(a) This Practice Note sets out the Exchange's expectations in relation to some of the eligibility criteria for becoming and remaining a sponsor.
2. Minimum Capital (Rules 204(1) and 205(1))
(a) A full sponsor must maintain a minimum base capital of S$500,000 and a continuing sponsor must maintain a minimum base capital of S$250,000. The Exchange will calculate minimum base capital in a similar way to that applicable for a capital market services licence.
3. Physical Office (Rules 204(2) and 205(2))
(a) As part of operating out of a physical office in Singapore, a sponsor should have at least 2 registered professionals based in Singapore.
4. Fit and Proper Criteria(Rules 204(3) and 205(3))
(a) The Exchange will assess whether an applicant's substantial shareholders, directors and officers are fit and proper, using the guidelines applicable to capital market services licence holders. In general, the substantial shareholders, directors and officers must demonstrate the following:
(i) honesty, integrity and reputation;
(ii) competence and capability; and
(iii) financial soundness.
(b) When assessing honesty, integrity and reputation, the Exchange will take into account whether the substantial shareholders, directors and officers have any links with money laundering or terrorist financing activities.
5. Experience (Rules 204(4) and 205(4))
(a) For an applicant intending to undertake introducing activities, the Exchange would normally regard relevant experience as having managed at least 3 initial public offerings or reverse takeovers in the last 2 years on the Exchange or an exchange from an acceptable jurisdiction (i.e. within a market of comparable regulatory standards to Singapore).
(b) For an applicant intending to undertake continuing activities, the Exchange would normally regard relevant experience as having advised on corporate finance transactions in the last 2 years on the Exchange or an exchange from an acceptable jurisdiction (i.e. within a market of comparable regulatory standards to Singapore). Relevant transactions include acquisitions and disposals, rights/bonus issues, placements of securities, and takeovers.
(c) An applicant relying on overseas experience must provide documentary proof of the work done on overseas exchanges and, where available, any formal communication indicating the quality of work. The Exchange may contact the overseas exchange(s) to verify the information.
6. Reputation and Work Record (Rules 204(5), 204(6), 205(5) and 205(6))
(a) The Exchange will take into consideration any previous breaches by the applicant, its directors or key officers, of any relevant rule or law, and past disciplinary action by any regulatory authority. The Exchange will also take into account whether the applicant has been denied of any membership or licence in other jurisdictions.
(b) The Exchange will normally not accept an applicant if complaints, warning letters, fines, private or public censures or reprimands, or other disciplinary action by any regulatory authority has occurred in the last 2 years. The Exchange may require proof that an applicant has rectified any problems or weaknesses if they have been subject to disciplinary actions more than 2 years ago.
(c) The Exchange will consider the quality of the applicant's past submissions, including initial public offering/reverse takeover applications rejected in the last 5 years.
(d) The applicant should be financially sound and the Exchange will take into account whether the applicant or any member of its group is under receivership, judicial management, liquidation or experiencing other financial difficulties.
7. Sufficient Skills and Resources (204(7), 205(7) and 224(3)(a))
(a) For a sponsor to ensure that it has sufficient skills and resources as required in Rules 204
, it must engage enough corporate finance, compliance and other employees to support its duties and responsibilities so that each employee has enough time to properly consider the position in respect of each of the sponsored entities.
(b) Every employee performing continuing sponsorship work must be supervised by a registered professional. The employee involved must have appropriate competency to be considered suitable.
(c) In connection with continuing activities, the ratio of sponsored issuers to suitable employees performing Catalist continuing sponsorship work should generally not exceed 8:1. This means that each employee can only be responsible for monitoring a maximum of 8 issuers at any one time.
(d) Even if the ratio is maintained, the sponsor should still assess whether this provides it with sufficient resources. The sponsor must consider the number and type of issuers it sponsors, the workload in its organisation (such as how many initial public offerings/reverse takeovers are being undertaken at one time), the work ethic and compliance culture of the organisation, the work ethic and compliance culture of the issuers it is sponsoring, the internal management and supervision arrangements in the organisation, and any other factors that might influence its ability to fulfil its obligations.
Amended on 7 February 20207 February 2020.