| 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 855–858 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.