Cross-referenced from Rules 204(8), 205(8), 224(3)(g) and 224(4)(d)
Part I Introduction
1. This Appendix sets out the minimum requirements with regards to a sponsor's obligations under Rules 204(8), 205(8), 224(3)(g) and 224(4)(d) in which the sponsor must be independent of and have no conflicts of interest with the issuers it sponsors.
2. A sponsor, its partners, directors, officers, registered professionals and employees must be able to demonstrate independence from the issuer at all times. The proof of independence, or absence of conflict, rests with the sponsor.
Part II Independence Requirements
3. The sponsor should have adequate procedures to avoid any conflict of interest that may arise from sponsor activities and other business activities (if undertaken by the sponsor or its parent, related or associated entity). At least the following is required:
(a) Separation between the functions undertaking sponsor activities and other relevant business activities.
(b) Separate reporting lines for the functions undertaking sponsor activities and other relevant business activities.
(c) Restriction of communication and information flow between sponsor activities and other activities to avoid leakage of sensitive information, including procedures to ensure that its officers, registered professionals and employees do not divulge any confidential information to any person who is not entitled to receive the information, and to ensure that they exercise due care to prevent any leakage of confidential information.
(d) Restriction of access into the function(s) undertaking sponsor activities to authorised officers, registered professionals and employees.
(e) Satisfy the Exchange that proper safeguards are in place if a sponsor wishes to act as both the sponsor and reporting auditor and/or ongoing auditor of an issuer.
(f) Where the sponsor is not a trading member of SGX-ST, notify the Exchange in writing at least 14 days before it establishes a business function which may create a conflict of interest with sponsor activities, including research, broking and market-making. The sponsor must supply the Exchange with information regarding the proposed function and the procedures in place to avoid any conflict of interest with sponsor activities.
4. The sponsor must adhere to the following practices within the function undertaking sponsor activities:
(a) An employee within the function undertaking sponsor activities may, either directly or indirectly, have an interest* of 5% or more in the securities of the sponsored issuer, provided adequate safeguards are in place to prevent any conflict of interest.
* Reference to an 'interest in securities' in this Appendix shall include rights, options and warrants (or similar financial products, where applicable) as if they have been exercised.
* Reference to an 'interest in securities' in this Appendix shall include rights, options and warrants (or similar financial products, where applicable) as if they have been exercised.
(b) An employee within the function undertaking sponsor activities may not, either directly or indirectly, have an interest of more than 10% in the securities of a sponsored issuer. If the limit is breached, the sponsor must immediately inform the Exchange and use its best endeavours to sell down to within the guidelines as soon as practicable.
(c) A sponsor should not advise other parties in a transaction, including any acquisition or takeover, involving its sponsored issuers, other than the issuer itself.
(d) A sponsor must take care to avoid the appearance of a conflict between interests of its sponsored issuers and those of any other party.
5. A sponsor should have controls over trading in restricted securities:
(a) A sponsor, or a partner or director of a sponsor, or associate of any such partner or director, may individually or collectively, have an interest either directly or indirectly of 5% or more in the securities of a sponsored issuer, provided that adequate safeguards are in place to prevent any conflict of interest. With proper safeguards, an asset management business operated by the sponsor is not subject to this limit.
(b) A sponsor, or a partner or director of a sponsor, or associate of any such partner or director, may not either individually or collectively, have an interest either directly or indirectly of more than 10% in the securities of a sponsored issuer. If the limit is breached, the sponsor must immediately inform the Exchange and use its best endeavours to sell down to within the guidelines as soon as practicable. With proper safeguards, an asset management business operated by the sponsor is not subject to this limit.
(c) No partner, director or employee of a sponsor, or associate of any such partner, director or employee, may deal in the securities or any related financial product of a sponsored issuer during any closed period of that issuer.
(d) No partner, director or employee of a sponsor, or associate of any such partner, director or employee, may deal in the securities or any related financial product of a sponsored issuer during any open period of that issuer without the prior written approval of a senior management staff. If the sponsor also has a dealing function, the person intending to deal in the securities must be independent of sales or dealing. Each trade must be separately approved.
(e) Policies, procedures and controls must ensure that any partner, director, or employee of a sponsor who is privy to confidential information regarding a sponsored issuer or any other issuer does not use such information to trade for their own benefit or for an associate of any such partner, director or employee. For this purpose, a sponsor should maintain a list of restricted securities which should be circulated only to the relevant personnel.
(f) Policies, procedures and controls must be implemented to monitor the trading activities of all partners, directors, employees of a sponsor and associates of any such partner, director or employee in sponsored issuers. The frequency of reviews should be at a level where the sponsor is confident that its policies, procedures and controls are being complied with.
6. No partner, director, employee of a sponsor or associate of any such partner, director or employee may hold the position of a director of a sponsored issuer.