warrant, including the worst case scenario.
      (8) A description of the key risk factors that are specific to the issuer and the issue of structured warrants.
      (9) Applicable Fees and charges.
      (10) Rights and ranking of the investors vis-à-vis other creditors in the event of an issuer default.
      (11) Summary information on the issuer and the guarantor (if any), including key financial information, credit rating and whether they are supervised by a monetary or securities regulatory authority.
      (12) Where the structured warrants are issued on securities of an entity (or entities) listed on an exchange, the identity of the exchange and how investors can obtain financial information on the entity (or entities). Where the structured warrants are based on an index, summary information about the index.
      (13) Whether the issuer or another person will make a market in the structured warrants. If so, the identity of the Designated Market-Maker, the maximum spread between the bid and offer quotations, the minimum quantity to which the quotations apply, and the circumstances in which no quotation will be provided.
      (14) Whether the issuer has authority to issue further structured warrants which will form a single series with the existing issue of structured warrants.
      (15) The identity of the manager, distributor, placing agent, paying agent, depository and warrant agent (if applicable).
      (16) Details on how copies of the offering memorandum, or base and supplemental listing documents, will be made available to the public.
      (17) The governing law and any selling restrictions under that law or otherwise.
      (18) Contact details of the issuer (including the contact number, email address and issuer's website).
      3.2 Where the issuer proposes an issue of a structured warrant which consists of novel features as approved by the Exchange, other than the information above, the term sheet should also consist of the following:—
      (1) a description of the additional features of the structured warrant;
      (2) circumstances where the issue will terminate prior to expiry (where applicable);
      (3) circumstances where the investor will only receive the capped amount of return (where applicable);
      (4) additional risks of the structured contract in relation to these features;
      (5) description of the methodology for determining the cash settlement amount if the issue terminates prior to expiry (where applicable);
      (6) description of the methodology for determining the periodic accumulation amount (where applicable);
      (7) description of the methodology for determining the cash settlement amount if there exists a multiplier effect on the amount of return (where applicable); and
      (8) scenario analysis to illustrate the variation in cash settlement methodology due to the additional features
      3.3 Other information may be required depending on the circumstances of the issue.
      3.4 The term sheet should highlight key features and risks of the structured warrants to investors in a clear and concise manner in the formats provided below. The term sheets should not contain any information that is:
      (1) not included in the listing documents; or
      (2) false or misleading.
      3.5 An indicative term sheet should be submitted to SGX-ST at the time of the submission of the listing application. Launch announcements should be accompanied by a term sheet and the final term sheet should form part of the listing documents to be made available to investors.

      4. Format for term sheets

      4.1 This section sets out the formats for the term sheets of structured warrants. Issuers are responsible for preparing the term sheets in accordance with the guidelines and formats provided in this Practice Note.
      4.2 The term sheet must be easily accessible by investors together with the base listing document, supplemental listing document, prospectus, pricing supplement or any other listing documents.
      4.3 Issuers should answer the questions provided in the templates in clear and simple language that investors can easily understand. Issuers should avoid using technical terms in the term sheet. Where technical terms are unavoidable, issuers should attach a glossary to the term sheet to explain these technical terms.
      4.4 The use of diagrams such as graphs, charts, flowcharts, tables or numerical explanations to explain structures or payoffs of the investment products to investors is encouraged.
      4.5 Information in the term sheets should be presented in a font size of at least 10-point Times New Roman. It should not be longer than four pages. Diagrams and a glossary, if included, would not count towards the four-page limit. However, the term sheet including diagrams and the glossary should not exceed eight pages.
      4.6 Where the structured warrant has different features, the format for term sheets provided in this Practice Note should be used with necessary adaptations.
      4.7 When changes are made to the base listing document, supplemental listing document, prospectus, pricing supplement or any other listing documents, the term sheet should be updated if the change has a material effect on the key features and risks of the structured warrants.
      4.8 Format for term sheet of structured warrants:—
      KEY TERMS SHEET

      Issuer's
      Company
      Logo


      [Name of Issuer]

      XX million European Style [Cash/Physically] Settled [Call/Put] Warrants due [expiry date] relating to [Underlying]
      •   The terms set out in this term sheet are a summary of, and are subject to the terms and conditions set out in the Issuer's base listing document dated [dd/mm/yyyy] (the "Base Listing Document"), the addendum to the Base Listing Document dated [dd/mm/yyyy] (the "Addendum") and the supplemental listing documents to be dated on or about [dd/mm/yyyy] (the "Supplemental Listing Documents" together with the Base Listing Document and the Addendum, the "Listing Documents").
      •   If you are in doubt whether the product is suitable for you, please consult your financial advisers or such advisers to the extent you consider necessary.
      •   Please read the Listing Documents and the risk factors stated in the Supplemental Listing Document and this term sheet carefully. You should not invest in the product if you do not understand the risks or are not willing to assume the risks.
      A. TERMS OF THE ISSUE
      SGX counter name (SGX stock code)   Issue Size XX million warrants
      Type European style cash/physically settled call/put warrants Launch Date dd/mm/yyyy
      Underlying Reference Asset (To also state the Reuters Instrument Code (RIC) of the underlying) Expiry Date dd/mm/yyyy
      Board Lot   Initial Settlement Date dd/mm/yyyy
      Issue Price   Expected Listing Date dd/mm/yyyy
      Exercise Price   Settlement Date dd/mm/yyyy
      Price Source for Underlying Reuters/Bloomberg etc. Valuation Dates  
      Last Trading Date dd/mm/yyyy Gearing  
      Entitlement Ratio xx warrant(s) : 1 share/index unit Volatility (Implied & Historical)  
      Warrant Agent   Premium  
      Clearing System The Central Depository (Pte) Limited Listing SGX-ST
      Settlement Method   Settlement Currency  
      Governing Law   Reference Currency  
      Cash Settlement Amount  
      Form  
      Final Reference Level  
      Exchange Rate  
      Adjustments and Extraordinary Events  
      Further Issuance  
      Documents The Base Listing Document, Addendum and the relevant Supplemental Listing Document are/will be available for inspection at the following address: [Address]
      Selling Restrictions  


      B. INFORMATION ON THE ISSUER AND GUARANTOR
      Name of Issuer  
      Name of Guarantor (if any)  
      Credit Rating of the Issuer / Guarantor Moody's Investors Service Inc.: Standard & Poor's Ratings Group: Fitch Ratings Ltd., London:
      Issuer / Guarantor Regulated by  
      Issuer's / Guarantor's Website and any other Contact Information  


      C. INFORMATION ON MARKET MAKING
      Name of Designated Market Maker  
      Maximum bid and offer spread  
      Minimum quantity subject to bid and offer spread  
      Circumstances where a quote will/may not be provided  


      D. PRODUCT SUITABILITY
      WHO IS THE PRODUCT SUITABLE FOR?
      •   This product is only suitable for investors who:
      •   believe that the price level of the underlying reference asset will increase/decrease and are seeking a short term leveraged exposure to the underlying reference asset.
      Further Information
      Key Product Features
      WHAT ARE YOU INVESTING IN?
      •   You are investing in cash-settled call/put warrants that allow you to take advantage of any increase/decrease in the price level of the underlying reference asset, which is <Name of underlying>.
      Information relating to the underlying can be obtained from
      Refer to Section xx on Pg xx of the Supplemental Listing Document.
      Calculation of Cash Settlement Amount
      •   The Cash Settlement Amount in respect of each Exercise Amount of Warrants, shall be an amount (if positive) payable in the Settlement Currency equal to the Entitlement in respect of each Exercise Amount for the time being multiplied by:
      (i)
      (a) the arithmetic mean of the closing prices of one underlying unit (as derived from the daily publications of the Relevant Stock Exchange subject to any adjustments to such closing prices determined by the Issuer to be necessary) for each Valuation Date LESS
      (b) the Exercise Price (subject to adjustment as provided in the Terms and Conditions of the Warrants) and divided by
      (ii) the Exchange Rate.
      WHAT WOULD YOU GAIN OR LOSE IN DIFFERENT SITUATIONS?
      •   Best case scenario:
      •   The value of the underlying index increases substantially resulting in a significant increase in the price of the Warrants. You then sell the warrants and realise a profit. The issuer is required to provide liquidity in the warrants to ensure that there will generally be a market price available for the purchase and sale of the warrants.
      •   Worst case scenario:
      •   If you buy the warrants and the value of the underlying reference asset decreases sharply. If you have not sold the warrants, you will lose your entire investment.
       
      E. KEY RISKS
      WHAT ARE THE KEY RISKS OF THIS INVESTMENT?  
      Market Risks
      •   Market price of the warrants may be affected by many factors
      •   Investors should note that the market price of the warrants may be affected by different factors, including but not limited to the level and volatility of the underlying reference asset, the time left to the expiry of the warrants, the strike level of the warrants, the prevailing interest rate climate, the currency exchange rates and the creditworthiness of the Issuer.
      •   You may lose your entire investment
      •   If the underlying reference asset falls to levels such that the cash settlement amount at expiry is calculated to be less than or equal to zero, you will lose your entire investment.
      •   You are exposed to the credit risk of <Issuer>
      •   The warrants are unsecured contractual obligations of <Issuer> and of no other person. If <Issuer> is unable to meet its obligations under the warrants, you may lose your entire investment.
      •   As <Issuer> is not incorporated in Singapore, any insolvency proceedings in respect of <Issuer> will be subject to foreign insolvency laws and procedures.
      Liquidity Risks
      •   The secondary market may be illiquid.
      •   The issuer acting through its designated market-maker may be the only market participant buying and selling the warrants. Therefore, the secondary market for the warrants may be limited and you may not be able to realise the value of the warrants. Do note that the bid-ask spread increases with illiquidity.
       
      Product Specific Risks
      •   Exchange rate risks
      •   There may be exchange rate risks as the warrants will be issued and traded in Singapore dollars while <the underlying> are traded in <foreign currency>. The value of the warrants may therefore be affected by, amongst other factors, the relative exchange rates of the Singapore dollar and the <foreign currency>.
      Refer to “Risk Factors” on Pg xx in the Supplemental Listing Document for the complete list of risks and details of the risks.
      F. FEES AND CHARGES
      WHAT ARE THE FEES AND CHARGES OF THIS INVESTMENT?
      •   Normal transaction and brokerage fees apply, similar to fees that you would pay for other transactions on SGX-ST.
       

      Amended on 1 August 20111 August 2011 and 7 February 20207 February 2020.

    • Practice Note 6.1 Disclosure Requirements: Pre-listing Information and Transitional Arrangements

      Details Cross References
      Issue date: 28 June 2002

      Effective date: 1 July 2002
      3 December 2007
      Listing Rules 603 and 606

      1. Introduction

      1.1 The Fifth Schedule of the Securities & Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018 stipulates prospectus disclosure requirements. In addition to complying with these regulations, the Exchange may require additional information to be disclosed, either to enable the Exchange to determine whether an issuer meets the SGX-ST's admission criteria, or to provide sufficient information for the secondary market as set out under the Exchange's continuing listing rules. To assist issuers, this Practice Note lists some of the disclosures that the Exchange will consider when reviewing an application. It is not an exhaustive list.
      1.2 In instances where the Exchange requires further information to be disclosed, the issuer is to decide whether it is more appropriate to disclose such information in the prospectus or as a pre-quotation announcement via SGXNET before listing.
      1.3 Sections 2 and 3 cover disclosure under the new framework. Section 4 covers transitional arrangements.

      2. Disclosure Relating to Admission Criteria

      2.1 In determining whether an issuer meets the requirements in Rules 203 and 211(3), the Exchange will need to make an assessment of the viability of the issuer's business. To enable the Exchange to make this assessment:
      2.1.1 An issuer which has not been profitable may have to disclose the group's burn rates and expenditures and for how long it is estimated that the proceeds will support the group's operations.
      2.1.2 An issuer will have to consider if the viability of its business depends on any governmental or regulatory approvals and whether such approvals, if not granted, would have a material adverse impact on the Group. The issuer may be required to obtain such approvals before its listing application.
      2.1.3 An issuer may have to quantify and disclose the effects on its business of material risks occurring.
      2.2 In relation to Rule 210 (2) to (4), if any of the financial statements of any entity included in the pro forma financial statements is unaudited, the scope of work done on the unaudited financial statements by the auditor and the reasons why unaudited accounts have been used may require further disclosure.
      2.3 Rule 210(3)(d) sets out the requirement that an issuer must not change or propose to change its financial year end to take advantage of exceptional or seasonal profits to show a better profit record. If an issuer proposes to change its financial end, or if it has done so for the recent three completed financial years, it must inform the Exchange and state the reasons for these changes. The Exchange may require the information to be disclosed.
      2.4 Rule 210(4)(a) sets out the requirement for an issuer to have a healthy financial position with no shortfall in working capital. To enable the Exchange to determine if an issuer complies with Rule 210(4)(a), an issuer will have to disclose any shortfall in working capital, the reasons for the shortfall, the company's views on the viability of the issuer, and the bases for these views.
      2.5 Rule 210(5) sets out the requirements for an issuer's directors and management. To enable the Exchange to determine if the issuer meets Rule 210(5), the issuer will have to disclose information such as in Rule 704(7), (8) and (9). In the disclosure of past working experience, the issuer may have to disclose the specific areas of responsibility, designation, period of employment, a brief description of the employer's business and scale of operations, and any other relevant information to enable the Exchange to assess whether the issuer's directors and executive officers have the experience and expertise to meet Rule 210(5)(a).
      2.6 A confirmation from the auditors must be submitted to the Exchange pursuant to Rule 246(9). If the confirmation refers to any inadequacy/weakness in the issuer's internal control and accounting systems, the issuer may be required to disclose the inadequacies/weakness and what/whether steps have been taken to rectify them.
      2.7 A confirmation from the issue manager must be submitted to the Exchange pursuant to Rule 246(4). If a profit forecast has been made, the issue manager may be asked to confirm that it is satisfied that the profit forecast has been made by the directors after reasonable enquiry.
      2.8 In relation to the structure of the IPO, the issuer will look at the following matters when considering whether an eligibility-to-list letter will be issued:
      2.8.1 The specific circumstances under which the termination clause in an underwriting agreement may be invoked.
      2.8.2 For a non-underwritten issue, whether it is likely that the spread and distribution guidelines in Rule 210(1)(a) will be met, and whether there is disclosure that the issue is not underwritten and the reasons.
      2.8.3 What disclosure is made if the issuer makes, or intends to make, a preferential offer or allotment of securities to any group of targeted investors (including persons listed in Rule 240, employees, or persons having a preferential relationship with the issuer such as the reporting accountant, valuer and solicitor). The issuer may be required to disclose the reasons for the allocation or allotment, whether they are made or to be made at a discount to the issue price, the number of securities allocated and allotted or to be allocated and allotted, and the basis of allocation and allotment.
      2.8.4 Where material, the impact on earnings per share and net tangible assets per share of the aggregate remuneration of controlling shareholders and their relatives (where these expenses are expected to increase after the offering of its securities) who have not entered into service agreements with the Company and of any proposed service agreements.

      3. Disclosure Showing Compliance with Continuing Listing Rules

      3.1 To comply with Rules 712 to 718, an issuer must appoint suitable auditors for the group and for significant foreign-incorporated subsidiaries and associated companies. The Exchange will consider the disclosures made in relation to the auditors (such as the names of auditors for the group, its principal subsidiaries and associated companies and the date of appointment and name of the company's audit partner) when assessing the issuer's compliance.
      3.2 Rule 806 sets out the limits under which an issuer can issue shares under a general mandate from shareholders. If an issuer wishes to obtain a general mandate under Rule 806 and includes this information in its IPO prospectus or offering memorandum, the Exchange will treat Rule 806 as satisfied by reason of investors subscribing for the issuer's securities. Otherwise, the issuer must take steps to meet the requirements of Rule 806 upon its listing on SGX-ST.
      3.3 Rules 843 to 861 set out the requirements for Share Option Schemes or Share Schemes. If an issuer's IPO prospectus or offering memorandum includes the disclosure required under Rules 855858 and 861, the Exchange will treat Rule 843(3) as satisfied by reason of investors subscribing for the issuer's securities. Otherwise, the issuer must take steps to meet the requirements of Rule 843(3) upon its listing on SGX-ST.
      3.4 Rule 920 sets out the requirements for seeking a general mandate from shareholders for recurrent interested person transactions. If an issuer's IPO prospectus or offering memorandum includes the disclosure required under Rule 920, the Exchange will treat Rule 920 as satisfied by reason of investors subscribing for the issuer's securities. Otherwise, the issuer must take steps to meet the requirements of Rule 920 upon its listing on SGX-ST.
      3.5 To comply with Rule 1207(11), an issuer must disclose the breakdown of the aggregate value between freehold and leasehold assets and other information. The Exchange will consider the disclosures made in relation to freehold and leasehold assets when assessing the issuer's compliance.

      4. Transitional Arrangements

      4.1 Rule 606(7)(j) sets out the requirement that the latest audited financial statements should be made up to a date not more than 9 months before the time of issue of the IPO prospectus or offering memorandum and where the latest audited accounts have been made up to a date more than 6 months before such time, the unaudited financial statements for a period of up to not more than 3 months prior to the date of the document shall be included. With effect from 1 July 2002, the Exchange will waive Rule 606(7)(j) if the issuer satisfies the requirements under paragraphs 11, 27 & 30 of Part 9 of the Fifth Schedule of the Securities & Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.

      Amended on 29 September 201129 September 2011 and 7 February 20207 February 2020.

    • Practice Note 6.2 Prospectus Disclosure for Life Science Companies

      Details Cross References
      Issue date: 24 March 2009

      Effective date: 24 March 2009
      Chapter 6

      1. Introduction

      1.1 This Practice Note sets out the prospectus disclosure requirements for life science companies seeking a listing on the Exchange.

      2. Disclosure Guidelines

      2.1 The applicant should disclose in its prospectus:
      (1) Details of its operations in laboratory research and development, to the extent material to investors, including details of patents granted and in relation to its products the successful completion of, or the successful progression of, significant testing of the effectiveness of its products. If there are no relevant details, a negative statement should be provided;
      (2) Details of the relevant expertise and experience of its key management and technical staff;
      (3) The salient terms of any service agreements between the applicant and its key management and technical staff;
      (4) The safeguards and arrangements that the applicant has in place, in the event of the departure of any of its key management or technical staff;
      (5) The risk and impact, financially or otherwise, from such departure of key management or technical staff on the group's business and operations;
      (6) Information on whether the applicant has engaged in collaborative research and development agreements with other organisations, to the extent material to investors;
      (7) A comprehensive description of each product, the development of which may have a material effect on the future prospects of the applicant;
      (8) The directors' opinion which must state, without requiring a profit forecast, that in their reasonable opinion, the working capital available to the applicant, as at the date of lodgement of the prospectus, is sufficient for the present requirements and for at least 12 months after listing; and
      (9) Where relevant and appropriate, an expert technical assessment and industry report.

      Amended on 29 September 201129 September 2011.

    • Practice Note 6.3 Requirements for Mineral, Oil and Gas Companies

      Details Cross References
      Issue date: 5 September 2013

      Effective date: 27 September 2013
      Listing Rules 624, 749, 750, 1014(2) and 1207(21)

      1. Introduction

      1.1 This Practice Note sets out guidance on the requirements for mineral, oil and gas companies.
      1.2 Exploration, development or production of mineral, oil or gas may be considered as principal activities of the issuer if the mineral, oil and gas activity of the issuer and/or its subsidiaries, based on the issuer's latest audited consolidated financial statements: (i) represents 50% or more of the total assets, revenue or operating expenses of the group; or (ii) is the single largest contributor based on any of the tests in (i) above.

      The issuer is required to make an announcement when any of the above situation occurs and will thereafter be required to comply with all the continuing listing rules applicable to mineral, oil and gas companies.
      1.3 A mineral, oil and gas company must demonstrate plans to obtain all necessary approvals required to proceed with development. The qualified person must provide basis for expecting that all required approvals will be granted and the directors must provide evidence of the company's intention to proceed with development within a reasonable time frame. The qualified person should highlight and discuss any material unresolved matter that is dependent on a third party on which extraction is contingent.
      1.4 Rule 210(9)(a) requires a mineral, oil and gas company to have a meaningful portfolio of reserves. A portfolio would be considered to be meaningful if the quantity of reserves is of sufficient substance. The 'reserves' must be able to generate sufficient revenues through production to support the plans to proceed with development.
      1.5 For ease of reference, the following sets out the Listing Rules specifically applicable to mineral, oil and gas companies:
      (a) Rule 210(9);
      (b) Rule 624;
      (c) Rule 705(6);
      (d) Rule 705(7);
      (e) Rule 712(1);
      (f) Rule 749;
      (g) Rule 750;
      (h) Rule 1006(e);
      (i) Rule 1014(2);
      (j) Rule 1015(3);
      (k) Rule 1207(21); and
      (l) Appendix 7.5 — Summary of Reserves and Resources.
      Other generally applicable Listing Rules also apply to mineral, oil and gas companies.

      2. General Requirements for Disclosure of Reserves, Resources or Exploration Results

      2.1 All mineral, oil and gas companies must comply with the following requirements:
      (a) All statements and reports in relation to reserves, resources or exploration results must be prepared and presented in accordance with a Standard. The listing applicant or issuer must state in the offer document, circular or announcement, as the case may be, the Standard used.
      (b) Tabulated estimates reserves and resources should be presented in the format as set out in Appendix 7.5.
      (c) Assay results must include disclosure of the analytical methods used and the name of the analytical laboratories which assayed the material sampled, together with details of their relationship, if any, to the listing applicant or issuer. The accreditation of each laboratory, or lack thereof, must also be disclosed.

      3. Additional Disclosure Requirements for Offer Document

      3.1 In addition to paragraph 2 of this Practice Note, the prospectus, offering memorandum or introductory document relating to a mineral, oil and gas company must include the following:
      (a) Information required in paragraphs 1.3 and 1.4 above;
      (b) the directors' opinion which must state, without requiring a profit forecast that in their reasonable opinion, the working capital available to the applicant is sufficient for the present requirements and for at least 18 months after listing;
      (c) a statement by the listing applicant that no material changes have occurred since the effective date of the qualified person's report. Where there are material changes, these should be prominently disclosed together with a statement that the listing applicant will as soon as practicable following its listing, announce the qualified person's report or the independent qualified person's report, as the case may be, on the material changes in accordance with Rule 750(1);
      (d) the listing applicant's plans and milestones to advance to production stage with capital expenditure for each milestone for an issuer applying for listing pursuant to Rule 210(9)(g). These plans must be substantiated by the opinion of an independent qualified person;
      (e) the listing applicant's policies and practices in relation to operating in a sustainable manner, including:
      (i) the listing applicant's policy with regards to environmental and social issues;
      (ii) impact of the listing applicant's business practices on the environment and the communities in which it operates; and
      (iii) environmental and social risks faced by the listing applicant.
      (f) In relation to a listing applicant whose principal activities consist of exploration for mineral, oil or gas, a clear and prominent statement on the front cover highlighting that fact, that the listing applicant may not progress to the next stage of development or to a stage where it is able to generate revenue; and industry-specific risks.

      4. Additional Continuing Obligations

      4.1 In addition to paragraph 2 of this Practice Note, a mineral, oil and gas company must also comply with the following:
      (a) Exploration, development and production activities must be reported in a timely and responsible manner. If the issuer releases partial results, e.g. the first two holes of a six hole program, it must ensure that the balance of the results are disclosed in a timely manner whether the results are positive or negative.
      (b) Where work has been discontinued on properties about which the issuer has made prior disclosure, there must be further information provided as to any undisclosed results and reasons for the cessation of work.

      5. Qualified Person's Report

      5.1 The qualified person's report must be prepared in accordance with a Standard.
      5.2 The qualified person must review the information contained in the offer document, circular or announcement, as the case may be, which relates to the qualified person's report and confirm that the information presented is accurate, balanced, complete and not inconsistent with the qualified person's report. The qualified person's report must not include blanket disclaimers or contain indemnities for fraud and gross negligence. If the qualified person's report includes a statement on the qualified person not accepting any responsibility for the completeness or adequacy of the information provided by the company and its advisors and for information extracted from public sources, this qualification must be subject to the qualified person having: (i) made reasonable enquiries and exercised his judgment on the reasonable use of such information; and (ii) found no reason to doubt the accuracy or reliability of the information.
      5.3 A qualified person's report must include the following:
      (a) Executive summary
      (b) Introduction
      •   Full name, and if applicable, the partner/director in charge of the report; professional qualifications, years of relevant experience, Professional Society Affiliations and Membership (including details of a recognised professional association) of the qualified person and the address of the qualified person's firm/company;
      •   Aim of the report;
      •   Scope of the report;
      •   Basis of the report — including data sources, data validation and reliance on other experts; and
      •   Standard used
      (c) Property description, size, location, access, natural and cultural environment, including:
      •   listing applicant's/issuer's assets and liabilities, including the following summary table of assets:

      Asset name/ Country Issuer's interest (%) Development Status Licence expiry date Licence Area Type of mineral, oil or gas deposit Remarks
                   
      •   nature and extent of listing applicant's/issuer's rights of exploration or extraction; and
      •   description of the economic conditions for the working of the licenses, concessions or similar, with details of the duration and other principal terms and conditions of the concessions including fiscal conditions, environmental and rehabilitation requirements, abandonment costs and any necessary licenses and consents including planning permission.
      (d) History of the property, including exploration history and any production history
      (e) Geological and geophysical setting, type and characteristics of the deposit/accumulation
      (f) Exploration data including drilling and sampling, sampling and analysis methods, sample preparation and security, quality assurance and quality control on the sample analyses.
      (g) Mineral processing and metallurgical testing, if applicable
      (h) Resource and reserve estimates and exploration results, as applicable, in accordance with the relevant Standard, including a summary of reserves and resources in the form of Appendix 7.5
      (i) Planned extraction method, processing method, capital costs, operating costs, considerations including social, environmental, health and safety factors that may affect exploration and/or exploitation activities; and production schedule, if applicable
      (j) Financial analysis of the operations, taxes, liabilities, marketing if applicable
      (k) Interpretation and conclusions
      (n) [deleted]
      (o) [deleted]
      (p) [deleted]
      (q) [deleted]
      (r) [deleted]

      6. Summary Qualified Person's Report

      6.1 A summary report prepared by a qualified person shall contain the following:
      (a) Appendix 7.5 and a commentary of material changes to the issuer's reserves and resources. The commentary should include information on the changes to the reserves estimates, indicating explanation for the changes (e.g. extensions and improved recovery, technical revisions, discoveries, acquisitions, dispositions, economic factors, production);
      (b) with regard to minerals, Table 1 of the JORC Code; and
      (c) with regard to oil and gas, paragraphs 5.3(a) and 5.3(b) of Practice Note 6.3.

      7. Valuation Report

      7.1 The prospectus, offering memorandum or introductory document relating to a mineral, oil and gas company must include a valuation report on the assets of the listing applicant. The valuation report must be prepared by an independent expert in accordance with the VALMIN Code, SPEPRMS or an equivalent standard that is acceptable to the Exchange. The effective date of the valuation report must not be more than 6 months from the date of lodgement of the offer document.
      7.2 With regard to any valuation, the following must be disclosed:
      (a) the Standard used;
      (b) principal assumptions used in arriving at the valuation, including but not limited to, assumed commodity prices, rate of discount and rate of inflation, and the basis for each assumption. Contracted commodity prices must be used where applicable and available. If unavailable, either forecast or constant prices may be used. Where forecast commodity prices are used, this should be accompanied by a statement by the qualified person that such forecast was arrived at after due and careful enquiry and reflects their view of a reasonable outlook of the future;
      (c) analysis of the sensitivity of such valuations to variation in the principal assumptions provided in (b) above. In relation to commodity prices, the scenarios must include both constant and forecast prices. In relation to the rate of discount, the scenarios must include the weighted average cost of capital;
      (d) an estimate of net present value. If the valuation is arrived at on an alternative basis, an explanation of the basis and the reasons for adopting the basis; and
      (e) risk factor in the prospectus highlighting the uncertainties inherent in the assumptions made in arriving at the valuation and the effects they may have on the valuation of the mineral, oil and gas assets and the value of the offering shares.

      8. Farm-in and Farm-out Transactions

      8.1 A farm-in transaction refers to an acquisition of a partial interest of an existing asset by a company from a third party. A farm-out transaction refers to a sale of a partial interest of an existing asset owned by a company to a third party.
      8.2 Farm-in and farm-out transactions are excluded from the requirements in Chapter 10 if they are in the ordinary course of business of the issuer under Rule 1002.
      8.3 Where a farm-in or farm-out transaction only changes an issuer's effective interest in the asset, Rule 750 is not applicable. However, the issuer must consider if the transaction needs to be disclosed under Rule 703. If so, the issuer must disclose its new working interest and/or net entitlement.

      Added on 27 September 201327 September 2013 and amended on 23 August 201823 August 2018.

    • Practice Note 6.4 Requirements for Special Purpose Acquisition Companies

      Details Cross Reference
      Issue date: 2 September 2021

      Effective date: 3 September 2021
      Listing Rule 210(11)(a)

      Listing Rules 210(11)(i)(i) and (v)

      Listing Rule 626

      Listing Rule 754(3)
      1. Introduction
      This Practice Note sets out guidance on the requirements for SPACs. Issuers should apply the principles outlined in the Practice Note flexibly and sensibly.
      2. Guidance on Suitability Assessment Factors of a SPAC
      2.1 The Exchange may, in its discretion, take into account any factor it considers relevant in assessing the suitability of a SPAC for listing. In exercising its discretion, the Exchange will consider factors including, but not limited to, the following:
      (a) the profile including the track record and repute of the founding shareholders and experience and expertise of the management team of the issuer;
      (b) the business objective and strategy of the issuer;
      (c) the nature and extent of the management team’s compensation;
      (d) the extent and manner of the founding shareholders and the management team’s securities participation in the issuer, including equity interests acquired by the founding shareholders, management team and their associates at nominal or no consideration prior to or at the IPO;
      (e) the alignment of interests of the founding shareholders and the management team with the interest of other shareholders;
      (f) the proportion of rewards to be enjoyed by the founding shareholders, the management team, and their associates;
      (g) the amount of time permitted for completion of the business combination prior to the liquidation distribution;
      (h) the dilutive features and events of the issuer, including those which may impact shareholders and whether there are any mitigants for such dilution;
      (i) the percentage of amount held in the escrow account that must be represented by the fair market value of the business combination;
      (j) the provisions in the Articles of Association and other constituent documents of the issuer (including comparability of shareholder protection and the liquidation rights with that of Singapore-incorporated companies, and whether the issuer will be subject to the Insolvency, Restructuring and Dissolution Act of Singapore ("IRDA") for liquidation procedures or the incorporation of such equivalent provisions of the IRDA);
      (k) the intended use of IPO proceeds not placed in the escrow account;
      (l) the escrow arrangements governing the funds in the escrow account; and
      (m) such other factors as the Exchange believes are consistent with the goals of investor protection and the public interest.
      2.2 The management team should have the appropriate experience and track record and demonstrate that it will be capable of identifying and evaluating acquisition targets and completing the business combination sustainably based on the business objective and strategy disclosed in the prospectus. The issue manager must demonstrate that the management team has the requisite collective experience and track record, which include having:
      (a) sufficient and relevant technical and commercial experience and expertise;
      (b) positive track record in relevant industry and business activities including (i) specific contribution to business growth and performance; (ii) ability to manage relevant business operations risks; and (iii) ability to identify and develop acquisition opportunities; and
      (c) positive corporate governance and regulatory compliance history.
      2.3 In demonstrating the suitability of a SPAC for listing, the issue manager must consider the SPAC proposal holistically and take into consideration factors including those set out in paragraphs 2.1 and 2.2 above.
      3. Additional Requirements for Escrow Agreement
      3.1 The escrow agreement provisions should include the following:
      (a) the governing law is Singapore law;
      (b) the obligation by the escrow agent to disclose any confidential or other information to the Exchange upon request;
      (c) the obligation by the escrow agent to take appropriate measures to ensure proper safekeeping, custody and control of the funds held in the escrow account, including that proper accounting records and other related records as necessary are retained in relation to the escrow account; and
      (d) where the escrow agent resigns or ceases to act for the issuer prior to the liquidation of the escrow account, the escrow agent is required to give three months’ notice in writing to the Exchange if it wishes to resign, stating its reasons for resignation. The issuer is similarly required to give three months’ notice in writing to the Exchange if it wishes to terminate the escrow agent’s appointment, stating its reasons for termination. Any resignation or termination arrangement shall be carried out in compliance with Rule 210(11)(i)(iii).
      4. Contents of Quarterly Updates via SGXNET
      4.1 The SGXNET announcement update required under Rule 754(3) must include the following information:
      (a) general description of the issuer’s operating expenses and the total amounts spent;
      (b) detailed description, analysis and discussion on the top 5 highest amount of operating expenses;
      (c) a statement by the directors of the issuer on whether there is any circumstance that has affected or will affect the business and financial position of the issuer;
      (d) commentary from the directors of the issuer on the direction of the business combination, including any change to the objective, strategy, status and capital of the issuer;
      (e) in relation to the funds placed in the escrow account, the composition of the permitted investments, the issuer’s investment strategy, market and credit risks for such investments; and
      (f) brief explanation of the status of (i) utilisation of proceeds from IPO, compared with the disclosure of the intended use of proceeds in the prospectus, segregated between those placed in the escrow account from those which are not, including explanation for any material deviation in the use of proceeds; and (ii) utilisation of any interests and income derived from the amounts placed in the escrow account.
      5. Event of Material Change prior to Business Combination
      5.1 Examples of circumstances that may constitute an event of material change as described in Rule 210(11)(n)(i) includes:-
      (a) a change in control of the founding shareholders; and
      (b) resignation and/or replacement of key members of the management team (which are not due to natural cessation events).

      The circumstances above are not intended to be exhaustive. In the event of any uncertainty, the issuer should consult and clarify with the Exchange as soon as possible. The Exchange retains discretion to determine a circumstance an event of material change.
      6. Circumstances for Escrow Funds Draw Down
      6.1 The issuer may draw down the amount placed in the escrow account prior to completion of a business combination in the following circumstances:
      (a) upon election by a shareholder to have its shares redeemed by the issuer at the time of business combination vote and if the business combination is approved and completed within the permitted time frame;
      (b) upon a liquidation of the issuer;
      (c) solely in respect of the interest earned and income derived from the amount placed in the escrow account, such interest and income is permitted for draw down by the issuer as payment for administrative expenses incurred by the issuer in connection with the IPO, general working capital expenses and related expenses for the purposes of identifying and completing a business combination; and
      (d) upon such other exceptional circumstances apart from those stipulated in (a) to (c).

      The issuer must obtain (i) the Exchange’s approval; and (ii) at least 75% of the votes cast by shareholders at a general meeting to be convened, for a draw down on the amount held in escrow account for the purposes of (d). For the purpose of voting on a draw down under (d), the founding shareholders, the management team, and their associates, are not permitted to vote with shares acquired at nominal or no consideration prior to or at the IPO of the issuer.
      7. Additional Disclosure Requirements for Shareholders’ Circular for the Business Combination
      7.1
      (a) Aggregate fair market value of the business combination in monetary terms and as a percentage of the amount held in the escrow account, net of any taxes payable (including basis of such value);
      (b) The details of how the target business(es) or asset(s) was identified, evaluated and decided for business combination;
      (c) A statement on whether the selection criteria or factors of the business combination are in line with those disclosed in the prospectus and relevant commentary on any variations from such selection criteria or factors, if any;
      (d) The status of the utilisation of proceeds raised from the IPO, compared with the disclosure of the intended use of proceeds in the prospectus, segregated between those placed in the escrow account from those which are not, including explanation for any material deviation in the use of proceeds;
      (e) Information required in Rules 1015(5)(a) and (b);
      (f) Valuation methodologies (if applicable) used in valuing the business combination, and explanation if such methodologies is not in line with that disclosed in the prospectus of the IPO;
      (g) The limit as to the maximum number of shares with respect to which an independent shareholder, together with any associates or persons acting jointly or in concert, may exercise a redemption right (if applicable);
      (h) Where an independent valuer is not appointed, statements from the financial adviser and the directors of the issuer on why obtaining an independent valuation on the business combination is not necessary and the basis for forming such views;
      (i) A responsibility statement by the founding shareholders and the directors of the issuer, the proposed directors of the resulting issuer, and the financial adviser, in the form set out in Practice Note 12.1;
      (j) The details of any additional financing including issuance of securities and credit facility entered into, including the salient terms and proposed utilisation of funds;
      (k) Voting, redemption and liquidation rights of shareholders in relation to the business combination. This includes:
      (i) basis of computation for pro rata entitlement in the event of a redemption of shares and liquidation of the issuer;
      (ii) any threshold on the aggregate percentage of shares owned by shareholders who exercise their redemption rights beyond which the issuer will not proceed with the business combination, and the basis for the quantum set;
      (iii) the process for those who elect to redeem their shares for cash and the timeframe for payment; and
      (iv) the terms and procedures for the liquidation distribution upon failure to meet the permitted time frame to complete a business combination;
      (l) Prominent disclosure on dilutive impact to shareholders arising from known dilutive features and events including (i) additional financing obtained for the business combination and new issuance of securities; (ii) the conversion of any warrants or other convertible securities issued by the issuer in connection with the IPO including the maximum percentage dilution limit established in accordance with Rule 210(11)(k) and the basis for the established limit; and (iii) the aggregate equity interests in the issuer acquired by the founding shareholders, management team, and their associates at nominal or no consideration;
      (m) Pertinent terms of any side voting arrangement or agreement respectively entered into by the SPAC and/or founding shareholders with other shareholders including the impact of such arrangement or agreement to shareholders;
      (n) Potential conflicts of interests between the issuer and the founding shareholders, the directors and the management team, and their associates (including measures to address potential conflicts of interests where the issuer pursues a business combination target in which the aforementioned persons or entity have an interest in);
      (o) Potential conflicts of interests a financial adviser and underwriters may have in providing additional services to the issuer such as identifying potential business combination targets, including description of the additional services, fees and commissions, and whether any commissions were conditional and deferred;
      (p) The details of any benefits and compensation received by the founding shareholders, the directors and the management team, and their associates arising from the completion of the business combination; and
      (q) The details of the ownership interest in and continuing relationship of the founding shareholders, the directors and the management team, and their associates with the resulting issuer.

      Added on 3 September 2021.

    • Practice Note 7.1 Continuing Disclosure

      Details Cross References
      Issue date:
      28 January 2003

      Effective date:
      29 January 2003
      Listing Rule 703
      Appendix 7.1

      1. Introduction

      1.1 This Practice Note provides guidance on the continuing obligations of issuers in respect of Listing Rule 703 on the disclosure of material information and Appendix 7.1 on the Exchange's Corporate Disclosure Policy. Issuers should apply the principles outlined in the Practice Note flexibly and sensibly. Issuers are still obliged to make their own judgments when determining whether a particular piece of information is material and requires disclosure. The purpose of timely disclosure of material information is to allow the operation of a fair, orderly and transparent market. The following discussion should be read in that light.
      1.2 In case of doubt, issuers are encouraged to consult the Exchange with respect to the application of the rules.

      2. Interaction with the SFA

      2.1 The Exchange's continuous disclosure rules are given statutory backing under Section 203 of the SFA. A breach of the Exchange's continuous disclosure obligations may be considered an offence under the SFA and may have serious legal consequences for the issuer and its officers.

      3. Guidance on what constitutes material information

      3.1 Rule 703(1) requires an issuer to announce any information known to the issuer concerning it or any of its subsidiaries or associated companies which:
      (a) is necessary to avoid the establishment of a false market in the issuer's securities (Rule 703(1)(a)). Appendix 7.1 explains that a false market may exist if information is not made available that would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, or buy or sell the securities. Such information may be referred to as “trade-sensitive” information; or
      (b) would be likely to materially affect the price or value of the issuer's securities (Rule 703(1)(b)). Information would be likely to have such material price impact if it is likely to prompt a significant change in the price or value of the issuer's securities. Such information may be referred to as “materially price-sensitive” information.
      3.2 Information is considered material and required to be disclosed under Rule 703(1) as long as it is either trade-sensitive or materially price-sensitive. Issuers must exercise judgment when deciding whether information is material using both these tests. If an issuer is unable to ascertain whether the information is material, the recommended course of action is to announce the information via SGXNET.

      Materially price-sensitive information
      3.3 The test of whether information is materially price-sensitive is an objective one. Issuers must assess, on an ex-ante basis, if the information is likely to have a material impact to the price of its securities. It requires issuers to foresee how investors will react to any particular information when it is disclosed.
      3.4 Issuers' assessment should consider the significance of the information in the context of the issuer's business. Information that might be immaterial to another entity may be material to the issuer, as the impact to the issuer would depend on its business and market expectations of the issuer's performance. Issuers should therefore rely on experience and knowledge of past market impact of similar type of disclosures made under comparable circumstances to form their assessment.
      3.5 Issuers should also consider prevailing market conditions in their assessment of price impact. Factors to be considered could include liquidity of the issuer's securities, macroeconomic or sector-specific factors and the general market sentiment. Information that might be considered immaterial during stable macroeconomic and industry conditions but could become material when the industry is undergoing extreme volatility or a protracted downcycle.
      3.6 For the purposes of assessing if a breach of Rule 703(1)(b) has occurred, the Exchange will examine actual market reaction to the information when it is disclosed. If information that is disclosed does not result in a significant change in price of the securities, then it is likely that the information may not be considered to be materially price-sensitive. The Exchange may examine market reaction over a length of time suitable for the liquidity of the securities. For example, if the securities are not actively traded, it may be necessary to look at a longer period of activity.

      Trade-sensitive information
      3.7 The test for trade-sensitive information does not focus on the potential price impact of information, but rather the likelihood that the omission or failure to disclose such information will result in the market trading on an uninformed basis. Such information must be disclosed to avoid the establishment of a false market in the securities. As set out in the Corporate Disclosure Policy in Appendix 7.1, a false market may exist if information is not made available that would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, or buy or sell the securities.
      3.8 The test of whether information is trade-sensitive is also an objective one. The question to ask is, is the information expected to influence an investor who commonly invests in securities to subscribe for, or buy or sell the issuer's securities in reliance of that information, if it had been known beforehand? If so, the information is trade-sensitive.
      3.9 The term “persons who commonly invest” is defined in Section 214 of the SFA. MAS has also issued guidelines on the interpretation of the term, which set out that the class of investors that are considered “persons who commonly invest” will be product-specific, and will include retail investors for listed shares. The Exchange will employ the same definition and interpretation for the purposes of the Listing Rules.
      3.10 For practical purposes, information which is materially price-sensitive would likely also be trade-sensitive. If information has a material price impact, it would also influence investors in their investment decisions. However, trade-sensitive information need not necessarily have a material price impact. For example, information on a transaction may have a neutral effect on share price, but may be considered to be trade-sensitive if the transaction is material to the issuer and likely to influence investors' decision to invest in the securities.
      3.11 Therefore, the Exchange's assessment of whether information is trade-sensitive is broader than that for materially price-sensitive information. The test for trade-sensitive information assesses the likelihood that the information, if undisclosed, will cause investors to trade on an uninformed basis. In that regard, the Exchange may consider information to be tradesensitive, even if there is no significant market reaction to the information when disclosed.
      3.12 Issuers should make their own judgment on whether information would be trade-sensitive. In particular, an issuer should consider whether a person who commonly invests in that security would likely trade in the security in reliance of that piece of information. As with the test for materially price-sensitive information, which requires issuers to assess the impact of the information to the price of the issuer's securities, issuers should review the information in the context of the issuer's business as well as prevailing market conditions in making their assessment.

      4. Exceptions to Rule 703(3)

      4.1 Rule 703(3) allows exception from disclosure provided that three conditions are met. These conditions are that (a) a reasonable person would not expect information to be disclosed, (b) the information is confidential and (c) the information either (i) concerns an incomplete proposal or negotiation, (ii) comprises matters of supposition or is insufficiently definite to warrant disclosure, (iii) is generated for internal management purposes, or (iv) is a trade secret. Information should be disclosed if any one of the three conditions is not satisfied.

      Confidential information
      4.2 Where material, non-public information has been reported but not released via SGXNET, the Exchange will require clarification from an issuer to ensure that the market is trading on accurate information. If information has been reported in a reasonably specific manner or from a reliable identified source, the Exchange is likely to consider that the information is no longer confidential. For example, should the report contain the salient terms of a contract or the information has been attributed to the issuer or a reliable source, this indicates that there may have been a leakage of material information. Leakage of material information would result in a loss of confidentiality and thus an issuer can no longer rely on the confidentiality exemption under Rule 703(3).
      4.3 An issuer is required to announce any material, non-public information that has leaked to the market even though it was covered by the exemptions in Rule 703(3) (for example, regardless of whether the transaction is still undergoing negotiation). This is regardless of the issuer's original intentions to keep the information confidential. It is therefore important for issuers to put in place strong safeguards to preserve confidentiality of its information. If the issuer is not ready to confirm the information that was leaked or there is too much uncertainty (for example, if the transaction is undergoing negotiation), the issuer should release a holding statement to sufficiently explain its position.
      4.4 If an issuer is of the view that there has been no leak, but there is unusual market activity that could be attributable to the report, the issuer should release a statement to provide clarity on the actual situation and deny or confirm the matters in the report, even if the statement may be a reiteration of information previously announced. Where there are no media reports, but unusual market activity is observed, the issuer should undertake a review to seek the causes of the unusual market activity and take appropriate action as set out in paragraph 20 of Appendix 7.1. The issuer should also respond promptly to any queries made by the Exchange concerning the unusual trading activity. Failing which, the Exchange may suspend the issuer's securities from trading.
      Positive example:

      The Exchange issued a query to an issuer due to unusual market activity observed on the issuer's securities.

      The issuer requested a trading halt on the same day, and responded that it had received a non-binding proposal from a third party who had expressed interest to purchase certain businesses of the issuer and was currently in discussions with the third party. The issuer also clarified that as at the date of the announcement, no binding offer has been made and no definitive agreements have been entered into in relation to any merger and acquisition, joint venture or strategic alliance opportunity.

      Upon the subsequent confirmation of the transaction, the issuer followed up with another announcement that it had entered into a conditional share purchase agreement for the sale of a certain part of its business to a third party.
      4.5 An issuer must not agree to a confidentiality clause with any other parties, for example as part of contractual terms, which may result in it not being able to comply with the continuous disclosure rules in the Listing Manual. If the test for disclosure under Rule 703 is otherwise met (for example, the entering into of a material agreement), the Exchange will expect the information to be disclosed notwithstanding that the information is confidential or that the issuer has signed a non-disclosure agreement. This requirement does not apply if Rule 703(2) applies.

      Rumours or speculation
      4.6 The Exchange generally does not expect issuers to respond to rumours or speculation (including reports predicting future sales, earnings or other data) unless there is a price or volume movement in the market. However, an issuer is expected to clarify the position if the information contained in the report or rumour is reasonably specific to suggest that the information came from an insider or a reliable source. For example, if there are media reports setting out material allegations involving an issuer or its business, its Board or its management, the issuer should, where necessary, request a trading halt and promptly release an announcement to clarify its position.

      Information concerns an incomplete proposal or negotiation
      4.7 Information that concerns an incomplete proposal or negotiation is excluded on the basis that the likelihood of such agreements proceeding is low or uncertain. Issuers cannot rely on this exception for material developments or arrangements where commitments to or from the issuer have already been made, even if there are expected to be subsequent developments that may change the potential impact.
      4.8 For example, if a material transaction is subject to conditions precedent, the issuer must make prompt disclosure when commitment to undertake the transaction is made, even if the conditions precedent have yet to be satisfied. If and when there is subsequent development, issuers should then provide further updates to the market.
      4.9 As another example, the service or receipt of a letter of demand or the commencement of a lawsuit may require disclosure if the amount or action claimed otherwise has a material impact, notwithstanding that negotiations on the letter of demand may be ongoing or the outcome of the lawsuit is not yet known. This is particularly so if the claim may, so long as it succeeds in part, materially impact the issuer's performance, even if the exact quantum of the claim may still be uncertain. However, if the claim or action could reasonably be characterised as bound to fail (for example, if the issuer has received legal advice to that effect), disclosure may not be necessary.
      Negative example:

      An issuer received a letter of demand from its lender. The amount owed by the issuer to the lender was substantial. The issuer did not immediately announce the receipt of the letter of demand, nor did it request a trading halt. The issuer said that it was still in negotiations with the lender to seek a time extension to make repayment and hence did not think that disclosure was necessary.

      The Exchange determined that the receipt of the letter of demand was material and took disciplinary action against the issuer for failure to disclose the matter promptly. The Exchange considered that the receipt of a letter of demand by the issuer from its lender would be considered material information for the issuer, given the amount owed. The fact that a time extension was being sought should not have altered the decision to disclose immediately, as there was already certainty of the claim. The issuer should have announced the receipt of the letter of demand promptly.
      Trade secrets
      4.10 An issuer also cannot rely on reasons, such as possible erosion of the issuer's competitiveness or unfavourable impact on the issuer's business to avoid complying with the disclosure rules, unless the matter is a trade secret. Trade secrets are intellectual property of the issuer, such as a specific process, system or know-how belonging to the issuer which provides it with a competitive advantage. It does not include general information that can be easily discoverable or observed.

      5. Guidance on particular situations

      5.1 Examples of the types of information that could be material are provided under paragraphs 4 and 8 of Appendix 7.1. However, no definitive list can be given. What may be considered material to one issuer may not be material to another. Hence each issuer must exercise its own judgment when deciding whether information is material. Apart from considering quantitative factors, an issuer should consider qualitative and circumstantial factors when deciding whether it is necessary to disclose a particular piece of information. These include trading history of the issuer, unexplained change in price or volume of the issuer's shares, volatility of the issuer's shares, operating environment of the issuer, and the total mix of information that is publicly available. As a guiding principle, an issuer should always consider whether a reasonable person would expect the information to be disclosed.

      Change in the issuer's near-term earnings prospects
      5.2 During the course of preparing its financial reports, an issuer may become aware that the company's financial position will significantly deviate from previously reported results. In such a situation, the issuer should disclose the significant deviation immediately, and not withhold it until the scheduled release of the financial report. This is made clear in paragraph 8 of Appendix 7.1, which states that where there is firm evidence of significant improvement or deterioration in the near-term earnings prospects, this is likely to be considered material information which must be disclosed immediately. The same obligation also applies if there are material adjustments to the issuer's previously announced financial statements.
      5.3 Issuers should take into account the information currently available to the public that might inform investors' expectations on the issuer's future performance. This will necessarily include previous prospect statements made by the issuer in its financial reports.
      5.4 Apart from the financial reporting cycle, an issuer may also become aware of material changes to its near-term earnings prospects caused by general trading trends or by specific events or developments during the course of its business which may be likely to materially affect its earnings (for example, a loss of a major customer or disruption to a major supplier). The issuer should assess if such events or developments are material and require immediate disclosure. The issuer should put in place internal controls to escalate material information to the Board expediently for consideration.

      Ongoing developments
      5.5 In certain situations, a matter may still be developing or undergoing further assessment, and issuers may not be able to quantify the impact at the occurrence of the material event. Issuers must still make disclosure of the event without delay. Their announcement should contain sufficient information for investors to understand the potential magnitude of the event and its relevance in the context of the issuer's prospects. Useful information will include a description of the risks or uncertainties and mitigating measures to be taken by the issuer. Issuers should follow up with further announcements to the market when there are subsequent material developments.
      Positive example:

      A fire occurred at a storage facility of a major supplier of an issuer. The issuer made immediate announcement of the incident on SGXNET, while it was still in the process of assessing the scale of the impact.

      In its announcement, the issuer included information on the extent of its reliance on that particular supplier, the immediate impact of the fire to its supply operations and obligations to existing customers, as well as mitigating measures undertaken to minimise impact of the disruption.

      The issuer also stated that it was conducting further assessment of the impact, and would provide updates to the market if it is concluded that there is material impact.
      Investigation on a director or an executive officer of the issuer
      5.6 Under Rule 704(7)(a), an announcement of the appointment of key persons by an issuer must contain material background information as set out in Appendix 7.4.1. Such information includes, among others, whether the key person has been concerned with the management or conduct of the affairs of any corporation or entity which has been investigated, or the subject of civil or criminal proceedings (including pending proceedings), in each case, involving a breach of law or regulatory requirement as set out in Appendix 7.4.1 relating to the securities or futures industry, or involving fraud or dishonesty.
      5.7 Under Rule 720(1), an issuer must also comply with Rule 210(5) on a continuing basis, which requires, among others, a consideration of the character and integrity of directors and management.
      5.8 Issuers should put in place internal controls to ensure that where directors or executive officers are notified by a regulatory authority, an exchange, a professional body or a government agency (“relevant authority”), that they are to be interviewed or under investigation, such information is escalated expediently to the Board, including the Nominating Committee. The Board should conduct an independent assessment of the matter and not rely solely on the representations made by the director or executive officer. Where investigations are on-going, directors and executive officers must continue to provide updates to the Board on material development relating to the investigations, including the conclusion of investigations, so long as they are not prohibited from doing so by the regulatory requirements.
      5.9 In determining whether the information is material for disclosure, the Board should consider, among others:
      (a) whether the information is material to the affairs of the issuer, taking into account factors such as:
      (i) the extent to which the interview or investigation concerns the affairs of the issuer or the group;
      (ii) the extent to which the issuer is reliant on the director or executive officer for the proper oversight and management of the issuer; and
      (iii) the extent to which the director's or executive officer's ability to oversee or manage the issuer is compromised; and
      (b) whether the investigation would affect the information previously disclosed in accordance with Rule 704(7)(a) or the assessment of the character and integrity of the director or executive officer; and
      (c) the severity of the potential breach.
      5.10 Subject to paragraph 5.9 above, the following events are likely to require immediate disclosure:
      (a) the director or executive officer has been served with an order for the production of documents to assist in an investigation in relation to a breach of law, rule or regulation;
      (b) the director or executive officer was investigated and interviewed by the relevant authority;
      (c) the director or executive officer has surrendered his passport to a relevant authority, has been arrested (with or without posting bail) by a relevant authority, has been formally charged by a relevant authority or a relevant authority has imposed conditions or restrictions on the director or executive officer; or
      (d) the director or executive officer has been convicted or disqualified or is the subject of any judgement or ruling.
      5.11 To give clarity to such events, an announcement made pursuant to paragraph 5.10 above should contain:
      (a) the name and position of the relevant director or executive officer;
      (b) the relevant fact (for example, that the director has surrendered his passport to the relevant authority) and details of any other conditions or restrictions imposed by the relevant authority, where applicable;
      (c) the alleged offences and the identity of the offender whom the authorities were investigating as stated in the order, where applicable;
      (d) the Nominating Committee’s assessment of the suitability of the continued appointment of the director or executive officer and continued compliance with Rule 720(1) (read with Rule 210(5)) as well as the measures (if any) put in place to safeguard against risks associated with his continued appointment, where applicable;
      (e) a statement by the director or executive officer that he undertakes to inform the Board of the ongoing investigation and subsequent developments; and
      (f) the Board’s statement that it will continue to monitor the progress of the investigation and the Nominating Committee will continue to re-assess the suitability of the continued appointment of the relevant director or executive officer as and when there are material developments to the investigation. If no measures to safeguard against risks associated with the retention of such individual are considered necessary by the Board, this should be stated in the announcement, along with the reasons.
      5.12 Where a person is a director or executive officer in multiple listed issuers, the onus is on the person to notify the Boards of all these listed issuers of his involvement in an ongoing investigation. Where an issuer has been notified by its director or executive officer of his involvement in an ongoing investigation that does not directly concern the affairs of the issuer, the Nominating Committee must still assess the suitability of the continued appointment of the relevant director or executive officer. For instance, the Nominating Committee must assess whether the investigation is material to the issuer, and whether the investigation would affect the assessment of the character and integrity of the director or executive officer. Where the Nominating Committee opines that the investigation is material to the issuer or has a bearing on the character and integrity of the director or executive officer, the issuer must announce the Nominating Committee’s assessment of the suitability of the continued appointment of the relevant director or executive officer and continued compliance with Rule 720(1) (read with Rule 210(5)) as well as the measures (if any) put in place to safeguard against the risks associated with his continued appointment. If no measures are considered necessary by the Board, this should be stated in the announcement, along with the reasons.
      5.13 Where the Nominating Committee finds that it is not in the best interest of the Company for the relevant director or executive officer to continue with his current appointment, an announcement should be made on the suspension or cessation of service pursuant to Rule 704(7)(a) and the reason for the suspension or cessation.
      5.14 On the other hand, where a relevant conduct has resulted in a private sanction by the relevant authority, such information need not be disclosed as the breach is likely to be of a less serious nature and the relevant authority has deemed it appropriate for the sanction to remain confidential.

      Investigation on an issuer
      5.15 In the case where the issuer itself is involved in an investigation, the market should similarly be updated in a timely manner. In determining whether the information is material for disclosure, the Board should consider, among others:
      (a) whether the information is material to the affairs of the issuer; and
      (b) the severity of the potential breach.
      5.16 Subject to paragraph 5.15 above, the following events are likely to require immediate disclosure:
      (a) the issuer has been contacted by a relevant authority or served with an order for the production of documents to assist in an investigation in relation to a breach of law, rule or regulation; or
      (b) the issuer has been informed or becomes aware that any of its subsidiaries or associated companies are under investigation by a relevant authority.
      5.17 To give clarity to such events, an announcement made pursuant to paragraph 5.15 above should contain:
      (a) the name of the relevant subsidiary or associated company, where applicable;
      (b) the relevant fact and details of any other conditions or restrictions imposed by the relevant authority, where applicable;
      (c) the alleged offences and identity of the offender whom the authorities was investigating as stated in the order, where applicable; and
      (d) the Board’s statement that it will continue to monitor the progress of the investigation and to provide updates on material developments.

      6. Content of announcements

      Publication of promotional material
      6.1 Announcements on SGXNET must be balanced and fair. That is, both the positive and negative aspects of the development or prospects must be disclosed honestly and without bias. Issuers should be cautious not to mislead investors with the presentation or emphasis of certain favourable information, or omission of certain unfavourable key facts.
      6.2 In particular, paragraph 25 of Appendix 7.1 states that issuers should avoid the use of promotional jargon in their announcements. This does not mean that issuers should avoid disclosing developments or presenting forward looking information that are positive in nature. For example, a property development company may announce updates of its key projects attaining certain sales milestones; a technology company may announce the launch of a breakthrough product. Such announcements enable investors to assess the impact of such developments on the issuer's business and future prospects. In this regard, issuers should refer to the specific guidance provided in Appendix 7.1, to ensure that their disclosures meet the requirements of being balanced and fair.
      6.3 Issuers should also avoid using SGXNET to publish third party research reports that present a favourable valuation of the issuer's shares, with the aim of driving up the share price. The publication of research reports by an issuer could be interpreted as tacit representation that its results will be close to the estimate and will likely be considered by the Exchange as a prospect statement. The report will also be subject to the same requirements as any other announcement from the issuer (for example, it must not mislead investors and must be presented in a balanced and fair manner). In addition, as stated in paragraph 11 of Appendix 7.1, estimates or projections should be prepared carefully, be soundly based and should be realistic.
      Negative example:

      An issuer announced a third party research analyst's projected valuation of the issuer's securities. Upon investigation, the Exchange found that the issuer had omitted key facts from the research report in its announcement. In particular, the issuer only presented the most optimistic scenario of the analyst's valuation in the announcement, without sufficient qualification or explanation. The issuer had failed to highlight the range of possible valuation scenarios and key assumptions for each scenario that had been included in the research report.

      The Exchange took the view that the issuer was in breach of the Listing Rule requirements for announcements to be balanced and fair and took disciplinary action against the issuer.
      Sufficient information
      6.4 Announcements should contain sufficient detail to allow investors to evaluate the relative importance of the announced information to the issuer. When announcing the award of any contract or new business arrangements, for example distributorships, joint ventures and strategic alliances, an issuer must state clearly the financial impact arising from the transaction or, if there is no material impact, provide a statement to that effect. By providing the financial impact on the issuer, investors will be able to put the announcement in perspective.
      6.5 The Exchange recognises that there may be some instances where an issuer is prevented from disclosing the financial impact with certainty. One example may be the existence of certain variables that are outside the issuer's control, such as fulfillment of a contract on an ad-hoc basis or poor visibility as to when revenue is generated. Under these circumstances, the issuer should provide an explanation for the non-disclosure and sufficient information to enable investors to independently assess the financial impact taking into consideration the variables disclosed.
      6.6 The inclusion of generic or boilerplate statements is of limited use to investors. For example, vague statements such as “the issuer expects to remain profitable” or imprecise terms such as “double digit performance” do not provide useful information to investors as to the possible scale of performance expected. As another example, if a transaction will only be conducted in the next financial year, a statement merely stating that the transaction is not expected to have a material impact for the current financial year will not be meaningful. In this regard, issuers should set out the specific facts or circumstances that has affected or may affect performance, and provide insightful analysis on the impact for investors to make an informed assessment of the issuer's prospects.

      7. Other issues

      Information from third parties
      7.1 Announcements by third parties, such as industry regulators, may be considered material information. If the issuer assesses that there is material impact from these developments, it should make the necessary disclosure, with an assessment impact of the event.
      7.2 There may be instances where a third party releases information on behalf of, or relevant to, an issuer, for example in the case of a takeover. Where possible, issuers should ensure that the announcement provided by the third parties is made under the issuer's name, so that investors can locate all announcements relating to an issuer when they access SGXNET. Third parties and professional advisers who do not represent the issuer are also encouraged to liaise with the issuer and make necessary arrangements to release any material announcement pertaining to the issuer under the issuer's name.

      Publication on the issuer's website
      7.3 The Exchange does not prohibit issuers from disseminating information through other media such as the Internet. Issuers are reminded that any material information released on the Internet, including posting of information on its own website, should have been previously released via SGXNET, or should be simultaneously released via SGXNET.

      Analyst briefings
      7.4 The Exchange does not prohibit issuers from conducting briefings with analysts and holding meetings with groups of investors and the media. However, such meetings might create a perception that analysts, institutional investors, fund managers or media have access to information that is not generally available to the public and this may undermine investors' confidence in the existence of a level playing field. Hence, an issuer should have in place policies to minimise the risk of being perceived to be practising selective disclosure. Such policies might include pre-release of any prepared information intended for the briefings and meetings, for example slides or speeches, via SGXNET. Alternatively, as such information must not be material, non-public information, it could be released on the issuer's website with an accompanying SGXNET announcement to inform investors that additional information is available on the issuer's website. The second alternative may be preferred if the issuer intends to release large-sized files or provide a webcast of the briefing.
      7.5 Where an issuer inadvertently discloses material, non-public information during these briefings or meetings, the issuer must disseminate the information via SGXNET as promptly as possible. An issuer may, if necessary, request a trading halt in its securities.

      Response to queries from the Exchange
      7.6 The Exchange may suspend the trading of an issuer's securities if an issuer fails to respond to a query issued by the Exchange before the commencement of trading or where there is unusual market activity upon commencement of trading. The issuance of a holding announcement by the issuer stating that the Exchange is querying the issuer is not acceptable, as the investing public would still be trading on an uninformed basis. Issuers may request a trading halt to facilitate the release of announcements.

      Amended on 29 September 201129 September 2011, 7 February 20207 February 2020 and 1 August 2021.

    • Practice Note 7.2 Monitoring and Querying Unusual Trading Activity

      Details Cross References
      First issued on: 30 October 2002

      Last revised on: 27 October 2015

      Effective date: 1 December 2015
      Listing Rule 703
      Appendix 7.1
      Practice Note 7.1

      1. Introduction

      1.1 This Practice Note provides information on the role of the surveillance function ("Surveillance") and the procedures normally employed when an issuer is queried regarding trading in its securities.

      2. Unusual Trading Activity

      2.1 As set out under Paragraph 18 of Appendix 7.1, unusual trading activity in an issuer's securities, without it being apparent that publicly available information could account for the activity, may signify trading by persons who are acting on unannounced material information or on a rumour or report, whether true or false.
      2.2 The unusual market activity may not be traceable directly to unannounced information or to a rumour or report. Nevertheless, the market activity itself may be misleading to investors, who may assume that a sudden and appreciable change in the price of, or volume traded in, the issuer's securities reflects a corresponding change in its business or prospects.

      3. Role of Surveillance

      3.1 Surveillance utilizes a real-time market surveillance system which employs the latest technology to automatically alert the Surveillance officers to market behaviour such as unusual price and volume movements of an issuer's securities. The Surveillance officer then examines whether public information, company specific news, counter-specific trends, industry trends, economic factors or prevailing market sentiment, can explain the market activity. If no explanation is apparent, the Exchange requires the issuer to inform the public whether it is aware of any material information that might reasonably be expected to have a significant effect on the trading volume or price of its securities.
      3.2 Surveillance will issue a query, depending on the extent of the unusual trading activity, measured against pre-determined thresholds set by the Exchange from time to time.
      3.3 Query by Surveillance
      3.3.1 All queries will be posted on SGXNET by the Exchange immediately. The Surveillance officer will make every effort to contact the issuer's authorized representatives to alert the issuer to the Exchange's query.
      3.3.2 The query will be emailed to the issuer.

      4. Response on Receiving a Query on Unusual Trading Activity

      4.1 An issuer is expected to respond to a query as soon as possible. Issuers should, therefore, ensure that they are operationally ready to respond promptly. In view of the importance of maintaining a fair and efficient market, issuers must, upon receiving a query from the Exchange, immediately undertake an enquiry to ascertain the cause of the unusual trading activity. Issuers should have in place, procedures to ensure that the enquiry or information gathering is carried out efficiently, systematically and promptly, so that the issuer is able to disseminate all material information as soon as possible.
      4.2 Paragraph 20 of Appendix 7.1 sets out some possible causes for unusual trading and how issuers should respond to the queries based on different causes.
      4.3 An issuer may wish to, where appropriate, request for suspension of trading in its securities or a trading halt. If so, the issuer should contact Securities Market Control and provide a SGXNET announcement requesting for suspension or a trading halt, stating the reason for the suspension or trading halt. Where possible, it would be useful for issuers to inform investors when the issuer can respond to the Exchange's query and when the suspension of its securities or trading halt is expected to be lifted.
      4.4 The person providing the reply to the Exchange must be authorised by the Board to do so. The directors of the issuer must collectively and individually take responsibility for the accuracy of the replies provided to the Exchange with regards to the query raised by Surveillance.

      5. Secondary Listings and Issuers that are Exempted from Continuing Listing Obligations

      5.1 Issuers with a secondary listing on the Exchange and issuers that are exempted from the continuing listing obligations under Chapter 7 must comply with the home exchanges' disclosure requirements. Nevertheless, as the securities of such issuers are being traded on the Exchange, the Exchange must ensure that there is a fair and orderly market in these securities. Issuers may therefore be required to respond to queries regarding the trading of their securities on the Exchange.

      6. Keeping Track of Persons with Access to Material Information

      6.1 Paragraph 12 of Appendix 7.1 explains that material information, which is otherwise required to be disclosed under Rule 703(1), may be temporarily withheld under Rule 703(3), provided that the strictest confidentiality is maintained.
      6.2 To ensure the confidentiality of the information and as a matter of good corporate governance, where an issuer relies on Rule 703(3) to withhold material information, the issuer must be able to keep track of persons who gained access to the information. These persons may include internal staff or external advisers. The issuer's supervision aids in the control of information flow, as well as assists in investigations in case of information "leaks".
      6.3 Unusual trading activity observed in an issuer's securities could indicate possible "leaks" of material information. In this circumstance, the Exchange may request the issuer to submit a list of persons who have access to the information ("privy persons list"). The privy persons list should typically include information on the identity of the privy persons, the circumstances under which these persons gained access to the information (i.e. became aware or involved in the transaction), and the dates on which these persons first gained access to the information. The Exchange may also ask for related information reasonably required for the proper discharge of its regulatory function.
      6.4 The issuer must have proper procedures in place to provide the privy persons list expeditiously to the Exchange upon request. Such procedures may include the maintenance of the privy persons list from the date the issuer first started withholding information under Listing Rule 703(3).

      7. Conclusion

      7.1 This Practice Note sets out the normal procedures which Surveillance undertakes when querying issuers on unusual trading activities. However, there may be instances when a different approach is warranted.
      7.2 Issuers should also familiarize themselves with the Exchange's Continuing Obligations, Corporate Disclosure Policy and any other relevant Practice Notes.
      7.3 Issuers may consult their account manager in Issuer Regulation if they have queries on this matter.

      Amended on 29 September 201129 September 2011, 3 March 20143 March 2014, 1 December 20151 December 2015 and 15 September 201715 September 2017.

    • Practice Note 7.3 Takeovers — Receipt of an Offer for Listed Shares

      Details Cross References
      Issue date: 18 August 2004

      Effective date: 19 August 2004
      Rule 703
      Practice Note 7.1

      1. Introduction

      1.1. This practice note sets out how the listing rules on disclosure work when a company receives an offer for listed shares. It is issued to provide guidance on the continuing listing obligations of listed issuers in the event that they are informed of a proposed offer for their shares or are made an offer for listed shares held by them. The circumstances used to illustrate the principles are drawn from past cases.

      2. The facts

      2.1. A Potential Purchaser made an unconditional offer by letter to Company A to acquire Company B's shares held by Company A. Both Company A and Company B are listed on SGX-ST. If the offer was accepted, the Potential Purchaser would be required under The Singapore Code of Takeovers and Mergers ("Code") to make a mandatory offer for all the shares in Company B that were not held by it.
      2.2. Company A and Company B received the offer letter shortly before 2 pm.
      2.3. At 4.30 pm, Company B requested a trading halt pending an announcement.
      2.4. At 7.30 pm, Company A announced that it had received the offer.
      2.5. At 8.45 pm, Company B made an announcement attaching Company A's announcement.

      3. The Issue

      3.1. Listing Rule 703(1) states that an issuer must make immediate announcement of any information known to the issuer concerning it or any of its subsidiaries or associated companies which:
      (a) is necessary to avoid the establishment of a false market in the issuer's securities, or
      (b) would be likely to materially affect the price or value of its securities.
      3.2. Should either company have:
      (a) asked for a trading halt immediately on receipt of the offer letter, or
      (b) made an immediate announcement of receipt of the offer letter?

      4. Company A's Position

      4.1. The company secretary received the offer letter when he was at a board meeting, and alerted the chairman when the meeting ended at 2.25pm. The company secretary proceeded to attend a scheduled meeting which commenced immediately. The chairman was not present in the latter meeting. At around 3pm, the company secretary discussed with the chairman whether a trading halt should be called. They concluded that the offer was not material in relation to Company A and as such, did not warrant disclosure during trading hours and correspondingly a trading halt. The chairman convened a board meeting. At 4pm, the board together with Company A's legal and financial advisers, met to discuss, among other issues relating to the offer, whether a trading halt should be called. In the meantime, Company A monitored its shares for signs of unusual trading activity.
      4.2. The Company A board agreed that it was not necessary to call for a trading halt of Company A's shares.
      4.3. Company A took the view that, as there was no material information which needed to be disclosed during trading hours and confidentiality was maintained, no immediate disclosure and accordingly no trading halt, was necessary.
      4.4 Further, Company A felt that even if the offer was material information, the conditions for exemption from disclosure in Listing Rule 703(3), as set out below, were met
      (a) Condition 1: This condition states that a reasonable person would not expect the information to be disclosed. Company A was of the view that a reasonable person would not expect the information to be disclosed. Premature disclosure could prejudice its ability to proceed in the best possible way.
      (b) Condition 2: This condition states that the information is confidential. Company A took that view that the information on the offer was confidential.
      (c) Condition 3: This condition requires one or more of the following to be applicable:—
      (i) the information concerns an incomplete proposal or negotiation;
      (ii) the information comprises matters of supposition or is insufficiently definite to warrant disclosure;
      (iii) the information is generated for the internal management purposes of the entity;
      (iv) the information is a trade secret.
      Company A opined that the information concerned an incomplete proposal or negotiation. The offer was unsolicited and the board might wish to negotiate.
      4.5. Company A also explained that it made an announcement on the offer at 7.30 pm as:
      (a) under the Code, all announcements of takeover offers had to be accompanied by a directors' responsibility statement. This was prepared after the board meeting concluded at about 4.45 pm.
      (b) based on market practice, announcements are released at the earliest "natural" trading break so as not to disrupt trading.
      (c) Company A's shares were trading "cum-offer" in respect of another then on-going offer with the last day for trading "cum-offer" being the next day.

      5. Company B's Position

      5.1. The offer letter was addressed to Company A and copied to Company B's chairman and company secretary.
      5.2. At 2.35 pm, Company B's company secretary tried unsuccessfully to contact Company A's company secretary. In the meantime, Company B monitored its shares for signs of unusual trading activity. At around 4.30 pm, Company B's chief executive officer received a call from Company A's company secretary, advising him to call for a trading halt. Company B immediately contacted SGX to request a trading halt.
      5.3. Company B took the view that, as the target of a potential takeover offer, it had to comply with the Code. Rule 2 of the Code requires absolute secrecy before an announcement is made of a takeover offer or a potential takeover offer.
      5.4. In making its decision, Company B drew a distinction between information involving the issuer as an active participant and as a passive participant. As the offer was made to Company A, whose decision would determine whether there would be a mandatory offer for Company B's shares, Company B needed to establish the facts with Company A before deciding its course of action.

      6. Disclosure Obligations Under Listing Rule 703

      6.1. Listing Rule 703(1) states that an issuer must make immediate announcement of any information known to the issuer concerning it or any of its subsidiaries or associated companies which:
      (a) is necessary to avoid the establishment of a false market in the issuer's securities; or
      (b) would be likely to materially affect the price or value of its securities.
      6.2. Paragraph 2 of Practice Note 7.1 states that, apart from quantitative factors, an issuer should consider qualitative and circumstantial factors when deciding whether it must disclose information under Listing Rule 703(1).
      6.3 In a negotiation, both the potential purchaser and the potential seller have the right not to proceed with the deal. However, by extending the unconditional offer to Company A, the Potential Purchaser had locked itself into making a takeover offer for Company B's shares should Company A decide to accept the offer for its holding of Company B shares. Thus, the offer to Company A was firm, not an incomplete proposal or negotiation. Nevertheless, Company A might have wanted to initiate negotiation for a higher price. In which case, should there be any suspicion that information about the offer was no longer confidential or if in doubt, an immediate announcement should be made.
      6.4. The share price of Company B moved significantly in market trading after the break for lunch, suggesting a leak of information on the offer, rendering the offer no longer confidential. Company A wondered if other factors might have accounted for the price rise, as there was upward movement in the Straits Times Index ("STI") that day. However, if it could not be reasonably determined that the upward movement in the STI was the only cause of the price increase, Company A should have erred on the side of caution and considered the information as no longer confidential. Further, in assessing the materiality of a transaction, its size and strategic significance should be taken into consideration The offer concerned the sale of an asset of some strategic significance worth more than $500 million.
      6.5. What might Company A have done? Company A should have given immediate attention to the matter. Company A received notification of the offer before 2pm but the first discussion, between the chairman and the company secretary, took place only at around 3 pm. This was followed by a meeting of the Company A board at 4pm and a decision was only reached after 4pm, more than 2 hours after receipt of the offer letter. The listing rule requires a company to make immediate disclosure, which means that consideration of the matter must be a priority.
      6.6 Further, it is important to note that a trading halt may be requested up to 3 days ahead of the release of information. The procedure was designed to help companies meet their listing rule obligations. Therefore:
      (a) while material announcements may be withheld until after trading ends where the information is contained to the company, it should not be withheld until after trading ends as a matter of course and definitely not when there are other parties in possession of it, and
      (b) if an issuer should, but is not able to, announce material information immediately, a trading halt should be called to ensure that trading will only take place in an informed market.
      6.7. If Company A was not yet in a position to decide on the issues that the offer letter posed -materiality, confidentiality and its response to the offer, it might have requested a trading halt until such time it had considered the matter. Equally it might have considered a holding or clarificatory announcement.
      6.8. What might Company B have done? Company B had an obligation under Listing Rule 703(1) to make an immediate announcement. The offer was material information to Company B. If Company B had to establish facts with Company A before deciding its course of action, it should have been insistent on doing so immediately. In the meantime, Company B might have called for a trading halt in its shares until such time it was able to establish the facts with Company A and release an announcement on the offer. If possible, as discussed below, any such trading halt should be co-ordinated with other listed entities.
      6.9 Rule 2 of the Code requires secrecy before any announcement of a takeover offer or possible takeover offer. This is to minimize the risk of a leakage of information to selected parties. The Rule, however, does not prevent any party to the takeover offer from making an announcement of the takeover offer. In fact, Rule 3.4 of the Code states that a potential offeror should not attempt to prevent the board of an offeree company from making an announcement or requesting the Securities Exchange to grant a trading halt at any time the offeree board considers appropriate. This clearly indicates that Company B is not prohibited from making an announcement of the offer under the Code.

      7. Potential Purchaser's Position

      7.1. Under Rule 3.1 of the Code, before the board of an offeree is approached, the responsibility for making an announcement normally rests with the offeror, who should keep a close watch on the offeree's share price and volume. If there is undue movement in the offeree's share price or volume, and there are reasonable grounds for concluding that the offeror's actions (whether through inadequate security, purchase of the offeree's shares or otherwise) have directly contributed to the situation, the offeror must make an announcement. This rule suggests that the only party who should be aware of an offeror's intentions is the offeror itself.
      7.2. In this case, the Potential Purchaser had informed Company B of the offer. Such action is not in conflict with the Code or the listing requirements. In the case where the Potential Purchaser had not forwarded the letter to Company B, the Potential Purchaser would then have had to keep a close watch on the offeree's share price and volume. Should there have been any significant unusual movement in the price or trading volume of Company B's shares, with reasonable grounds to attribute the movement directly to the offer made to Company A, the Potential Purchaser would have had to immediately inform Company B and Company A to request a trading halt, followed by an announcement of its offer to Company A.

      8. General Principle

      8.1. In a takeover it is important that the market is given material information in a timely and coordinated way. This condition is easily met when an offer is made after market hours. However if it is necessary to make the offer during market hours, suspension or trading halts should be coordinated among the listed participants.
      8.2. The Exchange's disclosure rules and the Code's requirements are not in conflict. If an offeror or offeree has any doubt on how it should comply with the relevant requirements, it should consult SGX or SIC or both.

      Amended on 29 September 201129 September 2011.

    • Practice Note 7.4 Guide for Operating and Financial Review

      Details Cross References
      Issue date: 7 June 2006

      Effective date: 1 September 2006
      Listing Rule 1207(4)

      1. Introduction

      1.1 This Practice Note publishes the guide provided by the Council on Corporate Disclosure and Governance on the Operating and Financial Review in an annual report.
      1.2 Issuers are encouraged to follow the OFR Guide, but it is not compulsory.

      2. OFR Guide

      2.1 The OFR Guide is enclosed.

      Guide for Operating and Financial Review

      INTRODUCTION

      1. The objective of the Operating and Financial Review ("OFR") in annual reports is to provide users with an understanding of the company by providing an analysis of the company's businesses as seen through the eyes of the directors and management. The OFR serves to facilitate assessment of the company's business and business objectives, its principal drivers of performance, the dynamics of the business, and the performance and financial condition of the company.
      2. Companies listed on the Singapore Exchange ("SGX") are currently required to include a discussion of their operating and financial performance and business outlook under the SGX listing rules1. This Guide provides a set of best practice guidance to listed companies in the preparation of the OFR in their annual reports, which will complement and supplement the financial statements.
      3. The approach taken in this Guide is to set out general guidance, in the form of Principles and Guidelines, on the OFR, rather than to prescribe a set of mandatory rules or requirements. Adherence with the Guide is voluntary. The Principles set out in the Guide should be regarded as fundamental to the preparation of a good OFR. The Guidelines elaborate on how those principles can be applied.
      4. Listed companies are encouraged to apply these best practices for disclosure of information in their OFRs. It is recognised that not all items in the guidelines may be relevant to all companies, as companies vary by size, industry group and other factors. The guidance should also not be regarded as a comprehensive list of the matters that might be considered by the directors and management to be relevant to an assessment of the company. The OFR should focus on those matters that are considered significant to that company as a whole. It is for the directors and management to decide how best to apply the framework of this Guide to the particular circumstances of the company.

      OBJECTIVES AND TENETS OF THE OPERATING AND FINANCIAL REVIEW

      1. The objective of the OFR is to provide users with a good understanding of the company by providing a historical and prospective analysis of the company's businesses as seen through the eyes of the directors and management. The OFR should assist the user's assessment of its performance and understanding of the future direction of the company. The OFR should focus on matters of significance to the company as a whole.
      2. The focus of the OFR is on explanations and analysis. It should contain analytical description, rather than replicate information in the financial statements. It should discuss and interpret the performance and financial condition of the company, in the context of opportunities and risks impacting the operations of the company and known or reasonably expected changes in the environment in which it operates. The OFR should discuss known trends and factors relevant to forming a view as to likely future performance. An explanation of the trends and uncertainties known to be facing the company would not require a forecast of the outcome of such uncertainties. Rather, the explanation should be sufficient to permit readers of the financial report to form their own judgements of the outcomes of such uncertainties.
      3. The benefits of particular disclosures should be balanced against any potential commercial risks to the company from the disclosure of commercially sensitive information. This Guide does not expect that disclosure be made by listed companies of information of a commercially prejudicial or sensitive nature that a reasonable person would not expect to be disclosed, for example where:—
      (a) the information concerns a trade secret;
      (b) the information concerns an incomplete proposal or negotiation; or
      (c) information comprises matters of supposition and is insufficiently definite to warrant disclosure.
      4 Information and analysis contained in the OFR should, as far as possible, be neutral and free from bias, dealing even-handedly with both good and bad aspects. The directors and management should ensure that material information is not omitted. Where the information in the OFR relates to financial information, it should be consistent with information in the audited financial statements. This should not be taken to mean that an audit of the OFR is required.

      PRINCIPLES AND GUIDELINES

      (A) Presentation of the OFR

      Principle 1
      1 The OFR should focus on matters that are relevant to investors. It should be easy for users of financial reports to understand.

      Guidelines
      1.1 The OFR should be written in a style that is clear and readily understood. It should avoid the use of technical language as far as possible. Figures and graphics may be useful to assist understanding of discussions in the OFR.
      1.2 To facilitate reference to OFR disclosures by users of the annual report, it could be useful to include the key discussions of the OFR in a distinct, stand-alone section of the annual report. However, companies may decide that, in the context of the format of their annual report, it would be preferable to incorporate some of the discussion within other sections of the annual report, such as the Chairman's statement or the Chief Executive Officer's statement.
      1.3 While the approach adopted for the presentation of the OFR may evolve over time, or differ from that adopted by other companies, disclosure should be sufficient for the user to be able to compare the information presented in the OFR of the company with that in previous periods, and with information about other companies in the same industry or sectors, where practical.
      (B) Company Overview, Objectives and Strategy

      Principle 2
      2 The OFR should describe the nature of the company, its objectives and broad strategies, and explain the main areas of operation of the company's business, as context for the discussion and analysis of performance and financial position. The discussion in the OFR should cover the group business of the listed company, including its principal subsidiaries.

      Guidelines
      2.1 The OFR should discuss the objectives for the business and broadly, management's strategy for achieving them. Objectives may be defined in terms of financial performance. Non-financial objectives may also be discussed, where relevant.
      2.2 Depending on the nature of the business, discussion of the company's business and operations might cover areas such as:—
      •   the industries, locations and markets in which the company operates;
      •   its main products and services, business processes and distribution methods, and intellectual property;
      •   the structure of the company and main operating facilities; and
      •   any significant changes to the legal, social, political and regulatory environments that influence the company.
      Principle 3
      3 The key financial and non-financial performance indicators used by management to assess the company and its performance should be discussed.

      Guidelines
      3.1 The OFR would normally include a range of financial and non-financial measures used to measure the company's performance. Comparability would be enhanced if the measures disclosed are accepted and widely used within the industry sector or more generally. Where practical, performance indicators should be compared with previous periods to outline trends.
      3.2 The measures used should be defined, and the basis for calculation explained. Comparative amounts should be disclosed. Material changes in the financial measures disclosed, including significant changes in the underlying accounting policies applied, should be identified and explained. Comparative amounts should be restated on the new basis, where practical.
      (C) Operating Review

      Principle 4
      4 The OFR should discuss the significant features of performance for the period covered by the financial report, focusing on the overall company as well as those business or geographic segments that are relevant to an understanding of the performance as a whole.

      Guidelines
      4.1 The OFR should identify and explain the main factors that affect the activities and performance of the company, and in particular discuss those that either have varied in the past or are expected to change in the future. Discussion of past performance should be supplemented by known trends and factors that are likely to affect future performance.
      4.2 Key components of the result of operations should be discussed, including major sources of revenues, where appropriate. The OFR should also discuss any significant changes in capital employed. The OFR should discuss the results in comparison with prior periods and any projections publicly disclosed by the company.
      4.3 The OFR should set out the analysis of any significant effect on performance of changes in the industry or the environment in which the company operates and of developments within the company, for example:—
      •   changes in market conditions;
      •   the introduction or announcement of new products and services;
      •   new activities, discontinued activities and other acquisitions and disposals;
      •   asset impairments; and
      •   results of any material acquisition, and extent to which published expectations at the time of acquisition have been realised.
      4.4 The analysis should cover any other special factors that have affected performance in the period under review, even where the effect cannot be quantified. Where unusual or infrequent events or transactions have affected the result for a period, the OFR should discuss their nature and impact on the company. The discussion should comment on the impact on future operations of significant post-balance sheet events. The OFR should enable users to assess the significance of the ongoing and core activities of the company and the sustainability of performance relating to those activities.
      Principle 5
      5 The OFR should discuss the dynamics and risk factors of the business.

      Guidelines
      5.1 This should include a discussion identifying the significant opportunities, risks and threats facing the business, together with a commentary on the strategies and processes applied to managing them, and in qualitative terms, the nature of their potential impact on performance. Known factors and influences that may have a material effect on future performance and financial position, particularly within the 12 months from the date when the financial statements are authorised for issue, should be discussed.
      5.2 A commentary on the strengths and resources of the business that should assist the company in the pursuit of its objectives would be useful. This could include items that are not reflected in the balance sheet, e.g corporate reputation and brand equity, licences, patents, copyrights and trademarks, and research and development.
      Principle 6
      6 The OFR should comment on investments and measures to maintain and enhance the position and profitability of the company.

      Guidelines
      6.1 The nature of activities and expenditure by the company to maintain and enhance the position and profitability of the company should be discussed. It could include description of major projects that involve capital expenditure being undertaken by the company. Qualitative information as to the benefits expected from such activities and expenditure could be given.
      (D) Financial Review

      Principle 7
      7 The OFR should identify and explain significant matters which affect the company's financial condition. It should discuss the capital structure and capital management policies of the company, its treasury policy, the dynamics of the company's financial position and its funding and liquidity position.

      Guidelines
      7.1 The OFR should contain a discussion of the capital structure of the company, including the maturity profile of its debt, type of financial instruments used and currency and interest rate exposures. This could include comments on the company's debt rating and relevant ratios such as interest cover and debt/equity ratios. The purpose and effect of major financing transactions undertaken up to the date the financial statements are authorised for issue should be explained.
      7.2 The discussion should cover the capital funding and treasury policies and objectives that are significant to the company's performance. The types of items that might be discussed include:—
      •   the currencies in which borrowings are made and in which cash and cash equivalents are held;
      •   maturity profile of borrowings and extent of fixed-rate borrowings;
      •   mix between equity and debt financing;
      •   significant investments held;
      •   risk management policies;
      •   hedging policies and the use of financial instruments for hedging;
      •   use of special purpose entities and other off-balance sheet arrangements; and
      •   capital management, including share buy-backs and capital restructuring.
      7.3 To assist understanding of the cash flow and liquidity position of the company, the cash generated from operations, and other cash flows during the period under review should be discussed. The OFR should comment on any special factors that influenced cash flows in the current period and any known factors that may have a significant effect on future cash flows.
      7.4 The company's liquidity and funding at the end of the period under review should be discussed. Discussion of significant funding requirements for capital expenditure and servicing of borrowings would be useful. The OFR could also comment on the level of borrowings, the seasonality of borrowing requirements, undrawn financing facilities and the maturity profile of both borrowings and undrawn committed borrowing facilities.
      7.5 Where the company has entered into covenants with lenders which could have the effect of restricting the use of credit facilities and a material breach of a covenant has occurred or is expected to occur, the measures taken or proposed to remedy the situation should be disclosed.
      7.6 To facilitate the user's understanding of the financial statements, it would be useful for the OFR to identify and discuss the critical accounting policies, estimates and judgements made that are key to the interpretation of the company's financial statements. Such information would be particularly relevant for areas where subjective judgements are involved or for companies with complex financial structures.
      Principle 8
      8 The OFR should discuss the overall return attributable to shareholders, including distributions and share repurchases.

      Guidelines
      8.1 All forms of shareholder returns, including share buy-backs, dividend distribution, other forms of return of capital and shareholder plans should be discussed and their effects should be explained. The OFR should also include a commentary on the various factors (including profitability) contributing to the dividend for the financial year, including the overall dividend policy.

      Amended on 29 September 201129 September 2011.


      1 Rule 1207(4) of the Listing Manual of the Singapore Exchange.

    • Practice Note 7.5 General Meetings

      Details Cross References
      Issue date: 31 July 201331 July 2013

      Effective date: 1 January 2014
      Listing Rule 704(16)

      Listing Rule 730A

      1. Introduction

      1.1 This Practice Note provides guidance on the conduct of general meetings.

      2. Location of general meeting

      2.1 An issuer primary-listed on the Exchange shall hold all its general meetings in Singapore, unless prohibited by relevant laws and regulations in the jurisdiction of its incorporation.
      2.2 General meetings are important avenues for shareholders to voice their opinion and seek clarifications from the Board and management on matters relating to an issuer. At these meetings, shareholders are given the opportunity to meet with the management team, the external auditors and key members of the Board, such as the Chairman, the Audit Committee Chairman and the independent directors. This enhances the quality of communication between the issuer and its shareholders.
      2.3 Issuers may be required by the laws and regulations of their country of incorporation to hold general meetings within their jurisdictions. Such issuers will be required to demonstrate to the Exchange the restrictions in their jurisdictions that prohibit general meetings from being held outside their country of incorporation.
      2.4 Issuers who hold general meetings outside Singapore should hold information meetings for the shareholders in Singapore. These provide an avenue for the shareholders in Singapore to interact directly with the Board and management of the issuers as they would at the general meetings. Where the general meetings are held in jurisdictions other than Singapore, the issuers should make arrangements such as video conference or webcast to enable the shareholders based in Singapore to follow the proceedings during the general meetings.
      2.5 The Exchange recognizes that there could be other circumstances which call for an issuer to hold its general meetings outside Singapore, such as to reach a larger public shareholder base, if most of its shareholders are based outside Singapore. The Exchange is prepared to consider these circumstances on a case-by-case basis. Issuers should consult the Exchange on the applicability of Listing Rule 730A(1) in the event of any doubt.
      2.6 An issuer is required to disclose the circumstances under which its general meetings are convened outside Singapore in the following:—
      (a) listing applicant's IPO prospectus, introductory document or offering memorandum if the arrangement to hold the general meetings outside Singapore is known at the time of listing; and
      (b) SGXNET announcement when the arrangement to hold the general meetings outside Singapore is approved by the Exchange after listing.

      3. Proxy voting

      3.1 An issuer should encourage its shareholders to attend, speak and vote at its general meetings in person. If shareholders are unable to attend in person, they should be allowed to appoint proxies to represent them.
      3.2 Proxy forms must be designed clearly to allow a shareholder appointing a proxy to indicate how the shareholder would like the proxy to vote in relation to each resolution.
      3.3 If a shareholder submits a proxy form and subsequently attends the meeting in person and votes, the appointment of the proxy should be revoked. There must be sufficient systems or processes in place at the meeting to identify and cancel the appointment of the proxy at the point when the shareholder attends the meeting.
    • Practice Note 7.6 Sustainability Reporting Guide

      Details Cross References
      Issue date: 20 June 2016

      Effective date: 20 July 2016
      Listing Rule 711A

      Listing Rule 711B

      1. Introduction

      1.1 Listing Rule 711A requires every issuer to prepare an annual sustainability report, which must describe the issuer's sustainability practices with reference to the primary components set out in Listing Rule 711B on a 'comply or explain' basis (other than as required under Listing Rule 711B(2)). This Practice Note contains the Sustainability Reporting Guide (the "Guide"), which provides guidance on the expected structure and contents and the preparation of the sustainability report.
      1.2 Sustainability reporting disclosure does not detract from the issuer's obligation to disclose any information that is necessary to avoid the establishment of a false market in the issuer's securities or would be likely to materially affect the price or value of its securities pursuant to Listing Rule 703.
      1.3 A glossary of the common terms used in the Guide is set out in paragraph 8 of this Guide.

      2. Policy Statement on Sustainability Reporting

      2.1 Issuers make regular financial reports to their investors that are used for assessment of the likelihood of repayment (in the case of debt securities) and the returns on investment (in the case of equity securities). Increasingly, investors are demanding that issuers also disclose sustainability information.
      2.2 Reflecting these expectations, financial reports increasingly need to be supplemented by descriptive and quantitative information on how business is conducted and the sustainability of the current business into the future.
      2.3 SGX believes that the addition of sustainability reporting to financial reporting provides a more comprehensive picture of the issuer: statements of financial position and comprehensive income provide a snapshot of the present and an account of the past year, while sustainability reports of environmental, social and governance (“ESG”) factors show the risks and opportunities within sight, managed for future returns. Taken together, the combined financial and sustainability reports enable a better assessment of the issuer's financial prospects and quality of management.
      2.4 To achieve the additional transparency which encourages efficiency and innovation, SGX-ST requires each issuer to publish an annual sustainability report, describing the primary components on a 'comply or explain' basis, and in relation to the primary component in Listing Rule 711B(1)(aa) where the issuer is in any of the industries identified in paragraph 4.9 of this Guide, on a mandatory basis, in accordance with the Listing Rules. This Guide provides guidance to the issuer on compliance with the requirements under the Listing Rules.

      3. Principles

      Board responsibility

      3.1 The Code states as its preamble that sustainability, together with accountability and transparency, is a tenet of good governance. It provides that the Board is collectively responsible for the long-term success of the issuer, and the Board's role includes setting strategic objectives which should include appropriate focus on sustainability. The Board has ultimate responsibility for the issuer's sustainability reporting. Consistent with its role, the Board should determine the ESG factors identified as material to the business and see to it that they are monitored and managed. Management has responsibility to ensure that the ESG factors are monitored on an ongoing basis and properly managed. The Board's close interaction with management will enable the Board to satisfy itself on the way sustainability governance is structured and functioning through the various levels of management. If any question is raised regarding the issuer's sustainability reporting, the Board and management should make sure it is addressed.

      'Comply or explain'

      3.2 Each issuer is required to prepare an annual sustainability report. The sustainability report must include the primary components as set out in Listing Rule 711B on a 'comply or explain' basis (other than as required under Listing Rule 711B(2)). Where the issuer cannot report on any primary component, the issuer must state so and explain what it does instead and the reasons for doing so. As set out in Listing Rule 711B(2), an issuer in any of the industries identified in paragraph 4.9 of this Guide may not exclude the primary component in Listing Rule 711B(1)(aa).

      Report risks as well as opportunities

      3.3 In identifying material ESG factors, the issuer should consider both risks and opportunities. In addition, it is conceptually sound, and validated by experience, that risks well-managed represent strengths which can be applied to fulfill opportunities. The risks and opportunities within sight have direct bearing on strategies and operations and should be reported for clearer understanding of the issuer's performance, prospects and management quality. To facilitate understanding, issuers should give the whole explanation in a concise manner.

      Balanced reporting

      3.4 In reporting on sustainability, care should be taken to give an accurate and balanced view. There may be a tendency to give more prominence to what is favourable and understate what is negative. Both situations require comprehensive explanations. In reporting performance, factors beyond the issuer's control are as relevant to exceeding the target as to a performance shortfall. In the event of underperformance, the issuer's response is also important and should be included to bring about confidence in its longer term sustainability objectives.

      Global standards and comparability

      3.5 The issuer needs to give priority to using globally-recognised frameworks and disclosure practices to guide its reporting. The recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) have gained widespread acceptance in international markets as a common framework to disclose climate-related financial information. The increasingly borderless markets for funds as well as for goods and services mean that corporate reporting standards tend to gravitate toward global best practice. Added to this is the international character of SGX-ST both in terms of issuers as well as investors. The individual issuer should take care that its disclosure efforts not be considered inadequate by stakeholders. Where the issuer is applying a portion of a particular framework, the issuer should provide a general description of the extent of the issuer's application of the framework.

      Stakeholder engagement

      3.6 The issuer's responsibility on disclosure, including annual reports and sustainability reports, is first and foremost to current and potential shareholders, i.e. the investing public. Interaction of the issuer with its other stakeholders is also of interest to investors for its relevance to sustainability across the value chain of the issuer. The views of stakeholders also contribute to inform the issuer's identification of material ESG factors. On a continuing basis, regular and sustained engagement with stakeholders provides the issuer with an up-to-date picture of its sustainability within both its business and physical environments. The material outcomes of such engagement should be included in the sustainability report.

      4. Contents of Sustainability Reporting

      Primary components

      4.1 The sustainability report should comprise the following primary components:
       
      (a) Material ESG factors. The sustainability report should identify the material ESG factors, and describe both the reasons for and the process of selection, taking into consideration their relevance or impact to the business, strategy, financial planning, business model and key stakeholders.
      (b) Climate-related disclosures. The sustainability report should contain disclosures related to climate risks and opportunities, consistent with the TCFD recommendations.
      (c) Policies, practices and performance. The sustainability report should set out the issuer's policies, practices and performance in relation to the material ESG factors identified, providing descriptive and quantitative information on each of the identified material ESG factors for the reporting period. Performance should be described in the context of previously disclosed targets.
      (d) Targets. The sustainability report should set out the issuer's targets for the forthcoming year in relation to each material ESG factor identified. Targets should be considered for defined short, medium and long term horizons, and if not consistent with those used for strategic planning and financial reporting, the reasons for the inconsistency should be disclosed.
      (e) Sustainability reporting framework. The issuer should select a sustainability reporting framework (or frameworks) to guide its reporting and disclosure. For climate-related disclosures, the issuer should report based on the TCFD recommendations. The sustainability reporting framework(s) selected should be appropriate for and suited to its industry and business model. The issuer should state the name of the framework(s), explain its reasons for choosing the framework(s) and provide a general description of the extent of the issuer's application of the framework(s).
      (f) Board statement. The sustainability report should contain a statement of the Board that it has considered sustainability issues in the issuer’s business and strategy, determined the material ESG factors and overseen the management and monitoring of the material ESG factors. In addition, the sustainability report should describe the roles of the Board and the management in the governance of sustainability issues.

      Identification of material ESG factors

      4.2 The issuer should review its business in the context of the value chain and determine what ESG factors in relation to its interaction with its physical environment and social community and its governance, are material for the continuity of its business. The issuer is expected to report the criteria and process by which it has made its selection with reference to how these factors contribute to the creation of value for the issuer.
      4.3 In broad terms, environmental factors would include materials, energy, biodiversity, water, greenhouse gas (“GHG”) emissions, effluents and waste as well as environmental complaint mechanisms. Social factors would include health and safety, employment practices and labour rights such as collective bargaining, product responsibility, anti-corruption, supplier assessments and impact of direct and supply chain activities on local communities. The framework chosen is likely to have additional factors that the issuer would report on.
      4.4 Corruption is a factor on which many investors require reassurance, whether inducement is being offered to employees or by employees to others. Where corruption has been addressed in the Corporate Governance report, the issuer may refer to that report. If corruption is not assessed to be a material ESG factor by the issuer, where stakeholders express sufficient interest in the information, the issuer is advised to state its policy and safeguards on its website.
      4.5 Gender, skills and experience have been highlighted as diversity indicators material to business sustainability. Diversity greatly enhances the issuer's capacity for breadth of input and perspectives into decision making, risk alertness and responsiveness to change. The issuer should be aware of this trend and assess whether diversity is a material social factor in its business. It should engage stakeholders in assessing the necessity of reporting on this matter. In satisfying investors and other stakeholders, diversity should be examined through broad levels of staff and also importantly, in the Board. Where other sections of the annual report sufficiently address stakeholders’ interest in diversity, the issuer may refer to those sections.
      4.6 The issuer should consider not just its internal circle of operations but also widen that circle to include persons and processes in the value chain that contribute to the issuer's product or service. Parts of the business outsourced to third parties (for example, freight and logistics), as well as downstream processes (for example, product defect response), constitute an integral part of the issuer's business and need to be included in the sustainability report.

      Climate-related disclosures

      4.7 Climate change threatens to disrupt businesses in a precipitous and potentially devastating manner, with consequential detrimental effects on their stakeholders and providers of capital. Conversely, it also opens up new markets for solutions that respond to the threat. Investors need to properly understand the climate-related risks and opportunities of their portfolio in order to price or value their investments.
      4.8 Securities markets promote the ready availability of decision-useful information so that it may be reflected in the price discovery process. In doing so, exchanges facilitate the allocation of capital to its most efficient use and the transfer of risks to those most willing to bear them.
      4.9 The issuer should provide climate-related disclosures, consistent with the TCFD recommendations. An issuer in any of the following industries identified by the TCFD as most affected by climate change and the transition to a lower-carbon economy will be prioritised to provide mandatory climate-related disclosures, consistent with the TCFD recommendations:
       
      For All Financial Years Commencing Industry (as identified by TCFD)
      1 January 2023 Financial
      Agriculture, Food and Forest Products
      Energy
      1 January 2024 Materials and Buildings
      Transportation
      4.10 Climate-related risks and opportunities are likely to impact the issuer’s future financial position and performance, as reflected in its income statement, cash flow statement and balance sheet. The TCFD sets out recommendations to help organisations disclose climate-related financial information that would be useful to investors, lenders and insurance underwriters. More broadly, this information may also be of interest to other stakeholders.
       
      Figure 1: Climate-related risks, opportunities, and financial impact
      Source: TCFD
      4.11 The TCFD developed recommended disclosures across four pillars: governance, strategy, risk management, and metrics and targets. The recommended disclosures provide an explanation on the requisite disclosures to fulfil the requirements of the four pillars.
       
      Figure 2: TCFD recommendations and supporting recommended disclosures
      Source: TCFD
      4.12 The TCFD recommendations are consistent with the requirements in the Listing Rules and this Guide. A mapping table is set out below:
       
      TCFD Recommendations Listing Rules and Guide
      Governance
      Describe the board’s oversight of climate-related risks and opportunities. The sustainability report should contain a statement of the Board that it has considered sustainability issues in the issuer’s business and strategy, determined the material ESG factors and overseen the management and monitoring of the material ESG factors. Listing Rule 711B(1)(e) and paragraph 4.1(f) of this Guide
      Describe management’s role in assessing and managing climate-related risks and opportunities. The sustainability report should describe the roles of the management in the governance of sustainability issues. Listing Rule 711B(1)(e) and paragraph 4.1(f) of this Guide
      Strategy
      Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term. The sustainability report should contain the material ESG factors, which are the most important ESG risks and opportunities that will act as barriers or enablers to achieving business goals in the short, medium and long term. Listing Rule 711B(1)(a) and paragraph 4.18 of this Guide
      Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning. The sustainability report should describe both the reasons for and the process of selection of the material ESG factors, taking into consideration their relevance or impact to the business, strategy, financial planning, business model and key stakeholders. Paragraph 4.1(a) of this Guide
      Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. The sustainability report should describe how resilient the issuer’s strategies are to climate-related risks and opportunities, taking into consideration a transition to a lower-carbon economy consistent with a 2°C or lower scenario and, where relevant, scenarios consistent with increased physical climate-related risks. Paragraph 4.15 of this Guide
      Risk Management
      Describe the organisation’s processes for identifying and assessing climate-related risks. The issuer is expected to report the criteria and process by which it has made its selection with reference to how the material ESG factors contribute to the creation of value for the issuer. Paragraph 4.2 of this Guide
      Describe the organisation’s processes for managing climate-related risks. The issuer should devise policies and processes to adequately and effectively manage the risks associated with the identified material ESG factors, and describe key features of mitigation. Paragraph 4.26 of this Guide
      Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management. The issuer should use risk ranking and prioritisation to distil the material ESG factors. This process is similar to the widely-practised Enterprise Risk Management (“ERM”) process. The issuer should expand the breadth of the assessment to integrate ESG risk management structures into existing ERM structures or apply existing ERM structures to ESG risk management structures. Paragraph 4.21 of this Guide
      Metrics and Targets
      Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. A description of the ESG practices and performance across historical and the current reporting periods allows investors and the issuer itself to track its progress. These metrics also form the baseline from which the issuer chooses to set its targets, as informed by its strategic plan and financial reporting. Paragraph 4.27 of this Guide
      Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions, and the related risks. The sustainability report should provide climate-related disclosures, consistent with the TCFD recommendations. TCFD recommends disclosure of the issuer’s Scope 1 and Scope 2, and if appropriate, Scope 3 GHG emissions. An internationally accepted GHG accounting system, such as the GHG Protocol should be used to measure the GHG emissions. These disclosures should include the methodologies and emission factors used. Listing Rule 711B(1)(aa) and paragraph 4.14 of this Guide
      Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. The sustainability report should set out the issuer's targets for the forthcoming year in relation to each material ESG factor identified. Targets should be considered for defined short, medium and long term horizons, and if not consistent with those used for strategic planning and financial reporting, the reasons for the inconsistency should be disclosed.

      The sustainability report should set out the issuer's performance in relation to the material ESG factors identified, providing descriptive and quantitative information on each of the identified material ESG factors for the reporting period. Performance should be described in the context of previously disclosed targets.
      Listing Rules 711B(1)(b) and 711B(1)(c) and paragraphs 4.1(c) and 4.1(d) of this Guide
      4.13 TCFD has issued both general and sector-specific guidance, as well as additional supporting materials, on implementing the TCFD recommendations. The sector-specific guidance highlights important considerations for the financial sector and non-financial sectors potentially most affected by climate change, and provides a fuller picture of potential climate-related financial impact in those sectors. The additional supporting materials provide guidance on specific topics intended to help address identified challenges in the preparer’s implementation of key components of the TCFD recommendations, such as on scenario analysis, and metrics and targets. The Sustainable Stock Exchanges initiative has also developed a checklist in its model guidance (“SSE Model Guidance”) on the implementation of the TCFD recommendations. The issuer is encouraged to refer to the TCFD’s supplemental guidance and additional supporting materials to guide its disclosure consistent with the TCFD recommendations, and use the checklist in the SSE Model Guidance to determine whether the information recommended for disclosure by the TCFD are contained in its sustainability report.
      4.14 TCFD recommends disclosure of the issuer’s Scope 1 and Scope 2, and if appropriate, Scope 3 GHG emissions. An internationally accepted GHG accounting system, such as the GHG Protocol should be used to measure the GHG emissions. These disclosures should include the methodologies and emission factors used. For industries with high energy consumption, it may also be important to provide emission intensity per unit of economic output (for example, unit of production or revenue).
      4.15 TCFD also recommends conducting scenario analysis to identify and effectively assess the potential implications of a range of plausible future conditions due to the uncertainty of climate-related changes. Conducting scenario analysis is not an exercise in forecasts, predictions or sensitivity analyses, but rather in evaluating resilience to different possible future scenarios. To reduce the risks and impacts of climate change, almost all countries have agreed to take action in limiting global warming to well below 2°C above pre-industrial levels, while pursuing efforts to arrest the increase to 1.5°C above pre-industrial levels. The issuer should describe how resilient its strategies are to climate-related risks and opportunities, taking into consideration a transition to a lower-carbon economy consistent with a 2°C or lower scenario and, where relevant, scenarios consistent with increased physical climate-related risks.
      4.16 An issuer new to scenario analysis can consider starting with qualitative scenario narratives to explore the potential range of implications. As it gains more experience, it can consider using quantitative information to describe the potential outcomes, and to enhance the rigour of that analysis.
      4.17 The SSE Model Guidance sets out a simplified three stage process to the conduct of scenario analysis. First, the issuer should identify appropriate scenarios that align with its underlying assumptions and the key risks and opportunities of its sector or industry, and clearly explain the scenarios used. Second, the issuer may set boundaries of its scenario analysis with sufficient disclosure of the reasons for exclusion and inclusion. A smaller issuer may feel that an analysis of the direct operations sufficiently covers the climate-related risks and opportunities within each scenario, while a larger issuer and those in the financial sector should expand their analysis beyond their direct operations to include indirect GHG emissions (i.e. Scope 3 GHG emissions). Third, an issuer should evaluate its physical and transitional risks within the scenarios chosen. Mapping the severity and likelihood of the risks enables the issuer to develop a strategic plan for future scenarios.

      Materiality

      4.18 As guidance, sustainability reporting relates to the most important ESG risks and opportunities that will act as barriers or enablers to achieving business goals in the short, medium and long term. The omission or misstatement of these risks or opportunities could influence the decisions of investors. The sustainability reporting framework selected by the issuer may also contain a definition of materiality that the issuer should consider.
      4.19 Generally, what is material in sustainability reporting would also be considered material in financial terms, if not in the immediate period, then over time.
      4.20 In assessing materiality of the ESG factors on which it reports, the issuer should first satisfy itself of the relevance of selected factors to its business strategy and outcomes. This has the benefit of focusing both executives and employees on uniform key risks and opportunities that deliver (or impede) desired outcomes.
      4.21 The issuer should use risk ranking and prioritisation to distil the material ESG factors. This process is similar to the widely-practised Enterprise Risk Management (“ERM”) process. The issuer should expand the breadth of the assessment to integrate ESG risk management structures into existing ERM structures or apply existing ERM structures to ESG risk management structures.
      4.22 The Board should determine the material ESG factors and the issuer's response to the attendant risks and opportunities. Discussion with stakeholders contributes to an accurate appreciation of what is important in the business on an ongoing basis.

      Possible process and tools

      4.23 A possible process for assessing ESG factors with material relevance to the business and business model are set out in the following paragraphs.
      4.24 In assessing materiality of the ESG factors on which it reports, the issuer may consider:
       
      (a) Value drivers
      (b) Stakeholder engagement
      (c) Risk management
      (d) External factors, for example sector, geography, economics, market, social, environment
      (e) Internal factors, for example business model, business cycle, strategy
      (f) Qualitative perspectives, for example operational, strategic, reputational and regulatory
      (g) Timeframe of these considerations
      4.25 The issuer may use the following Materiality Determination Process: Identify — Rate — Prioritise — Validate. The issuer should disclose the outcomes of this process in its sustainability report.
       
      (a) STEP 1: IDENTIFY. The issuer should identify the most pressing (material) factors (impact/opportunities) for the issuer (or for each subsidiary in the group). It will also help formulate management's approach and response, and identify where data collection needs to be strengthened.
      (b) STEP 2: RATE. Once the issues of the issuer and its subsidiaries have been explored, the issuer will need to cluster similar issues e.g. safety and health issues can be clustered together. If the issuer is a holding company, a rating process can be done to assess what issues are pervasive/most common across the group.
      (c) STEP 3: PRIORITISE. Once the issues of the issuer and its subsidiaries have been clustered and rated, the issuer will need to prioritise them using a matrix based on likelihood and impact.
      (d) STEP 4: VALIDATE. Once the issuer has prioritised its factors, they need to be internally validated and signed off by leadership.

      Policies, practices and performance

      4.26 The issuer should devise policies and processes to adequately and effectively manage the risks associated with the identified material ESG factors, and describe key features of mitigation.
      4.27 A description of the ESG practices and performance across historical and the current reporting periods allows investors and the issuer itself to track its progress. These metrics also form the baseline from which the issuer chooses to set its targets, as informed by its strategic plan and financial reporting.
      4.28 An effective policy and operational response to sustainability risks and opportunities requires performance measurement and its linkage to performance incentives. Having a good performance measurement system allows the issuer to benchmark performance against stated objectives and facilitates comparison over time and across entities. Clearly linking sustainability risks and opportunities with strategy, other organisational risks, operational indicators, performance measures and performance incentives not only enhances understanding but provides an engine for improvement, innovation and accountability.
      4.29 A clear description of the issuer’s substantive response to ESG risks and opportunities, with a focus on its policies, practices and performance against targets, will bolster investors’ confidence in the Board and management.

      Sustainability reporting framework

      4.30 The issuer should select a sustainability reporting framework which is appropriate for and suited to its industry and business model, and explain its choice. In doing so, the issuer should place importance on using a globally-recognised framework for its wider acceptance in an increasingly global marketplace. The issuer can be more easily understood and compared with its peers in Singapore as well as in other jurisdictions across the world. The issuer should exercise considerable caution if it chooses to deviate from generally-accepted frameworks.
      4.31 Among the well-known and globally-recognised sustainability reporting frameworks, the Global Reporting Initiative (“GRI”) Sustainability Reporting Guidelines set out generic sustainability factors and general principles and indicators that an issuer can use to report sustainability policies, practices, performance and targets. The International Integrated Reporting Council's (“IIRC”) Framework (“<IR>”) also sets out a general framework for reporting. An issuer using <IR> should consider ESG factors when determining their material factors for inclusion in the integrated report. The issuer may also consider referring to the Sustainability Accounting Standards Board's (“SASB”) standards which adopt an industry-specific approach to material ESG factors. IIRC and SASB have merged to form the Value Reporting Foundation. More than one sustainability reporting framework may be chosen as relevant to the issuer's business.
      4.32 For climate-related disclosures, the issuer should provide such disclosures consistent with the TCFD recommendations. Some issuers have used the Science Based Targets initiative to guide their GHG emissions reduction targets.
      4.33 The issuer is expected to follow the chosen framework(s) from year to year and build up its knowledge and understanding of how to report effectively. In turn, it can expect to be building up investors' and stakeholders' understanding, leading to increased confidence. In the absence of regulatory changes, only major changes in business strategy and/or model are likely to require change in sustainability reporting framework. This does not preclude examination of framework relevance from time to time.

      Time horizons used in the sustainability report

      4.34 In making its sustainability report, the issuer should consider whether it would be useful to report matters for their relevance in the short, medium and long term. Accordingly, sustainability policies, practices, performance and targets would be considered along the same time horizons. The time horizons should be internally consistent with those used for strategic planning and financial reporting (e.g. useful life of assets, impairment testing etc.). Where they are not consistent, the reasons for the inconsistency should be disclosed. Typically the short-term is considered less than one year for banking and financial instruments. For the medium term, the issuer may wish to take reference from their typical planning horizon, investment cycle or plant renewal or other considerations relevant to its business. The long-term should be a useful time horizon over which expectations can be formed and efforts planned.

      Stakeholder engagement

      4.35 Stakeholder engagement is integral to any business and would be conducted regularly. The issuer should consider ESG factors in their engagement with stakeholders, not just with investors, but also customers, staff, suppliers, regulators, local communities and others in the value chain. The issuer should monitor carefully its communication with stakeholders so as to avoid any information asymmetry as it may lead to unfair trading in the securities market.

      Group and investment holding company reporting

      4.36 Where holding companies and operating subsidiaries are both listed and have to undertake sustainability reporting, the operating entities can report on the ESG factors within their scope of operations. If the ESG factors are also material to the holding company, the holding company may make reference in its sustainability report to the sustainability reports of the operating subsidiaries. If the holding company has material investee companies which are not subsidiaries, its sustainability report should include the selection and management of these investee companies.

      5. Internal Reviews and External Assurance

      5.1 Internal reviews and external assurance increase stakeholder confidence in the accuracy and reliability of the sustainability information disclosed.
      5.2 These procedures over sustainability disclosures should be aligned with the issuer’s existing internal review or external assurance frameworks for other management information, such as financial information or production data.
      5.3 An internal review of the sustainability reporting process builds on the issuer’s existing governance structure, buttressed by adequate and effective internal controls and risk management systems. The internal audit function conducts the internal review, and may involve relevant functions, such as risk management, sustainability or other specialist functions. The identified processes relating to sustainability reporting should be incorporated into the internal audit plan, which should cover key aspects of the sustainability report; the review may take place over an audit cycle, which may span one or a few years in accordance with risk-based planning, as approved by the Audit Committee. The expectations of the Board, management and other stakeholders should be considered as part of the prioritisation. The internal review should be conducted in accordance with the International Standards for the Professional Practice of Internal Auditing issued by The Institute of Internal Auditors.
      5.4 An issuer whose sustainability reporting has already matured after several annual exercises would want to undertake external assurance by independent professional bodies to add credibility to the information disclosed and analysis undertaken. The issuer is encouraged to consider independent external assurance on selected important aspects of its sustainability report even in its initial years, expanding coverage in succeeding years.
      5.5 External assurance involves the engagement of a third party. The scope of the assurance may include a materiality assessment, and cover different aspects of the sustainability disclosures, for example:
       
      (a) data and its associated data collection process;
      (b) narratives;
      (c) compliance with the specified sustainability reporting framework;
      (d) process to identify sustainability information reported; and
      (e) compliance with the Listing Rules.
      5.6 External assurance should be performed in accordance with recognised assurance standards, for example the International Standard on Assurance Engagements (ISAE) 3000, the Singapore Standards on Assurance Engagement (SSAE) 3000, the AA 1000 Assurance Standards or the ISO.
      5.7 An issuer that has conducted external assurance should disclose, in the sustainability report, that external assurance has been conducted, including the scope covered, the identity of the external assurer, the standards used and key findings.

      6. Form and Frequency of Sustainability Reporting

      6.1 The issuer should report on sustainability at least once a year. The issuer's sustainability disclosure may be done in its annual report. The inclusion of sustainability risks and opportunities with the businesses' other risks and strategy in the same document presents advantages to the user. Sustainability reports contained within annual reports would observe annual report deadlines. Alternatively, if more appropriate for the circumstances of the issuer, the issuer may include a summary in its annual report and issue a full standalone sustainability report within 4 months of the end of the financial year, or where the issuer has conducted external assurance on the sustainability report, within 5 months of the end of the financial year.
      6.2 In either case, the issuer should make available its sustainability reports on SGXNet and on its company website. After a few years of sustainability reporting, the issuer may wish to maintain static information, such as, policies and historical sustainability information, on its website while presenting the current year's changes as well as performance in the annual sustainability report.
      6.3 To provide sufficient time for preparation, an issuer in its first year of reporting may report within 12 months of the end of its financial year.

      7. Phased Approach

      7.1 For the first year of sustainability reporting, the issuer should have at least the assessment of material ESG factors, policies and/or practices to address the factors; but if their reporting is lacking in qualitative or quantitative descriptions, they need only state progressive targets for reaching maturity of reporting and do their best to meet them in subsequent years. Compliance with the TCFD recommendations may also take place progressively.
      7.2 An example of a phased implementation approach is illustrated in the table below:
       

      Illustration of Possible Phased Approach

      Primary Components Adoption
      Year 1 Year 2 Year 3
      Material ESG factors Addressed most critical factors Reviewed factor assessment and added factors which have become material and removed existing factors which are no longer material Reviewed factor assessment and added factors which have become material and removed existing factors which are no longer material
      Material ESG factors would be dependent on current business strategy, market conditions, stakeholder concerns etc., therefore the number of material ESG factors may vary year-on-year.
      Climate-related disclosures consistent with the TCFD recommendations Described the governance structures, including Board oversight and management’s role

      Identified the climate-related risks and opportunities

      Described the processes for identifying and managing climate-related risks

      Impacts in qualitative terms

      Scope 1 and Scope 2 GHG emissions
      Metrics used for assessment

      Impacts in more quantitative terms

      Scope 3 GHG emissions

      Targets in qualitative terms

      Conducted qualitative scenario analysis
      Scenario analysis with more quantitative outcomes

      Targets in quantitative terms
      Policies, practices and performance Minimal description of how issuer manages material factors

      No previous targets for comparison of performance

      One metric per factor

      Plans for improved reporting in future
      Description includes specific policies, practices per material factor

      More quantitative metrics and qualitative description per factor

      Comparison against previously disclosed qualitative commitments and targets with explanation of overachievement and shortfall
      Description includes specific policies, practices per material factor

      Qualitative and quantitative description per factor

      Comparison against previously disclosed targets and commitments with explanation of overachievement and shortfall
      Targets Qualitative commitments if no quantitative targets Short and long term qualitative targets and some quantitative targets Short and long term qualitative and quantitative targets

      Include peer/sector benchmarks

      Targets linked to management performance incentives
      Sustainability reporting framework GRI

      TCFD
      GRI

      TCFD
      GRI

      TCFD
      Board statement and associated governance structure for sustainability practices Complied Complied Complied

      8. Glossary

      ESG factors Environmental, social and governance factors that affects the issuer's performance and prospects. Also referred to as sustainability issues, or sustainability risks and opportunities. Does not mean philanthropy or other charitable activities.
      Sustainability reporting The publication of information on material ESG factors in a comprehensive and strategic manner.
      Materiality In relation to ESG factors, the most important ESG risks and opportunities that will act as barriers or enablers to achieving business goals in short, medium and long term. The omission or misstatement of these risks or opportunities could influence the decisions of investors.

      Added on 20 July 201620 July 2016 and amended on 7 February 20207 February 2020 and 1 January 2022.

    • Practice Note 7.7 Announcement of dividends and other corporate actions

      Cross-referenced from Rule 107 and Rule 704(25)

      1. Introduction

      1.1 Rule 704(25) states that after the end of the first three quarters of its financial year, half year or financial year, as the case may be, an issuer must not make specific corporate action announcements (i.e., dividend, bonus issue or rights issue, record date, capital return or passing of a dividend), unless it is accompanied by the financial statements for the quarter, half year or financial year (as set out in Appendix 7.2), as the case may be, or the financial statements (as set out in Appendix 7.2) have been announced.
      1.2 Rule 107 states that the Exchange may waive or modify compliance with a listing rule. This Practice Note sets out guidance on the restricted periods in which an issuer may not make specific corporate action announcements (the "Restricted Periods"). Additionally, this Practice Note sets out guidance on a waiver in respect of announcement of dividend or passing of dividend, subject to certain conditions.

      2. Restricted Period on announcements of bonus issue or rights issue, record date or capital return

      2.1 In relation to announcements of bonus issue or rights issue, record date or capital return, the Restricted Periods set out in Rule 704(25) shall commence from such time after the end of the relevant financial period in which an issuer is announcing its financial statements in accordance with Rule 705, until such time when such financial statements have been announced.
      2.2 For an issuer that announces its financial statements for its half year in accordance with Rule 705(3)(b)(ii) and its full financial year in accordance with Rule 705(1), the Restricted Periods for announcements of bonus issue or rights issue, record date or capital return shall commence from after the end of the issuer's half year and full financial year until the financial statements for these financial periods have been announced.
      2.3 On the other hand, for an issuer that announces its financial statements for each of the first three quarters of its financial year in accordance with Rule 705(2) or Rule 705(3)(b)(i) and its full financial year in accordance with Rule 705(1), the Restricted Periods for such announcements shall commence from after the end of the first three quarters of the financial year and the full financial year, as the case may be, until the financial statements for these financial periods have been announced.
      2.4 Other than for the Restricted Periods set out in paragraphs 2.1 to 2.3, Rule 704(25) does not prohibit issuers from making announcements of bonus issue or rights issue, record date or capital return at all other periods.

      3. Announcements of dividend or passing of dividend

      3.1 The announcement of dividend or passing of dividend without it being accompanied by the release of the results may send signals on a company's financial performance for the relevant period.
      3.2 Thus, the Restricted Periods for announcements of dividend or passing of dividend shall commence from after the end of the first three quarters of the financial year and the full financial year, until the financial statements for the first three quarters, half year or full financial year have been announced in accordance with Appendix 7.2. This approach applies regardless of whether the issuer performs financial reporting on a quarterly basis or a half-yearly basis.
      3.3 Therefore, an issuer must not announce dividend or passing of dividend in relation to the first or third quarters of the financial year, unless the issuer has announced its quarterly financial statements in accordance with Appendix 7.2 (whether required by the Exchange or otherwise) for the first or third quarters of the financial year.
      3.4 However, dividend announcements are permissible without being accompanied by the results for the relevant period if the issuer is able to fulfill the following conditions: —
      (i) the issuer must have a committed dividend policy to announce dividends on a quarterly basis and such policy must have been communicated to shareholders;
      (ii) the issuer must confirm, for each dividend announced for the first or third quarter of the financial year, that after making payment of the dividend, the issuer has sufficient financial resources to fulfil its liabilities as and when they fall due; and
      (iii) in the case of an issuer that is a corporation, the issuer must confirm, for each dividend announced for the first or third quarter of the financial year, that the corporation complies with or will comply with section 403 of the Companies Act or similar statutory requirements in its place of incorporation.
      3.5 Notwithstanding this exemption, all issuers are reminded of their obligation to make immediate disclosures of material information under Rule 703, which will include a material development that will cause dividends to significantly deviate from expectations based on previous announcements, or if no dividend is paid. The exemption set out in paragraph 3.4 will cease to apply once an issuer is unable to fulfill its commitment to the dividend policy.
      3.6 Other than for the Restricted Periods set out in paragraph 3.2, Rule 704(25) does not prohibit issuers from making announcements of dividend or passing of dividend at all other periods.

      4. Announcements of record date for previously announced bonus issues or rights issues, capital return or dividend

      4.1 Rule 704(25) does not prohibit the announcement of a record date during the Restricted Period if such record date is relating to a dividend, capital return, bonus issue or rights issue which has been previously announced outside the Restricted Periods for such announcements as set out in this Practice Note.

      Added on 7 February 20207 February 2020.

    • Practice Note 8.1 Rights Issue Timetable

      Details Cross References
      Issue date: 10 May 2002

      Effective date: 1 July 2002
      Listing Rule 823

      The following is the expected timetable for a renounceable rights issue:—

          No of market days after record date (D)
      (a) To despatch SRAFs to shareholders who hold shares in their securities accounts with CDP, and to despatch PALs to CDP and to shareholders whose names appear on the register D+3
      (b) Commencement of trading of nil-paid rights D+3
      (c) Latest day for trading of nil-paid rights On or after D+9
      (d) Last day for receipt and acceptance of SRAFs On or after D+13

      The following is the expected timetable for a non-renounceable rights issue:—

          No of market days after record date (D)
      (a) To dispatch SRAFs to shareholders who hold shares in their securities accounts with CDP, and to dispatch PALs to CDP and to shareholders whose names appear on the register D+3
      (b) Last day for receipt and acceptance of SRAFs On or after D+9

      Amended on 29 September 201129 September 2011 and 7 February 20207 February 2020.

    • Practice Note 8.2 Sub-underwriting Arrangements

      Details Cross References
      Issue date: 1 January 2011

      Effective date: 1 January 2011
      Chapter 8 Part V

      1. Introduction

      1.1 The objective of this Practice Note is to provide guidance on sub-underwriting arrangements entered into with controlling shareholders and substantial shareholders where sub-underwriting fees will be paid. Payment of sub-underwriting fees to controlling shareholders and substantial shareholders to take up their rights entitlement and/or sub-underwrite a portion of the excess rights shares translates to a larger price discount for the rights shares for such shareholders.
      1.2 This Practice Note sets out the requirement for all sub-underwriting arrangements, entered into with controlling shareholders and substantial shareholders where sub-underwriting fees are paid, to be subject to specific shareholders' approval. To protect the interest of other shareholders, we are also requiring specific conditions to be met by issuers and underwriters.

      2. Shareholders' Approval

      2.1 For issuers seeking shareholders' approval for the rights issue, a separate resolution is needed where sub-underwriting fees will be paid to controlling shareholders and substantial shareholders.
      2.2 Issuers that intend to utilize the general mandate for the issue of rights shares will have to seek specific shareholders' approval for the sub-underwriting arrangements where a sub-underwriting fee will be paid.

      3. Conditions to be Satisfied by Issuers and Underwriters

      3.1 To increase the transparency and accountability of these sub-underwriting arrangements, the Exchange will allow sub-underwriting arrangements with a fee to be entered into with controlling shareholders and substantial shareholders, where specific conditions are satisfied by issuers and underwriters:—
      3.1.1 The issuer's Board of Directors ("Board") provides assurance that the terms of the sub-underwriting arrangement are fair and not prejudicial to the issuer and to other shareholders. The Board must provide the basis for their opinion;
      3.1.2 The issuer's Board provides a confirmation in the circular to shareholders that the terms agreed between the issuer and the underwriter (including the commission payable to the underwriter and the controlling and/or substantial shareholder) are on arms' length and normal commercial terms;
      3.1.3 The underwriter must be a financial institution licensed by the Monetary Authority of Singapore to conduct underwriting activities;
      3.1.4 The Board's opinion (including the basis thereof) and the confirmation referred to in paragraphs 3.1.1 and 3.1.2 above, together with a statement whether there are any dissenting views of the Board members (and if so, details of the dissenting views), must be disclosed in the circular to shareholders;
      3.1.5 The underwriters confirm to the Board that:—
      (a) the discussion on the sub-underwriting arrangement with the sub-underwriters was initiated by the underwriters and not by the sub-underwriters; and
      (b) the underwriters will not underwrite the rights issue unless the sub-underwriters enter into the sub-underwriting arrangement.
      3.1.6 The commission that the sub-underwriters earn shall not be higher than, and must be part of, the commission paid to the underwriters; and
      3.1.7 The fee earned by the underwriters and the sub-underwriters must be disclosed in the circular to shareholders.

      Amended on 1 January 20111 January 2011 and 29 September 201129 September 2011.

    • Practice Note 10.1 Acquisitions and Realisations

      Details Cross References
      Issue date: 5 July 2002

      Effective date: 8 July 2002
      29 September 2011
      7 February 2020

      Revised on: 24 March 2009
      14 September 2011
      9 January 2020
      Chapter 10

      1. Introduction

      1.1 This Practice Note sets out, in relation to acquisitions and realisations, the following:
      (a) the types of acquisitions and disposals that are regarded to be in, or in connection with, the ordinary course of an issuer's business;
      (b) the considerations to apply in computing the relative figures under Rule 1006;
      (c) the applicability of Chapter 10 where any of the relative figures computed pursuant to Rule 1006 involves a negative figure;
      (d) the factors to be taken into account in arriving at the consideration value of a transaction for the purposes of Chapter 10;
      (e) the considerations to apply where a transaction requires shareholders' approvals for inter-conditional proposals; and
      (f) the circumstances under which the Exchange may grant a waiver of the requirement for shareholders' approval of any major transactions.
      1.2 Issuers and their professional advisers may consult the Exchange on the application of the rules in respect of a particular transaction, if necessary. Issuers and their professional advisers are required to furnish the Exchange with the full facts and information on the matters consulted.
      1.3 Notwithstanding the classification of the transaction, the Exchange may, in appropriate circumstances, exercise its powers under Chapter 14 to impose additional requirements on the transaction, including to require that the issuer appoint an independent professional, or that the transaction be made conditional upon the approval of shareholders or the Exchange.
      1.4 In this Practice Note, "issuer" refers to the issuer or a subsidiary that is not listed on the Exchange or primary listed on an approved exchange, unless the context otherwise requires.

      2. Acquisitions and Disposals in, or in Connection with, the Ordinary Course of an Issuer's Business

      2.1 Rule 1002(1) states, among others, that, unless the context otherwise requires, "transaction" refers to the acquisition or disposal of assets by an issuer or a subsidiary that is not listed on the Exchange or on an approved exchange, including an option to acquire or dispose of assets. It excludes an acquisition or disposal which is in, or in connection with, the ordinary course of its business or of a revenue nature.
      2.2 An acquisition that is regarded to be in, or in connection with, the ordinary course of an issuer's business, is not subject to the requirements under Chapter 10 (except for Part VIII on very substantial acquisitions or reverse takeovers).
      2.3 An acquisition can be regarded to be in, or in connection with, the ordinary course of an issuer's business, if:
      (a) the asset to be acquired is part of the issuer's existing principal business; and
      (b) the acquisition does not change the issuer's risk profile.
      2.4 Existing principal business: An asset is part of the issuer's existing principal business if the acquisition of the asset is required to be reported under the applicable accounting standards within a specific reportable operating segment (excluding any miscellaneous "any other segment" category) that:
      (a) contributes more than 20% of the issuer's net profits or total assets; and
      (b) has been reported in the issuer's latest audited financial statements.
      2.5 Change of risk profile: The following are indications that an acquisition would change the risk profile of an issuer:
      (a) notwithstanding Rule 1002(3)(c), a proposed acquisition will result in reduction of the issuer's net profits or net asset value by 20% or more, based on the latest audited financial statements, and assuming that the proposed acquisition had been effected at the end of that financial year;
      (b) the asset proposed to be acquired is loss-making or is in a net liability position;
      (c) the proposed acquisition will have a significant adverse impact on the issuer's gearing;
      (d) the proposed acquisition will result in an expansion into a new jurisdiction that will expose the issuer to significant new risks; or
      (e) in the case of a mineral, oil and gas company, a proposed acquisition will result in an expansion into a new resource or commodity type, or into a new jurisdiction. The exploration and extraction methods of different types of minerals, oil and gas are different. Minerals, oil and gas resources are also necessarily situated in specific geographical areas, which may be subject to specific licensing or regulatory regimes. An expansion into a new resource or commodity type, or into a new jurisdiction, is likely to require a reconsideration of the applicable risks.
      These indicators are neither exhaustive nor conclusive.
      2.6 A disposal of an issuer's business (or a substantial part of its business) will usually not be considered to be in the ordinary course of business. In respect of REITs and property trusts, Rule 1014(3) provides that a disposal of property is considered to be in the ordinary course of business, provided that the relative figures as computed on the bases set out in Rule 1006 do not exceed 50% based on the aggregate value of all disposals in the last twelve months. Notwithstanding that the disposal of the property may be within the 50% threshold, the REIT or property trust will need to comply with Rule 1010 to immediately announce information relating to the disposals. However, where the disposal of the property is executed in conjunction with a view to reinvest the disposal proceeds into an acquisition of another property, the Exchange may grant a waiver of Rule 1014(3) provided that:
      (a) the property to be acquired has been identified and is within the issuer's investment mandate, including being in a similar sector that the issuer has been investing in and located in a similar jurisdiction where its current portfolio of properties is located; and
      (b) a legally binding agreement for the acquisition of the property has been signed.

      3. Computation of Relative Figures under Rule 1006

      3.1 Rule 1006 sets out the following bases for computing the relative size of a transaction:
      (a) Rule 1006(a): The net asset value of the assets to be disposed of, compared with the group's net asset value. This basis is not applicable to an acquisition of assets;
      (b) Rule 1006(b): The net profits attributable to the assets acquired or disposed of, compared with the group's net profits;
      (c) Rule 1006(c): The aggregate value of the consideration given or received, compared with the issuer's market capitalisation based on the total number of issued shares excluding treasury shares;
      (d) Rule 1006(d): The number of equity securities issued by the issuer as consideration for an acquisition, compared with the number of equity securities previously in issue; and
      (e) Rule 1006(e): The aggregate volume or amount of proved and probable reserves to be disposed of, compared with the aggregate of the group's proved and probable reserves. This basis is applicable to a disposal of mineral, oil or gas assets by a mineral, oil and gas company, but not to an acquisition of such assets.
      3.2 For the purposes of computing the relative figures of Rule 1006, an issuer shall consider the following:
      (a) in computing the net asset value of a business to be disposed of under Rule 1006(a), if there is a capitalisation, or a waiver or write-off of a loan (in full or in part) extended by the issuer to the business, the amount of the loan, waiver or write-off shall be added to the net asset value of the business; and
      (b) in computing the aggregate value of consideration given or received under Rule 1006(c):
      (i) any deferred consideration that may be payable or receivable by the issuer in the future shall be included in the aggregate value of consideration (i.e., the consideration is the maximum total consideration payable or receivable under the agreement);
      (ii) any additional amounts related to the transaction, including loans or guarantees extended by the purchaser or the provision of other forms of security, shall be included in the aggregated value of consideration;
      (iii) any additional liabilities (whether actual or contingent) to be assumed by the purchaser or waived by the seller under the terms of the transaction shall be included in computing the aggregate value of consideration. For example, in the case of a disposal of a business at a nominal consideration but which obliges the purchaser to repay a loan, or the seller to waive or write-off a loan, that was extended to the business, the value of consideration shall include the amount of the loan; and
      (iv) if a business to be acquired has negative net asset value, the absolute value of the negative net asset value shall be taken into account in computing the aggregate value of consideration. For example, in the case of an acquisition at a nominal value of a business with negative net asset value, the value of consideration shall include the absolute value of the negative net asset value of the business.

      4. Negative Relative Figures under Rule 1006

      4.1 In some cases, tests based on assets under Rule 1006(a) and profits under Rule 1006(b) may involve a negative figure in the numerator, denominator or both, which may not give a meaningful indication of the significance of the transaction to the issuer. Such situations arise where a transaction concerns any of the following:
      (a) an issuer with a negative net asset value;
      (b) a disposal of an asset with negative net asset value;
      (c) a loss-making issuer; and
      (d) an acquisition or a disposal of a loss-making asset.
      By way of example, (i) the disposal of an asset with negative net asset value by an issuer with a negative net asset value; or (ii) the acquisition or disposal of a loss-making asset by a loss-making issuer, will result in a negative relative figure computed pursuant to Rule 1006(a) and Rule 1006(b) respectively.
      4.2 Under Rule 1007(1), if any of the relative figures computed pursuant to Rule 1006 involves a negative figure, Chapter 10 may still be applicable to the transaction in accordance with the applicable circumstances in this Practice Note 10.1.
      4.3 In the following situations, unless Rule 703, Rule 905 or Rule 1009 applies, no announcement and shareholders' approval of the transaction is required:
      (a) the acquisition of a loss-making asset by an issuer (whether profitable or loss-making), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(c) and Rule 1006(d) amounts to 5% or less; and
      (ii) the net loss attributable to the asset to be acquired amounts to 5% or less of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values);
      (b) the acquisition of a profitable asset by a loss-making issuer, where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(c) and Rule 1006(d) amounts to 5% or less; and
      (ii) the net profit attributable to the asset to be acquired amounts to 5% or less of the consolidated net loss of the issuer (taking into account only the absolute value);
      (c) the disposal of an asset by an issuer (where either or both the asset or the issuer has negative net asset value), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(b), Rule 1006(c) and (if applicable) Rule 1006(e), amounts to 5% or less; and
      (ii) if the disposal will result in a loss on disposal, the loss on disposal amounts to 5% or less of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values);
      (d) the disposal of a profitable asset by a loss-making issuer, where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(a), Rule 1006(c) and (if applicable) Rule 1006(e) amounts to 5% or less; and
      (ii) the net profit attributable to the asset to be disposed of and, if the disposal will result in a loss on disposal, the sum of such net profit and the loss on disposal, amounts to 5% or less of the consolidated net loss of the issuer (in each case taking into account only the absolute value); and
      (e) the disposal of a loss-making asset by an issuer (whether profitable or loss-making), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(a), Rule 1006(c) and (if applicable) Rule 1006(e) amounts to 5% or less; and
      (ii) if the disposal will result in a loss on disposal, the loss on disposal amounts to 5% or less of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values).
      However, if the issuer wishes to announce the transaction, the announcement must include the information required under Rule 1008(2).
      4.4 In the following situations, an issuer must, in relation to the transaction, immediately announce the information required in Rule 1010, Rule 1011, Rule 1012 and Rule 1013, where applicable:
      (a) the acquisition of a loss-making asset by an issuer (whether profitable or loss-making), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(c) and Rule 1006(d) does not exceed 20%; and
      (ii) the net loss attributable to the asset to be acquired exceeds 5% but does not exceed 10% of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values);
      (b) the acquisition of a profitable asset by a loss-making issuer, where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(c) and Rule 1006(d) does not exceed 20%; and
      (ii) the net profit attributable to the asset to be acquired exceeds 5% of the consolidated net loss of the issuer (taking into account only the absolute value);
      (c) the disposal of an asset by an issuer (where either or both the asset or the issuer has negative net asset value), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(b), Rule 1006(c) and (if applicable) Rule 1006(e) does not exceed 20%; and
      (ii) if the disposal will result in a loss on disposal, the loss on disposal exceeds 5% but does not exceed 10% of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values);
      (d) the disposal of a profitable asset by a loss-making issuer, where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(a), Rule 1006(c) and (if applicable) Rule 1006(e) does not exceed 20%; and
      (ii) the net profit attributable to the asset to be disposed of and, if the disposal will result in a loss on disposal, the sum of such net profit and the loss on disposal, exceeds 5% but does not exceed 10% of the consolidated net loss of the issuer (in each case taking into account only the absolute value); and
      (e) the disposal of a loss-making asset by an issuer (whether profitable or loss-making), where:
      (i) the absolute relative figure computed on the basis of each of Rule 1006(a), Rule 1006(c) and (if applicable) Rule 1006(e) does not exceed 20%; and
      (ii) if the disposal will result in a loss on disposal, the loss on disposal exceeds 5% but does not exceed 10% of the consolidated net profit or net loss of the issuer (in each case taking into account only the absolute values).
      4.5 In relation to Rule 1010(13), notwithstanding that a relative figure computed on the bases set out in Rule 1006 is negative, the issuer must still announce its value.
      4.6 If the transaction does not fall within all the situations in paragraphs 4.3 and 4.4, Rule 1014 shall apply to the transaction. By way of example, unless the disposal of a loss-making asset with negative net asset value falls within paragraphs 4.3(c), 4.3(e), 4.4(c) and 4.4(e), Rule 1014 shall apply to the transaction.

      5. Factors taken into Account in Arriving at Consideration Value

      5.1 Where the relative figures under Rule 1006 exceeds 5%, Rule 1010, Rule 1014 and Rule 1015 require the issuer to announce certain information about the transaction. Among others, the issuer must announce the aggregate value of the consideration, stating the factors taken into account in arriving at it and how it will be satisfied.
      5.2 Substantive factors should be disclosed to justify the aggregate value of the consideration. The mere fact that the consideration was arrived at on a "willing buyer willing seller" basis is not a sufficient factor.

      6. Shareholders' Approvals for Inter-conditional Proposals

      6.1 If a transaction requires shareholders' approvals for inter-conditional proposals, the issuer should consider whether separate resolutions on the different aspects of the proposal are to be voted on by shareholders.
      6.2 In reviewing circulars to be sent to shareholders, the Exchange will consider whether the resolutions have been constructed in a manner that allows shareholders to properly exercise their voting rights.

      7. Waiver of Shareholders' Approval for Major Transactions

      7.1 A major transaction is one where any of the relative figures as computed on the bases set out in Rule 1006 exceeds 20%. Under Rule 1014, a major transaction must be made conditional upon approval by shareholders in general meeting and a circular containing the information in Rule 1010, Rule 1011, Rule 1012 and Rule 1013 must be sent to all shareholders.
      7.2 Where an issuer seeks a waiver from the requirement for shareholders' approval, the issuer must submit an opinion from its board of directors that there has been or will be no material change in the risk profile of the issuer arising from the transaction, including the basis for its opinion.
      7.3 The Exchange may grant the waiver in the following circumstances:
      (a) a proposed transaction has been foreshadowed or investors have had the opportunity to consider and vote in favour of the proposal at a previous general meeting; and
      (b) a proposed disposal involves a non-core asset. This is because a non-core asset is not likely to affect the nature of the issuer's principal business. A non-core asset is one that meets all of the following criteria:
      (i) it is not critical to the principal business activity of the issuer;
      (ii) it is ancillary to the principal business activity of the issuer; and
      (iii) it is not an existing principal business (as described in paragraph 2.4) of the issuer.
      7.4 The Exchange will not grant a waiver from the requirement for shareholders' approval solely on the basis that the substantial shareholders of the issuer have undertaken to vote in favour of the transaction. As a general rule, shareholders should be given the opportunity to vote on the issuer's proposal.
      7.5 The Exchange would not in normal circumstances regard only the cost and inconvenience of convening a meeting as sufficient reasons to grant a waiver.
      7.6 Under Rule 107, where a waiver is granted, the issuer must announce the waiver, the reasons for seeking the waiver and the conditions, if any, upon which the waiver is granted as soon as practicable.

      Amended on 29 September 201129 September 2011 and 7 February 20207 February 2020.

    • Practice Note 12.1 Responsibility Statements for Directors, Vendors and Financial Advisers

      Details Cross References
      Issue date: 14 September 2011

      Effective date: 29 September 2011
      Listing Rules 610(3), 610(4), 1015(5)(c), 1015(5)(d), 1205 and 1206(6)

      Appendix 8.2

      1. This Practice Note provides guidance on the wordings for the responsibility statements for directors, vendors, issue managers and financial advisers.

      2. Responsibility Statement for Directors and Vendors

      2.1 For the purposes of Rule 610(3), Rule 1015(5)(c) and Rule 1205, the following directors' [or vendors'] responsibility statement should be included in circulars:

      "The [directors/vendors] collectively and individually accept full responsibility for the accuracy of the information given in this circular and confirm after making all reasonable enquiries that, to the best of their knowledge and belief, this circular constitutes full and true disclosure of all material facts about the [describe proposed action], the issuer and its subsidiaries, and the [directors/vendors] are not aware of any facts the omission of which would make any statement in this circular misleading, [and where the circular contains a profit forecast, the directors are satisfied that the profit forecast has been stated after due and careful enquiry and consideration]. Where information in the circular has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the [directors/vendors] has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the circular in its proper form and context."

      3. Responsibility Statement for Issue Managers and Financial Advisers

      3.1 For the purposes of Rule 610(4), Rule 1015(5)(d), Rule 1206(6) and Appendix 8.2, the following issue manager's or financial adviser's responsibility statement should be included in circulars:

      "To the best of the [issue manager's/financial adviser's] knowledge and belief, this circular constitutes full and true disclosure of all material facts about the [describe proposed action], the issuer and its subsidiaries, and the [issue manager/financial adviser] is not aware of any facts the omission of which would make any statement in the document misleading; [and where the document contains a profit forecast, it is satisfied that the profit forecast has been stated by the directors after due and careful enquiry and consideration]."

      Added on 29 September 201129 September 2011 and amended on 10 January 202010 January 2020 and 7 February 20207 February 2020.

    • Practice Note 12.2 Internal Controls and Risk Management Systems

      Details Cross References
      Issue date: 2 April 2013

      Revised Date: 6 August 2018

      Effective date: 2 April 2013
                             1 January 2019
      Listing Rules 610(5) and 1207(10)

      1. Introduction

      1.1 This Practice Note provides guidance on the application of Rules 610(5) and 1207(10).
      1.2 In its prospectus and annual reports, the issuer's board must comment on the adequacy and effectiveness of the internal controls (including financial, operational, compliance and information technology controls) and risk management systems. A statement on whether the audit committee concurs with the board's comments must also be provided.

      Rule 610(5) requires the disclosure to be made in the prospectus whereas Rule 1207(10) requires the disclosure to be in the annual reports.

      2. Intent of Rules 610(5) and 1207(10)

      2.1 Internal controls (including financial, operational, compliance and information technology controls) and risk management systems serve to safeguard shareholders' investments and company's assets.
      2.2 A board committee, for example, the audit committee is usually responsible for overseeing internal controls and risk management. The board, which includes executive directors, is also responsible for assessing the adequacy and effectiveness of these internal controls and risk management systems.
      2.3 The objective of Rules 610(5) and 1207(10) is to increase transparency and accountability. In providing this comment, the board and the audit committee are required to demonstrate that they have rigorously assessed the (i) internal controls (including financial, operational, compliance and information technology controls) and (ii) risk management systems.

      3. Compliance with Rules 610(5) and 1207(10)

      3.1 In satisfying Rules 610(5) and 1207(10), the board and the audit committee may ask for an independent audit on internal controls or risk management systems to assure themselves on the adequacy and effectiveness of the systems of internal controls and risk management, or if they are not satisfied with the systems of internal controls or risk management.
      3.2 The issuer should maintain proper record of the discussions and decisions of the board and the audit committee.
      3.3 Compliance with Rules 610(5) and 1207(10) involves the following disclosures:-
      (i) Where the board and the audit committee are satisfied that the issuer has adequate and effective systems of internal controls and risk management, the disclosure must include the basis for such comment.

      To avoid doubt, under Rule 246(9), all listing applicants are required to provide, for the Exchange's assessment, the auditor's report to management on the internal controls and accounting systems. Where weaknesses exist in a potential issuer's internal controls and accounting systems, the Exchange may seek a confirmation from the auditors of the potential issuer that the material weaknesses were addressed. This is in addition to Rule 610(5) which requires the board and audit committee to disclose the basis for their comments on the adequacy and effectiveness of the issuer's systems of internal controls and risk management.
      (ii) In relation to Rule 1207(10), where the board and/or the audit committee has commented that internal controls or risk management systems need to be strengthened, or has concerns that internal controls or risk management systems are inadequate, the board must disclose the issues and how it seeks to address and monitor the areas of concerns.

      4. Format of Disclosure

      4.1 There is no prescribed format of disclosure.
      4.2 As the board and audit committee are obliged by Rules 610(5) and 1207(10) to provide the specific disclosures in Paragraph 3.3 above, the Exchange recommends the comment be provided in the following ways:-
      (i) Disclosure to be made in the section on "Audit Committee", "Internal Controls" or "Risk Management" of the prospectus for compliance with Rule 610(5).
      (ii) Disclosure to be made in the Directors' Report or Corporate Governance section of the annual report for compliance with Rule 1207(10).

      5. General Principle

      5.1 Good disclosures which comply with Rules 610(5) and 1207(10) comprise the following:
      (i) The board's comment on the Group's internal controls (including financial, operational, compliance and information technology controls) and risk management systems. A statement on whether the audit committee concurs with the board's comment must also be provided; and
      (ii) The basis for the board's comment and if the audit committee does not concur with the board, the basis for the audit committee's comment.
      5.2 Should the board or the audit committee comment that the Group's internal controls or risk management systems have material weaknesses, then clear disclosure of these weaknesses and the steps taken to address them is necessary for investors to make an informed decision about the issuer.

      Added on 2 April 20132 April 2013, amended on 1 January 20191 January 2019.

    • Practice Note 13.1 Trading Halt and Suspension

      Details Cross References Enquiries
      Issue date: 3 Nov 2003
      7 Jun 2006
      1 Aug 2011
      14 September 2011
      12 October 2017
      9 January 2020

      Effective date: 10 Nov 2003
      1 Sep 2006
      1 Aug 2011
      29 September 2011
      13 November 2017
      3 June 2019
      7 February 2020
      Listing Rules 1301, 1302, 1303 and paragraph 21 of Appendix 7.1. Please contact Market Control: —
      6236-8820 Hotline

      1. Introduction

      1.1 This Practice Note provides guidance in connection with trading halts and suspensions.
      1.2 A trading halt is a short term trading stoppage requested by an issuer to disclose material information. It is generally requested for a minimum of 30 minutes to a maximum of three market days. When a trading halt is being lifted, a stock will enter into the phase that the market is then in.
      1.3 A suspension is generally a longer term trading stoppage that can be requested either by an issuer or imposed by the Exchange. When a suspension is being lifted, a stock will enter into an adjust phase for a minimum duration of 15 minutes before normal trading commences.
      1.4 In a trading halt, orders in the system are not purged until the end of the market day while for a suspension, all orders are purged at the time of the suspension.

      Amended on 29 September 201129 September 2011, 3 June 20193 June 2019 and 7 February 20207 February 2020.

      2. Trading Hours

      2.1 For normal day trading, our trading hours are from 9.00 am to 12.00 pm and 1.00pm to 5.00 pm. There is a mid-day break from 12.00 pm to 1.00 pm. Opening Routine is a 30-minute session before trading commences at 9.00 am, i.e. 8.30 am to 9.00 am. Closing Routine will run for 6 minutes after 5.00 pm, i.e. 5.00 pm to 5.06 pm. Trade at Close Phase will run for 10 minutes after the Closing Routine ends at 5.06 pm, i.e. 5.06 pm to 5.16 pm.
      2.2 For half day trading, our trading hours are from 9:00 am to 12:00 pm. Opening Routine is a 30-minute session before trading commences at 9.00 am, i.e. 8.30 am to 9.00 am. Closing Routine will run for 6 minutes after 12.00 pm, i.e. 12.00 pm to 12.06 pm. Trade at Close Phase will run for 10 minutes after the Closing Routine ends at 12.06 pm, i.e. 12.06 pm to 12.16 pm.

      Amended on 1 August 20111 August 2011, 13 November 201713 November 2017 and 3 June 20193 June 2019.

      3. Procedures for Trading Halt and Suspension

      3.1 Trading halt or suspension can be applied at any time. When an issuer wishes to request for a trading halt or suspension in its securities during trading hours and the mid-day break, it must first contact the officers in Market Control ("MC"). After alerting the MC officer, the issuer can then send the SGXNET announcement to request for trading halt or suspension.
      3.2 In the SGXNET announcement, issuers should state the reason for requesting the trading halt or suspension.
      3.3 Issuers are to observe the following guidelines when requesting for a trading halt or suspension:—
      (a) During trading hours and mid-day break

      Please call and alert Market Control before releasing the request via SGXNET.
      (b) Before or after trading hours

      Please call and alert Market Control between 7.30 am and 8.30 am although the SGXNET request can be released anytime after the close of the previous market day and before 8.30am on the day of the Trading Halt or Suspension.

      Amended on 1 August 20111 August 2011, 29 September 201129 September 2011, 13 November 201713 November 2017 and 3 June 20193 June 2019.

      4. Procedures for Lifting of Trading Halt and Resumption of Trading from Suspension

      4.1 For both trading halt and suspension, trading can resume only on the quarter-hour between 8.30 am to 4.45pm for lifting of trading halt and between 9.00 am to 4.45pm for resumption of trading from suspension.
      4.2 Issuers must allow at least 30 minutes of dissemination time after a material announcement is made and before trading resumes.
      4.3 For trading halt, issuers must allow at least 15 minutes of dissemination time for an announcement on the request for the lifting of trading halt, before trading resumes. By way of example, if an issuer makes a request for trading halt announcement at 10:00 am and releases the material information at 10:16 am, if there is no further release of material information, the issuer may also make a request for lifting of trading halt announcement at 10:16 am. However, trading may only resume at 11:00 am. If an issuer wishes to resume trading at 11:00 am, the latest time which the issuer is required to make the request for lifting of trading halt announcement is 10:45 am.
      4.4 For suspension, issuers must allow at least 30 minutes of dissemination time for an announcement on the request for the resumption of trading from suspension, before trading resumes. By way of example, if an issuer makes a request for suspension announcement at 3:00 pm and releases the material information at 3:14 pm, if there is no further release of material information, the issuer may also make a request for the resumption of trading from suspension announcement at 3:14 pm. However, trading may only resume at 3:45 pm. If an issuer wishes to resume trading at 3:45 pm, the latest time which the issuer is required to make the request for the resumption of trading from suspension announcement is 3:15 pm.
      4.5 Issuers are to observe the following guidelines when requesting for a lifting of trading halt or resumption of trading from suspension:—
      (a) During trading hours and mid-day break

      Please call and alert Market Control before releasing the request via SGXNET.
      (b) Before or after trading hours

      Please call and alert Market Control between 7.30 am and 8.30 am although the SGXNET request can be released anytime after the close of the previous market day and before 8.30am on the day of the lifting of trading halt or resumption of trading from suspension.
      4.6 Issuers whose securities have been halted or suspended and wish to resume trading upon commencement of trading on a market day are advised to disclose both their material announcement and SGXNET request for resumption of trading pursuant to paragraphs 4.2, 4.3 and 4.4 of this Practice Note.

      Amended on 1 August 20111 August 2011, 29 September 201129 September 2011, 13 November 201713 November 2017, 3 June 20193 June 2019 and 7 February 20207 February 2020.

      5. SGXNET Templates

      Issuers must use the correct template when sending in the above requests. Issuers can choose from the following four templates:—

      a. Request for Trading Halt;
      b. Request for Suspension;
      c. Request for Lifting of Trading Halt;
      d. Request for Resumption of Trading from Suspension

      6. Disclosure Obligations

      6.1 While the listed securities of an issuer is suspended from trading, shareholders must be kept updated regularly on material developments, particularly on efforts undertaken to allow the listed securities to resume trading. Accordingly, except as provided in Rule 1303(2) and Rule 1303(3), issuers whose listed securities are suspended from trading should provide half-yearly updates on their developments via SGXNET. If there has been no material updates since the previous update, it is still salutary to state so in the issuer's subsequent update. Such announcements inform shareholders that the circumstances in the last material update continue to apply and that there is no material development of which they should take note.

      Added on 7 February 20207 February 2020.

    • Practice Note 13.2 Watch-List

      Details Cross References
      Issue date: 6 December 2007

      Effective date: 1 June 2020
      Chapter 13 Part V
      Appendix 13.1.

      1. Introduction

      1.1 The watch-list seeks to heighten transparency of an issuer's financial performance. The 2 main purposes of the watch-list are to:
       
      (i) instill discipline in issuers to administer their financial performance for continued compliance with the listing rules; and
      (ii) alert investors to the risk of being invested in companies that may face delisting.
      1.2 The inclusion criteria for the watch-list are as set out in Rule 1311.
      1.3 This Practice Note sets out the guidelines for inclusion of issuers on the watch-list and removal of issuers from the watch-list.

      2. Half-Yearly Reviews

      2.1 Rule 1311 states that an issuer will be placed on the watch-list if it records pre-tax losses for the 3 most recently completed consecutive financial years (based on audited full year consolidated accounts) and an average daily market capitalisation of less than S$40 million over the last 6 months.
      2.2 The Exchange will conduct half-yearly reviews to identify issuers to be included on the watch-list. The half-yearly review will take place on the first market day of June and December of each year. Upon identifying an issuer for inclusion on the watch-list, the Exchange will promptly notify the issuer of its status.
      2.3 The table below shows how the inclusion criteria are applied at each of the review dates.
       
      Watch-List Review Date Entry Criteria
      First market day of June Loss-making issuers for the 3 most recently completed consecutive financial years (based on audited full year consolidated accounts) with average daily market capitalisation of less than S$40 million from 1 December – 31 May
       
      First market day of December
       
      Loss-making issuers for the 3 most recently completed consecutive financial years (based on audited full year consolidated accounts) with average daily market capitalisation of less than S$40 million from 1 June – 30 November
       
      2.4 Daily updated market capitalisation figures are made available on the Exchange's website. Audited financial results of issuers can be found in annual reports which are available on the Exchange's website.
      2.5 Issuers are expected to take proactive steps to exit the watch-list.

      3. Removal from the Watch-List

      3.1 An issuer which enters the watch-list will be removed if it meets the exit criteria in Rule 1314. An issuer cannot exit from the watch-list by a transfer to Catalist unless otherwise permitted by the Exchange in exceptional circumstances (for example, if the company is profitable, has a viable business, is able to operate as a going concern and has adequate working capital).
      3.2 An issuer placed on the watch-list will have to submit an application to the Exchange within the cure period for removal from the watch-list. The Exchange may reject an application for exit from the watch-list if the Exchange is of the opinion that there are other factors that justify the continued inclusion of the issuer in the watch-list or the delisting of the issuer.
      3.3 To exit the watch-list, the issuer must have recorded profit in accordance with Rule 1314. In addition, to provide assurance that the issuer demonstrates actual profitability, the Exchange takes into account the audit opinion of the financial statements and the sustainability of the profit. Therefore, the Exchange will reject an application for exit from the watch-list if the issuer’s latest audited full year consolidated accounts are subject to an adverse opinion, a qualified opinion, a disclaimer of opinion or the issuer’s auditors have stated that a material uncertainty related to going concern exists. The Exchange will also exclude non-recurrent income and income generated by activities outside the ordinary course of business in assessing if the issuer has met the exit criteria in Rule 1314.
      3.4 The issuer must also have an average daily market capitalisation of S$40 million or more over the last 6 months in order to exit the watch-list in accordance with Rule 1314. The Exchange monitors trading of listed securities for unusual trading activity. The Exchange will consider if the issuer’s share price during the relevant period has been determined by artificial means in assessing if the issuer has met the exit criteria in Rule 1314.

      4. Extension to the 36-Month Cure Period

      4.1 Pursuant to Rule 1315, if the issuer fails to comply with the exit criteria within the 36-month cure period, the Exchange may either remove the issuer from the Official List, or suspend trading of the listed securities of the issuer (without the agreement of the issuer) with a view to removing the issuer from the Official List.
      4.2 An issuer may apply to the Exchange for an extension to the 36-month cure period and the Exchange may, if the circumstances warrant it, grant an extension:
       
      (1) of up to 12 months if the issuer satisfies at least one of the requirements under Rule 1314 and has achieved healthy cash flow from its operating activities (based on its audited full year consolidated accounts for the most recently completed financial year);
      (2) of up to 3 months if the issuer has entered into a legally binding agreement to acquire asset(s) that enable the enlarged group to comply with the requirements in Rule 210(2)(a) or (b) and the transaction is expected to be completed within 3 months;
      (3) if trading of its securities was suspended pursuant to Rule 1303(3) during a period preceding the end of the 36-month cure period. The period of extension granted by the Exchange, if any, shall not exceed that which is required to compute the issuer's average daily market capitalisation over a period of 6 months; or
      (4) if the issuer has completed a corporate action (with the aim of exiting the watch-list) less than 6 months before the expiry of the cure period. The period of extension granted by the Exchange, if any, shall not exceed that which is required to compute the issuer’s average daily market capitalisation over a period of 6 months.
      4.3 Any application for extension of time must be submitted to the Exchange at least 1 month before expiry of the cure period.

      5. Cash Companies and Companies Suspended Pursuant to Rule 1303(2) or 1303(3)

      5.1 For avoidance of doubt, an issuer that has been suspended pursuant to Rules 1303(2) or 1303(3) or has been allowed to trade pursuant to the requirements of Rule 1018(1) will not be included on the watch-list and will not be required to provide the notification pursuant to Rule 1312. Rule 1311 will be applicable from the date the issuer satisfies the requirements of Rule 1304 or is no longer a cash company pursuant to the requirements in Rule 1018(2).
      5.2 Where an issuer has been placed on a watch-list pursuant to Rule 1311 and is subsequently suspended under Rules 1303(2) or 1303(3) or is allowed to trade subject to the requirements of Rule 1018(1), it will remain on the watch-list.
       
      (1) For the purposes of Rule 1314, the average daily market capitalisation will be computed based on the period commencing from the date the issuer satisfies the requirements of Rule 1304.
      (2) The Exchange will remove the issuer from the Official List:
       
      (a) at the end of the 36-month cure period which commences from the time it was placed on the watch-list (subject to any extension granted); or
      (b) before the expiry of the 36-month cure period if it does not meet the requirements in Rules 1304 or 1018(2).

      Amended on 29 September 201129 September 2011, 1 March 20161 March 2016, 2 December 20162 December 2016 and 1 June 20201 June 2020.

    • Transitional Practice Note 2 Transitional Arrangements Regarding Accounting Standards

      Details Cross References
      Issue date: 26 March 2018

      Effective date: 26 March 2018
      Rule 220

      1. Introduction

      1.1 On 26 March 2018, the Exchange replaced the reference to Singapore Financial Reporting Standards ("SFRS") with Singapore Financial Reporting Standards (International) ("SFRS(I)s") in Rule 220.
      1.2 Rule 109(2) states that the Exchange may, from time to time, publish transitional arrangements in relation to any amended or new rule.
      1.3 This Practice Note is published to clarify the transitional arrangements that will have effect under Rule 109(2).
      1.4 Rule 220 has been replaced by Rule 211A with effect from 12 February 2021.

      2. Transitional Arrangements for Listing Applicants

      2.1 Rule 220 requires that the financial statements submitted with the listing application by listing applicants must be prepared in accordance with SFRS(I)s, or International Financial Reporting Standard, or US Generally Accepted Accounting Principles.
      2.2 For the purpose of paragraph 2.1, if a listing applicant (other than a business trust) submits the financial statements for financial years that begin before 1 January 2018, Rule 220 in respect of the financial statements submitted with the listing application will be deemed satisfied if the listing applicant satisfies the relevant requirements under Part IX of the Fifth Schedule of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005. In the case of a business trust, if a listing applicant submits the financial statements for financial years that begin before 1 January 2018, Rule 220 in respect of the financial statements submitted with the listing application will be deemed satisfied if the listing applicant satisfies the relevant requirements under Part X of the Fourth Schedule of the Securities and Futures (Offers of Investments) (Business Trusts) (No. 2) Regulations 2005.

      3. Transitional Arrangements for Existing Issuers

      3.1 For existing primarily listed issuers, periodic financial reports for financial years that begin before 1 January 2018 may be prepared in accordance with SFRS, or International Financial Reporting Standard, or US Generally Accepted Accounting Principles.
      3.2 For existing secondary listed issuers, periodic financial reports for financial years that begin before 1 January 2018 may be reconciled in accordance with SFRS, or International Financial Reporting Standard, or US Generally Accepted Accounting Principles.

      4. SGX may amend, modify or supplement the above transitional arrangements.

      Added on 26 March 201826 March 2018 and amended on 12 February 2021.

    • Transitional Practice Note 3 Transitional Arrangements Regarding Code of Corporate Governance 2018

      Details Cross References
      Issue Date: 28 November 2018

      Effective Date: 1 January 2019
                                1 January 2022
      Rules 109(2), 210(5)(a), 210(5)(c), 210(5)(d)(i), 210(5)(d)(ii), 210(5)(d)(iii), 710 and 720(5) and 1207(10)
      1. Introduction
      1.1. On 6 August 2018, the Exchange amended the SGX-ST Listing Rules (Mainboard) following the publication of the Code of Corporate Governance 2018 by the Monetary Authority of Singapore ("MAS"). The Code of Corporate Governance 2018 applies to annual reports covering financial years commencing from 1 January 2019.
      1.2. As part of the amendments to the Code of Corporate Governance 2018, certain guidelines from the Code of Corporate Governance 2012 were shifted into the SGX-ST Listing Rules (Mainboard) for mandatory compliance.
      1.3. This Transitional Practice Note is published to establish transitional arrangements for certain guidelines shifted into the SGX-ST Listing Rules (Mainboard).
      2. Arrangements
      2.1. The following transitional arrangements will apply:—
      Listing Rule Subject Effective Date Transitional Arrangement
      710 Issuer to describe in its annual report its corporate governance practices with specific reference to the principles and provisions of the Code of Corporate Governance 2018 Financial year commencing on or after 1 January 2019 For any financial year commencing on or after 1 January 2019, an issuer must describe its corporate governance practices with specific reference to the principles and provisions of the Code of Corporate Governance 2018, in accordance with the amendments to Rule 710 ("Amended Rule 710"). The first batch of annual reports which would have to comply with Amended Rule 710 will likely be issued in 2020 or thereafter.

      For a financial year commencing prior to 1 January 2019, an issuer may describe its corporate governance practices with specific reference to the principles of the Code of Corporate Governance 2012, in accordance with Rule 710 prior to the relevant amendments.

      Alternatively, an issuer may elect to adopt Amended Rule 710 early, by describing its corporate governance practices with specific reference to the principles and provisions of the Code of Corporate Governance 2018, in accordance with Amended Rule 710. In this scenario, the issuer should state in its annual report that it is adopting Amended Rule 710 in advance, and would not need to make reference to the Code of Corporate Governance 2012.
      1207(10) The annual report must contain the board's comment on the adequacy and effectiveness of the issuer's internal controls (including financial, operational, compliance and information technology controls ) and risk management systems Financial year commencing on or after 1 January 2019 As the issuer may require time to establish its internal controls and risk management systems in accordance with the amendments to Rule 1207(10) ("Amended Rule 1207(10)"), the disclosures required in Amended Rule 1207(10) need only be provided in the annual report for financial years commencing on or after 1 January 2019. The first batch of annual reports which would have to comply with Amended Rule 1207(10) will likely be issued in 2020 or thereafter.
      720(5) All directors must submit themselves for re-nomination and re-appointment at least once every three years 1 January 2019 With effect from 1 January 2019, all directors, including executive directors, must submit themselves for re-nomination and re-appointment at least once every three years.
      (a) Existing directors appointed or re-appointed before 1 January 2019
      Within three years of the effective date of this rule, a director appointed or re-appointed before 1 January 2019 must submit himself for re-nomination and re-appointment to the board at a general meeting (i.e. no later than 31 December 2021).

      As an illustration, if a director was appointed or re-appointed on 30 April 2017, he will have to submit himself for re-nomination and re-appointment to the board by 31 December 2021. As another illustration, if a director has not been subject to re-nomination and re-appointment at least once every three years for any reason prior to 1 January 2019, he will have to submit himself for re-nomination and re-appointment to the board by 31 December 2021.
      (b) Directors appointed or re-appointed on or after 1 January 2019
      A director appointed or re-appointed to the board on or after 1 January 2019 must submit himself for re-nomination and re-appointment to the board at a general meeting by the end of the calendar year of the third anniversary of his appointment or re-appointment.

      As an illustration, if a director was appointed or re-appointed on 30 April 2019, he will have to submit himself for re-nomination and re-appointment to the board at a general meeting in 2022.

      This rule will apply to any director appointed or re-appointed to the board including all executive directors.
      210(5)(a) A director who has no prior experience as a director of an issuer listed on the Exchange must undergo training in the roles and responsibilities of a director of a listed issuer as prescribed by the Exchange. 1 January 2019 A person with no prior experience as a director of an issuer listed on the Exchange (a "First-time Director") and whose date of appointment to the board of directors is on or after 1 January 2019, must undergo training in the roles and responsibilities of a director of a listed issuer as prescribed by the Exchange.

      Prior to 1 January 2019, Guideline 1.6 of the Code of Corporate Governance 2012 will operate on a comply-or-explain basis.

      Guideline 1.6 of the Code of Corporate Governance 2012 states that the issuer should provide training for first-time directors in areas such as accounting, legal and industry-specific knowledge as appropriate.
      210(5)(c) Independent directors must comprise at least one-third of the issuer's board 1 January 2022 The number of independent directors must comprise at least one-third of the issuer's board at any time on or after 1 January 2022.

      To ensure compliance with this requirement, the issuer must ensure that the requisite number of independent directors are appointed prior to 1 January 2022. For example, the issuer may do so at the issuer's annual general meeting in 2021.

      Issuers should also note the independence tests set out in Rule 210(5)(d) and for which transitional arrangements are set out in this Transitional Practice Note.

      Prior to 1 January 2022, Guideline 2.1 of the Code of Corporate Governance 2012 will operate on a comply-or-explain basis.

      Guideline 2.1 of the Code of Corporate Governance 2012 states that there should be a strong and independent element on the Board, with independent directors making up at least one-third of the Board.
      210(5)(d)(i) Director will not be independent if he is employed by the issuer or any of its related corporations for the current or any of the past three financial years 1 January 2019 On or after 1 January 2019, a director will not be independent under the circumstances set out in Rule 210(5)(d)(i).
      210(5)(d)(ii) Director will not be independent if he has an immediate family member who is employed or has been employed by the issuer or any of its related corporations for the past three financial years, and whose remuneration is determined by the remuneration committee of the issuer 1 January 2019 On or after 1 January 2019, a director will not be independent under the circumstances set out in Rule 210(5)(d)(ii).
      210(5)(d)(iii) Continued appointment as independent director, after an aggregate period of more than 9 years on the board, must be sought and approved in separate resolutions by (A) all shareholders and (B) shareholders excluding directors, chief executive officer, and their associates 1 January 2022 On or after 1 January 2022, a director who has served on the board for a cumulative period of 9 years will no longer be eligible to be designated as an independent director unless a resolution from shareholders present and voting at the general meeting is sought and approved in the manner described in Rule 210(5)(d)(iii).

      The issuer must, prior to 1 January 2022, consider if a director will not be considered independent against the circumstances set out in Rule 210(5)(d)(iii) at any time on and from 1 January 2022.

      For example, if a person has been a director (whether independent, executive or non-executive) for an aggregate period of more than 9 years as at 1 January 2022, then he will not be independent as at 1 January 2022, unless his continued appointment as an independent director has been sought and approved in separate resolutions (as required in Rule 210(5)(d)(iii)) prior to 1 January 2022.

      If a person had been a director (whether independent, executive or non-executive) for an aggregate period of more than 9 years and had retired from the board prior to 1 January 2022, he will not be eligible to be appointed as an independent director on or after 1 January 2022, unless his appointment as an independent director has been sought and approved in separate resolutions (as required in Rule 210(5)(d)(iii)). This is because he has already served on the board of the issuer for an aggregate period of more than 9 years prior to the proposed appointment.

      To ensure that the independence designation of a director who has served for more than 9 years as at and from 1 January 2022 is not affected, an issuer should seek and obtain approvals for his continued appointment as an independent director prior to 1 January 2022. For example, the issuer may do so at the issuer's annual general meeting in calendar year 2021. In accordance with Rule 210(5)(d)(iii), such approvals will remain valid until the conclusion of 3rd AGM from such approvals.

      Prior to 1 January 2022, Guideline 2.4 of the Code of Corporate Governance 2012 will operate on a comply-or explain basis.

      Guideline 2.4 of the Code of Corporate Governance 2012 states that "[t]he independence of any director who has served on the Board beyond nine years from the date of his first appointment should be subject to particularly rigorous review. In doing so, the Board should also take into account the need for progressive refreshing of the Board. The Board should also explain why any such director should be considered independent."
      3. SGX may amend, modify or supplement the above transitional arrangements.

      Added on 1 January 20221 January 2022.