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:
 

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.

2.1 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.

3.1 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.

4.1 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:
 

4.3 Any application for extension of time must be submitted to the Exchange at least 1 month before expiry of the cure period.

5.1 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.