Practice Note 1.2 Oversight of Issuers
Details | Cross References |
Issue date: 25 February 2004 Effective date: 1 March 2004 | Chapter 1 |
1. Introduction
2. Disclosure-Based Regulatory Regime and the Exchange's Role
3. Regulatory Objectives
4. Regulatory Approach
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 |
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
2. Exchange's Procedure
3. Comments Received
4. Due Diligence
5. Verification
6. Foreign Applicants' Connection to Singapore
7. 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
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
2. Documents to be Submitted as Part of the Listing Application
3. Documents to be Submitted After Approval In-Principle
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 1 February 2024 – Paragraph 2.2 applies to First-time Directors of REIT managers appointed on or after 1 February 2024 | Rule 210(5)(a) Appendix 7.4.1 |
- Introduction
- 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.
- 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.
- Mandatory Training
- To fulfil the Mandatory Training requirements, First-time Directors must attend one of the training programmes conducted by a training provider as specified in Schedule 1 to this Practice Note.
- A First-time Director of a REIT manager must also attend the training programme specified in Schedule 2. A director is considered a First-time Director of a REIT manager if he or she has no prior experience as a director of a REIT manager.
- Persons with Relevant Experience
- The Exchange expects all First-time Directors to attend Mandatory Training.
- 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.
- 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 The First-time Director must attend all the core modules. The First-time Director must also attend the elective modules relevant to his appointment on the board of the issuer. |
Singapore Institute of Directors | Listed Entity Directors Bridging Programme The First-time Director must also have completed one of the recognised programmes, and attend the elective modules for the Listed Entity Directors Programme that are relevant to his appointment on the board of the issuer. |
Institute of Singapore Chartered Accountants and SAC Capital | Board Of Directors (BOD) Masterclass Programme The First-time Director must attend all the mandatory classes and modules. The First-time Director must also attend the optional classes and modules relevant to his appointment on the board of the issuer. |
Schedule 2
Training Provider | Mandatory Training |
REIT Association of Singapore | Essentials for Directors of REIT Managers |
Added on 1 January 20191 January 2019 and amended on 1 January 2022, 1 February 2024 and 1 October 2024.
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
2. Term sheets
Issuer's Company Logo |
[Name of Issuer]
[NAME OF PRODUCT]
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: Example: • [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] • 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. If the Issuer has to redeem the notes early, due to taxation and other reasons, you may receive less than your principal investment. • 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. | ||
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. |
Issuer's Company Logo |
[Name of Issuer]
[NAME OF PRODUCT]
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: Example: • [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] • 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:
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
2. Procedures Applicable to the Seasoning of Debt Securities
Application to List the Initial Issuance of Debt Securities on the Exchange for Seasoning
Application for Confirmation that the Debt Securities are Eligible for Trading by Non-Specified Investors
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
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
Withdrawing debt securities from the seasoning framework
3. Assessment Criteria for Debt Securities to be Eligible for Trading by Non-Specified Investors
4. Disclosures
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 8 September 2023 Effective date: 29 September 2011 29 September 2023 | Chapter 4 |
- Introduction
- 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").
- Profit Estimates, Forecasts and Projections
- 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.
- 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.
- 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).
- Right of First Refusals ("ROFRs")
- 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:—
- gives the Trust the first right to acquire the competing assets from the controlling unitholder and/or any of its subsidiaries; and
- 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.
In lieu of the grant of ROFR by the controlling unitholder and/or any of its subsidiaries, the issue manager and Manager of the Trust must demonstrate how alternative measures in place will effectively mitigate conflicts of interest for disposal of competing assets.
- 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:—
Added on 29 September 2011 and Amended on 8 September 2023.
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 11 January 2023 | Rule 210(5)(d)(iii) Rule 210(5)(e) Rule 720(5) Transitional Practice Note 3 |
1. Introduction
2. Real Estate Investment Trusts
3. Business Trusts
Added on 1 January 2019 and amended on 11 January 2023.
Practice Note 4.3 Actively Managed Exchange Traded Funds
Details | Cross References |
Issue date: 4 December 2023 Effective date: 15 December 2023 | Chapter 4 Rule 703 Appendix 7.1 |
- 1. Introduction
- 1.1This Practice Note provides guidance on the Exchange’s requirements for the listing of actively managed exchange traded funds ("Active ETFs"). An Active ETF is an ETF in which the investment manager makes investment decisions on the portfolio of the ETF without being subject to the set rules of an index.
- 1.2Active ETFs must comply with the listing rules applicable to investment funds.
- 2.Listing Requirements for Active ETFs
- Disclosure
- 2.1An Active ETF shall ensure that it prominently discloses in the prospectus or offering document that the ETF will be actively managed. Such disclosure shall also be made in the marketing materials of the Active ETF.
- Investment style
- 2.2As best practice, an Active ETF should adopt the applicable disclosures and practices set out in MAS Circular No. CMI 32/2020 Good Disclosure Practices for Actively Managed Funds.
- 2.3Notwithstanding paragraph 2.2, an Active ETF shall disclose:
- (a)that it will be an actively managed ETF;
- (b)its investment style, in a manner that would be plainly understood by retail investors;
- (c)its investment limits and constraints and how such limits and constraints may affect the risks and expected returns of the Active ETF; and
- (d)the following, where it is not managed in reference to any benchmark:
- (i)a clear statement that the Active ETF is not managed in reference to any benchmark, with an accompanying explanation of why a reference benchmark is not used; and
- (ii)the associated risks of not being managed in reference to any benchmark.
- 2.4An Active ETF shall also have in place processes to ensure that:
- (a)its directors or senior management, as the case may be, have effective oversight of the Active ETF’s operations; and
- (b)the Active ETF’s promotional materials are clear, fair, balanced, non-misleading and fully comply with relevant rules and regulations.
- Investment manager
- 2.5Rule 404(5) states that the management company (if there is no management company, the sponsor or trustee) must be reputable and have an established track record in managing investments. Generally, the management company (sponsor or trustee) must have been in operation for at least five years.
- 2.6For an Active ETF, the management company must have an established track record in managing other actively managed funds to satisfy Rule 404(5).
- 2.7Rule 404(6) states that the persons responsible for managing the investments of the investment fund must be reputable and have a track record in managing investments for at least 5 years. They must have satisfactory experience in managing the particular types of funds for which listing is sought.
- 2.8For an Active ETF, the persons responsible for managing the investments must have satisfactory experience in managing actively managed funds.
- 3.Continuing Listing Obligations
- Net asset value ("NAV") disclosure
- 3.1Rule 748(1) states that an investment fund must announce via SGXNET its net tangible assets per share or per unit at the end of each week.
- 3.2An Active ETF will be in compliance with Rule 748(1) if it:
- (a)publishes its daily NAV per share or per unit on its website, on the business day following each trading day before the market opens; and
- (b)announces, via SGXNET, its NAV per share or per unit at the end of each week.
- Indicative Net Asset Value ("iNAV") Disclosure
- 3.3An Active ETF shall publish, on its website, the iNAV per share or per unit at least every 15 seconds during trading hours on the Exchange.
- 3.4An Active ETF shall ensure that, as far as practicable, the iNAV provides an accurate indication of the Active ETF’s NAV. In appropriate cases, an Active ETF may use suitable proxies for the calculation of iNAV.
- 3.5An Active ETF shall disclose in its prospectus or offering document:
- (a)the iNAV calculation methodology, including any use of proxies to determine iNAV;
- (b)the relevant risks and limitations of iNAV; and
- (c)a statement that the iNAV is not independently verified by the Exchange.
- Disclosure of portfolio holdings
- 3.6An Active ETF shall publish, at least once a month, its full portfolio holdings on SGXNET and on its website. The report must reflect the full portfolio holdings of the Active ETF with no more than a one month lag.
- 3.7For example, where an Active ETF publishes its full portfolio holdings on 15 November, the published portfolio holdings shall reflect the Active ETF’s actual holdings as at a date no earlier than 16 October.
- 3.8An Active ETF must comply with Rule 703 on the disclosure of material information. Rule 703 states that an issuer must observe the Corporate Disclosure Policy set out in Appendix 7.1. Under Appendix 7.1, the Exchange recognises that there may be limited instances where selective disclosure is necessary. Disclosure may be made to Participating Dealers of the Active ETF to facilitate creation and redemption. Disclosure for market making purposes may only be made to the Designated Market Makers of the Active ETF. These disclosures must be made on a ‘need to know’ basis and subject to appropriate confidentiality restraints. Such arrangements must also be in compliance with insider trading regulations.
- 3.9An Active ETF must have effective controls and segregation of duties to address any conflict of interest that may arise from these arrangements with the Participating Dealers of the Active ETF or the Designated Market Makers of the ETF to ensure that the Active ETF will, at all times, act in the best interest of its unitholders.
- Tracking performance
- 3.10An Active ETF shall publish, no less frequent than on a monthly basis, its performance and where applicable, the performance of its reference benchmark, covering the following periods of time: 3-month, 6-month, 1-year, 3-year, 5-year, 10-year and since inception.
Added on 4 December 2023.
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
2. Listing Rule 518
"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
4. Format for term sheets
Issuer's Company Logo |
[Name of Issuer]
XX million European Style [Cash/Physically] Settled [Call/Put] Warrants due [expiry date] relating to [Underlying]
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: WHAT WOULD YOU GAIN OR LOSE IN DIFFERENT SITUATIONS? (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. • 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
2. Disclosure Relating to Admission Criteria
3. Disclosure Showing Compliance with Continuing Listing Rules
4. Transitional Arrangements
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
2. Disclosure Guidelines
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
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.
2. General Requirements for Disclosure of Reserves, Resources or Exploration Results
3. Additional Disclosure Requirements for Offer Document
4. Additional Continuing Obligations
5. Qualified Person's Report
Asset name/ Country | Issuer's interest (%) | Development Status | Licence expiry date | Licence Area | Type of mineral, oil or gas deposit | Remarks |
6. Summary Qualified Person's Report
7. Valuation Report
8. Farm-in and Farm-out Transactions
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) |
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.
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.
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 |
- Introduction
- 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.
- In case of doubt, issuers are encouraged to consult the Exchange with respect to the application of the rules.
- Interaction with the SFA
- 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.
- Guidance on what constitutes material information
- 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:
- 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
- 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.
- 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 - 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.
- 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.
- 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.
- 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 - 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.
- 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.
- 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.
- 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.
- 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 trade-sensitive, even if there is no significant market reaction to the information when disclosed.
- 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.
- 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:
- Exceptions to Rule 703(3)
- 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 - 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).
- 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.
- 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. - 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 - 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 - 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.
- 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.
- 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 - 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.
- 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.
- Guidance on particular situations
- 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 - 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.
- 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.
- 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 - 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 - 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.
- 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.
- 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.
- In determining whether the information is material for disclosure, the Board should consider, among others:
- whether the information is material to the affairs of the issuer, taking into account factors such as:
- the extent to which the interview or investigation concerns the affairs of the issuer or the group;
- the extent to which the issuer is reliant on the director or executive officer for the proper oversight and management of the issuer; and
- the extent to which the director's or executive officer's ability to oversee or manage the issuer is compromised; and
- 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
- the severity of the potential breach.
- whether the information is material to the affairs of the issuer, taking into account factors such as:
- Subject to paragraph 5.9 above, the following events are likely to require immediate disclosure:
- 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;
- the director or executive officer was investigated and interviewed by the relevant authority;
- 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
- the director or executive officer has been convicted or disqualified or is the subject of any judgement or ruling.
- To give clarity to such events, an announcement made pursuant to paragraph 5.10 above should contain:
- the name and position of the relevant director or executive officer;
- 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;
- the alleged offences and the identity of the offender whom the authorities were investigating as stated in the order, where applicable;
- 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;
- a statement by the director or executive officer that he undertakes to inform the Board of the ongoing investigation and subsequent developments; and
- 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.
- 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.
- 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.
- 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 - 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:
- whether the information is material to the affairs of the issuer; and
- the severity of the potential breach.
- Subject to paragraph 5.15 above, the following events are likely to require immediate disclosure:
- 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
- the issuer has been informed or becomes aware that any of its subsidiaries or associated companies are under investigation by a relevant authority.
- To give clarity to such events, an announcement made pursuant to paragraph 5.15 above should contain:
- the name of the relevant subsidiary or associated company, where applicable;
- the relevant fact and details of any other conditions or restrictions imposed by the relevant authority, where applicable;
- the alleged offences and identity of the offender whom the authorities was investigating as stated in the order, where applicable; and
- the Board’s statement that it will continue to monitor the progress of the investigation and to provide updates on material developments.
- 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.
- Content of announcements
Publication of promotional material
- 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.
- 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.
- 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 - 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.
- 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.
- 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.
- Other issues
Information from third parties
- 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.
- 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 - 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 - 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.
- 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 - 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
2. Unusual Trading Activity
3. Role of Surveillance
4. Response on Receiving a Query on Unusual Trading Activity
5. Secondary Listings and Issuers that are Exempted from Continuing Listing Obligations
6. Keeping Track of Persons with Access to Material Information
7. Conclusion
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
2. The facts
3. The Issue
4. Company A's Position
5. Company B's Position
6. Disclosure Obligations Under Listing Rule 703
7. Potential Purchaser's Position
8. General Principle
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
2. OFR Guide
Guide for Operating and Financial Review
INTRODUCTION
OBJECTIVES AND TENETS OF THE OPERATING AND FINANCIAL REVIEW
PRINCIPLES AND GUIDELINES
Principle 1
Guidelines
Principle 2
Guidelines
Guidelines
Principle 4
Guidelines
Guidelines
Guidelines
Principle 7
Guidelines
Guidelines
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 2013 19 April 2023 Effective date: 1 January 2014 1 July 2023 | Listing Rule 704(16) Listing Rule 730A |
1. Introduction
2. Location and format of general meeting
3. Notice of meeting and dissemination of documents
4. Written questions
5. Voting
6. Minutes
Amended on 1 July 2023.
Practice Note 7.6 Sustainability Reporting Guide
Cross-referenced from Rules 711A and 711B
- Introduction
- 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. 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.
- 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.
- A glossary of the common terms used in the Guide is set out in paragraph 8 of this Guide.
- Policy Statement on Sustainability Reporting
- Issuers make regular financial reports to their investors that are used for assessment of the likelihood of repayment and the returns on investment.
- 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, the sustainability of the current business into the future and quality of management.
- To achieve the additional transparency which encourages efficiency and innovation, SGX-ST requires each issuer to publish an annual sustainability report. This Guide provides guidance to the issuer on compliance with the requirements under the Listing Rules.
- Principles
Board responsibilityThe 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.
- [Deleted]
Report risks as well as opportunities
- 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
- In reporting on sustainability, care should be taken to give a neutral and accurate 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.
Stakeholder engagement
- 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.
- Contents of Sustainability Reporting
Primary componentsThe sustainability report should comprise the following primary components:
- 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.
- Climate-related disclosures. The sustainability report should contain disclosures related to climate-related risks and opportunities.
- 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.
- 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.
- 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 refer to paragraphs 4.7 to 4.28 of this Guide. 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). 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.
- 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
- 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.
- 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.
- 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.
- 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.
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
- 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.
- 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.
- The IFRS Sustainability Disclosure Standards build on the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”). It aims to be a comprehensive global framework of sustainability-related financial disclosures to meet the needs of capital markets and to serve the demand for more consistent, comparable and verifiable information about the exposure to, and management of, sustainability-related risks and opportunities. The IFRS Sustainability Disclosure Standards were developed to support a global framework of investor-focused disclosures on sustainability-related financial information and have received widespread support globally, including from the G20 and the Financial Stability Board. The International Organization of Securities Commissions has also endorsed the IFRS Sustainability Disclosure Standards in July 2023.
Structure of the IFRS Sustainability Disclosure Standards and baseline requirement
- The core content of the IFRS Sustainability Disclosure Standards is structured in alignment with the four pillars of the TCFD recommendations: governance, strategy, risk management, and metrics and targets. Climate-related risks are associated with both physical risks (such as those arising from weather-related events like storms, floods or heatwaves and longer-term shifts in climatic patterns like sea level rise) and transition risks (arising from efforts to transition to a lower-carbon economy and may include policy, technological and reputational risks).
- IFRS S1 sets out the general requirements for disclosure of sustainability-related financial information including the conceptual foundations, core content, general requirements and judgements, uncertainties and errors. IFRS S2 sets out supplementary requirements that relate specifically to climate-related risks and opportunities.
- The baseline requirement for issuers under the Listing Rules in respect of the disclosure of the primary component in Listing Rule 711B(1)(aa) is to disclose information on climate-related risks and opportunities that apply all the requirements in IFRS S2 (other than the disclosure of Scope 3 GHG emissions as set out in paragraph 4.23 of this Guide), and consequently apply the climate-relevant provisions in IFRS S1.
- Therefore, in applying IFRS S1 for climate-related disclosures, an issuer should particularly refer to the conceptual foundations, general requirements, judgements and uncertainties and errors specified therein. Key concepts such as connected information, value chains, assessment of materiality and key requirements such as the reporting entity and timing and location of reporting are set out in IFRS S1. For example, materiality of information is judged in relation to whether omitting, misstating or obscuring the information could reasonably be expected to influence decisions of primary users of general purpose financial reports.
- IFRS S1 requires entities that report their sustainability-related financial disclosures in accordance with the IFRS Sustainability Disclosure Standards to make an explicit and unreserved statement of compliance, which may not be made unless an entity complies with all the requirements, including the requirements in IFRS S1 applicable beyond climate-related disclosures. In this regard, issuers will not be required to make such a statement of compliance. SGX RegCo permits and encourages issuers of any size to use and fully apply the IFRS Sustainability Disclosure Standards. An issuer that complies with all the requirements in IFRS S1 and IFRS S2 can, but is not mandated to, make an explicit and unreserved statement of compliance with the IFRS Sustainability Disclosure Standards; an issuer that complies with all the requirements in IFRS S2 and the climate-relevant provisions in IFRS S1 can, but is not mandated to, state that it complies with the climate-related requirements in the IFRS Sustainability Disclosure Standards.
- In the core content of IFRS S1, there are also specific paragraphs which will be relevant for the issuer including the elaboration of short-, medium- and long-term time horizons, trade-offs between sustainability-related risks and opportunities that an issuer considered and the objective of sustainability-related financial disclosures on risk management to enable users of general purpose financial report to assess an issuer’s overall risk profile and its overall risk management process.
ISSB guidance
- The ISSB has issued application guidance, which forms an integral part of the IFRS Sustainability Disclosure Standards, on, among others, the following topics:
- identifying sustainability-related risks and opportunities and disclosing material information about such risks and opportunities;
- applying scenario analysis to assess climate resilience;
- measuring GHG emissions, including Scope 3 GHG emissions;
- disclosing information relevant to the cross-industry metric categories; and
- disclosing information about the climate-related targets that have been set or are required to be met by law or regulation.
- In addition, the ISSB has also issued accompanying guidance containing illustrative guidance and illustrative examples to support companies in applying the IFRS Sustainability Disclosure Standards on, among others, the following topics:
- guidance on metrics that could be disclosed as part of information relevant to the cross-industry metric categories;
- examples of disclosing GHG emissions applying the principles in IFRS S1 for aggregation and disaggregation; and
- industry-based guidance on identifying appropriate disclosures about climate-related risks and opportunities that are associated with common business models and activities in a particular industry.
Reliefs
- The ISSB has sought to achieve a balance between the costs for companies in applying the requirements and ensuring investors are provided with consistent, comparable and verifiable information. It introduced a package of (permanent) structural reliefs and (temporary) transition reliefs in the IFRS Sustainability Disclosure Standards.
- As part of the (permanent) structural reliefs, an issuer is allowed to:
- consider its skills, capabilities and resources when determining its approach:
- for its climate-related scenario analysis; and
- in preparing disclosures about the anticipated financial effects of a climate-related risk or opportunity; and
- use all reasonable and supportable information that is available to the issuer at the reporting date without undue cost or effort in:
- identifying climate-related risks and opportunities;
- preparing disclosures about the anticipated financial effects of a climate-related risk or opportunity;
- determining its approach, and selecting the inputs, for its climate-related scenario analysis;
- determining the scope of the value chain;
- calculation of amount or percentage of assets or business activities vulnerable to or aligned with climate-related risks and opportunities; and
- measuring Scope 3 GHG emissions.
- consider its skills, capabilities and resources when determining its approach:
- As part of the (temporary) transition reliefs, an issuer (including newly-listed issuers) need not do the following in the first year of reporting applying the IFRS Sustainability Disclosure Standards:
- provide its Scope 3 GHG emissions;
- use the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standards (2004) if it was previously using a different method; and
- provide comparative information in respect of the preceding period.
Scope 3 GHG emissions
- IFRS S2 requires disclosure of Scope 3 GHG emissions, and the approach used to measure such GHG emissions. Emissions must be measured in accordance with the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standards (2004), subject to the reliefs specified and to the extent that it does not conflict with the IFRS Sustainability Disclosure Standards. An issuer should consider the 15 categories of Scope 3 GHG emissions, as described in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011) (“Scope 3 Standard”), to identify which categories are applicable to the issuer. The issuer might determine that not all categories are applicable to it and therefore disclose which of these categories are included in its Scope 3 GHG emissions. For example, an issuer may not have leased assets or franchises or may be unable to estimate Scope 3 GHG emissions due to a lack of data or other limiting factors, as described in the Scope 3 Standard.
- The ISSB has also developed a Scope 3 measurement framework to provide additional guidance about measuring Scope 3 GHG emissions. While direct measurement and primary data is preferred, an issuer may still estimate Scope 3 GHG emissions based on assumptions and appropriate inputs and use secondary data under such framework. Primary data includes data provided by suppliers or other entities in the value chain from specific activities within an entity’s value chain, while secondary data is not directly obtained. Secondary data is typically supplied by third-party providers and includes industry-average data.
- Recognising that the measurement and reporting methodologies of Scope 3 GHG emissions are still evolving, SGX RegCo will carry out an in-depth review of issuers' experience and readiness in reporting Scope 3 GHG emissions before setting out the implementation roadmap for disclosures of Scope 3 GHG emissions. In the implementation roadmap, larger issuers (e.g. issuers above a certain market capitalisation) will likely be prioritised for reporting. The intention is for larger issuers by market capitalisation to report Scope 3 GHG emissions from the financial year commencing on or after 1 January 2026. Ample notice will be given to issuers before reporting requirements come into effect. Issuers that are already reporting their Scope 3 GHG emissions are encouraged to continue to do so. Issuers that have not yet reported on Scope 3 GHG emissions are encouraged to build up their capabilities in the interim period.
Scenario analysis
- IFRS S2 requires use of climate-related scenario analysis to inform an issuer’s disclosures about their resilience to climate change. IFRS S2 contains application guidance on how an issuer is required to determine the method of scenario analysis to assess its climate resilience. 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.
- 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.
- The Sustainable Stock Exchanges initiative has also developed a checklist in its model guidance on climate disclosure (“SSE Model Guidance on Climate Disclosure”). The SSE Model Guidance on Climate Disclosure 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. Additional guidance on scenario analysis as required by IFRS S2 has also been provided in the model guidance on sustainability-related financial disclosures issued by the Sustainable Stock Exchanges initiative in 2024.
Industry-based metrics and cross-industry metrics
- IFRS S2 requires an issuer to disclose industry-based metrics that are associated with common business models and activities in a particular industry. When an issuer provides industry-based metrics, it shall refer to and consider the relevant industry-based guidance to present fairly the climate-related risks and opportunities to which it is exposed.
- In addition, IFRS S2 requires an issuer to disclose cross-industry metric categories including:
- climate-related transition risks – the amount and percentage of assets or business activities vulnerable to transition risks;
- climate-related physical risks – the amount and percentage of assets or business activities vulnerable to physical risks;
- capital deployment – the amount of capital expenditure, financing or investment deployed towards climate-related risks and opportunities; and
- internal carbon prices used to assess the cost of emissions.
The industry-based guidance can assist issuers in meeting the requirements for disclosures related to cross-industry metric categories.
Materiality
- 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. For example, for climate-related disclosures, in accordance with the IFRS Sustainability Disclosure Standards, materiality of information is judged in relation to whether omitting, misstating or obscuring the information could reasonably be expected to influence decisions of primary users of general purpose financial reports. This would require consideration of the characteristics of those users and of the issuer’s own circumstances.
- Generally, what is material in sustainability reporting would also be considered material in financial terms, if not in the immediate period, then over time.
- 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.
- 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. Issuers may consider sustainability-related opportunities as part of business strategy.
- 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
- A possible process for assessing ESG factors with material relevance to the business and business model are set out in the following paragraphs.
- In assessing materiality of the ESG factors on which it reports, the issuer may consider:
- Value drivers
- Stakeholder engagement
- Risk management
- External factors, for example sector, geography, economics, market, social, environment
- Internal factors, for example business model, business cycle, strategy
- Qualitative perspectives, for example operational, strategic, reputational and regulatory
- Timeframe of these considerations
- 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.
- 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.
- 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.
- 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.
- STEP 4: VALIDATE. Once the issuer has prioritised its factors, they need to be internally validated and signed off by the Board.
Policies, practices and performance
- 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.
- 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.
- 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.
- 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
- 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. 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.
- Among the well-known and globally-recognised sustainability reporting frameworks, the IFRS Sustainability Disclosure Standards and the Global Reporting Initiative (“GRI”) Standards set out generic sustainability factors and general principles and indicators that an issuer can use to report sustainability policies, practices, performance and targets. The SASB Standards also enables issuers to adopt an industry-specific approach to material ESG factors. The Integrated Reporting 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. More than one sustainability reporting framework may be chosen as relevant to the issuer's business.
- For climate-related disclosures, the issuer should refer to paragraphs 4.7 to 4.28 of this Guide. Some issuers have used the Science Based Targets initiative or other sector-specific guidance to guide their GHG emissions reduction targets.
- 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
- 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
- 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
- Subject to paragraph 4.48 of this Guide, 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.
- IFRS S1 requires an issuer to provide disclosures required by the IFRS Sustainability Disclosure Standards as part of its general purpose financial reports. For climate-related disclosures, an issuer may only make reference to other reports published by the same entity (and not the sustainability reports of its operating subsidiaries).
- Internal Reviews and External Assurance
- Internal reviews and external assurance increase stakeholder confidence in the accuracy and reliability of the sustainability information disclosed.
- 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.
- 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 (or any subsequent framework or standard including the International Professional Practices Framework and the Global Internal Audit Standards replacing such standards) issued by The Institute of Internal Auditors. If the issuer has reviewed that certain or all key aspects of the sustainability report has been externally assured, the issuer can, as part of its internal review, determine that no further internal review on such aspects of the sustainability report is required under a risk-based approach.
- 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.
- 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:
- data and its associated data collection process;
- narratives;
- compliance with the specified sustainability reporting framework;
- process to identify sustainability information reported; and
- compliance with the Listing Rules.
- External assurance should be performed in accordance with recognised assurance standards, for example the International Standard on Assurance Engagements (ISAE) 3000 (or any subsequent sustainability-specific standard including the International Standard on Sustainability Assurance (ISSA) 5000), the ISAE 3410, the Singapore Standards on Assurance Engagement (SSAE) 3000 (or any subsequent sustainability-specific standard including the Singapore equivalent of the ISSA 5000), the SSAE 3410, the AA 1000 Assurance Standards or the ISO.
- 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, the level of assurance obtained and key findings.
- Form and Frequency of Sustainability Reporting
- The issuer should report on sustainability at least once a year. An issuer must issue a sustainability report at the same time as the issuance of its annual report. As a transitional measure, where the issuer has conducted external assurance on the sustainability report, it may issue its sustainability report no later than 5 months after the end of the financial 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. Alternatively, if more appropriate for the circumstances of the issuer, the issuer may issue a full standalone sustainability report. If an issuer issues its sustainability report after its annual report, it must include a summary of its sustainability report in its annual report.
- 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.
- To provide sufficient time for preparation, a newly listed issuer (other than an issuer that has an obligation to prepare a sustainability report under local legislation prior to listing) may issue its first sustainability report only in respect of its first full financial year after listing.
- Implementation of Sustainability Reporting and Climate-related Disclosures
- For the first year of sustainability reporting, an issuer new to sustainability reporting 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.
- For climate-related disclosures, an example of how issuers could report over a few years using the (permanent) structural reliefs and (temporary) transition reliefs in the IFRS Sustainability Disclosure Standards is illustrated in the table below. Issuers may decide on an implementation approach that best suits their circumstance and that complies with the listing requirements.
Illustration of Possible Phased Approach
Year 1 Year 2 Year 3 Qualitative climate-related scenario analysis, with disclosure of reliance on the (permanent) structural reliefs*# Qualitative climate-related scenario analysis, with disclosure of reliance on the (permanent) structural reliefs*# Climate-related scenario analysis with more quantitative outcomes Qualitative disclosure of current financial effects of climate-related risks or opportunities as the effects are not separately identifiable or the level of measurement uncertainty is high
Qualitative disclosure of anticipated financial effects of climate-related risks or opportunities, with disclosure of reliance on the (permanent) structural reliefs*#Qualitative disclosure of current financial effects of climate-related risks or opportunities as the effects are not separately identifiable or the level of measurement uncertainty is high
Qualitative disclosure of anticipated financial effects of climate-related risks or opportunities, with disclosure of reliance on the (permanent) structural reliefs*#More quantitative disclosures of current and anticipated financial effects of climate-related risks or opportunities, with disclosure of reliance on the (permanent) structural reliefs*# where necessary Limited disclosure of the amount or percentage of assets or business activities vulnerable to or aligned with climate-related risks and opportunities* Disclosure of the amount or percentage of assets or business activities vulnerable to or aligned with climate-related risks and opportunities* Disclosure of the amount or percentage of assets or business activities vulnerable to or aligned with climate-related risks and opportunities* Determined the scope of its value chain, including its breadth and composition, with disclosure of reliance on the (permanent) structural reliefs* Determined the scope of its value chain, including its breadth and composition, with disclosure of reliance on the (permanent) structural reliefs* Determined the scope of its value chain, including its breadth and composition, with disclosure of reliance on the (permanent) structural reliefs* Disclosure of reliance on the (temporary) transition reliefs of (a) not using the Greenhouse Gas Protocol and (b) not providing comparative information in respect of the preceding period Use the Greenhouse Gas Protocol to calculate its GHG emissions
Comparative information in respect of the preceding periodUse the Greenhouse Gas Protocol to calculate its GHG emissions
Comparative information in respect of the preceding periodFor issuers already disclosing Scope 3 GHG emissions, continue to disclose Scope 3 GHG emissions
For other issuers, to build capabilities to report Scope 3 GHG emissions* Using all reasonable and supportable information that is available to the issuer at the reporting date without undue cost or effort
# Considering the issuer’s skills, capabilities and resources
- 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, 1 January 2022, 1 January 2025 and 1 January 2026
Practice Note 7.7 Announcement of dividends and other corporate actions
Cross-referenced from Rule 107 and Rule 704(25)
1. Introduction
2. Restricted Period on announcements of bonus issue or rights issue, record date or capital return
3. Announcements of dividend or passing of dividend
4. Announcements of record date for previously announced bonus issues or rights issues, capital return or dividend
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
2. Shareholders' Approval
3. Conditions to be Satisfied by Issuers and Underwriters
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
2. Acquisitions and Disposals in, or in Connection with, the Ordinary Course of an Issuer's Business
3. Computation of Relative Figures under Rule 1006
4. Negative Relative Figures under Rule 1006
5. Factors taken into Account in Arriving at Consideration Value
6. Shareholders' Approvals for Inter-conditional Proposals
7. Waiver of Shareholders' Approval for Major Transactions
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
"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
"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
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)
3. Compliance with Rules 610(5) and 1207(10)
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.
4. Format of Disclosure
5. General Principle
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
Amended on 29 September 201129 September 2011, 3 June 20193 June 2019 and 7 February 20207 February 2020.
2. Trading Hours
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
Please call and alert Market Control before releasing the request via SGXNET.
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
Please call and alert Market Control before releasing the request via SGXNET.
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.
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:—
6. Disclosure Obligations
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
2. Half-Yearly Reviews
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 |
3. Removal from the Watch-List
4. Extension to the 36-Month Cure Period
5. Cash Companies and Companies Suspended Pursuant to Rule 1303(2) or 1303(3)
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 1 Transitional Arrangements Regarding Continuing Listing Rules [Deleted]
Deleted on 7 February 20207 February 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
2. Transitional Arrangements for Listing Applicants
3. Transitional Arrangements for Existing Issuers
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 11 January 2023 | 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) |
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) | This Rule was deleted on 11 January 2023. |
Added on 1 January 2022 and amended on 11 January 2023.
Transitional Practice Note 4 Transitional Arrangements Regarding the Tenure Limit for Independent Directors
1. Introduction
2. Arrangements
Added on 11 January 2023.