This content is from: Local Insights

Stricter mainboard admission criteria on the Singapore exchange

Nicole OngGerald Cheong
From August 10 2012, companies intending to list on the Mainboard of the Singapore Exchange (SGX) must meet stricter entry requirements. An issuer must have:
  • a minimum consolidated pre-tax profit of at least S$30 million ($24 million) for the latest financial year with an operating track record of at least three years;
  • a market capitalisation of not less than S$150 million based on the issue price and post-invitation issued share capital if it has been profitable in the last financial year with an operating track record of at least three years; or
  • a market capitalisation of not less than $300 million based on the issue price and post-invitation issued share capital with a generated operating revenue in the latest completed financial year.

In addition, the minimum issue price will be raised from S$0.20 to S$0.50 per share.

Real estate investment trusts and business trusts that meet the S$300 million market capitalisation test but do not have historical financial information may be admitted if they are able to demonstrate that they are able to generate operating revenue immediately upon listing.

A number of ancillary amendments will also be made to SGX's Mainboard Listing Rules and Catalist Listing Rules.

A Catalist issuer will be required to satisfy any of the new Mainboard admission criteria in order to qualify for a transfer to the Mainboard.

An issuer who intends to make a bonus issue, capitalisation issue or a subdivision of shares will be required to satisfy SGX that its daily weighted average price, adjusted for the capitalisation issue or subdivision of shares will not be less than S$0.50. Any corporate actions announced before July 19 2012 may still apply using the adjusted price of S$0.20 per share.

The incoming business and the enlarged group that are involved in a reverse takeover must meet the new Mainboard admission criteria and the issuer is required to appoint a valuer to value the incoming business.

The target business that is to be acquired in a very substantial acquisition must be profitable and have a healthy financial position. Similarly, the issuer is required to appoint a valuer to value the target business, and the very substantial acquisition is subject to the approval of SGX.

SGX will provide transitional arrangements for the existing mandates that have been signed but not yet registered and the Catalist issuers that are applying for transfer to the Mainboard.

The stricter Mainboard admission requirements described above are part of SGX's continuing efforts to enhance Singapore's securities market and keep pace with the global developments in corporate governance. They also aim to help SGX in attracting bigger and better established companies and institutional investors. Time will tell whether the new criteria will attain their stated objectives or will cause potential candidates to seek listing on other exchanges.

Further information about the new Mainboard admission criteria is available online at www.sgx.com/transformingthemarket.

Nicole Ong and Gerald Cheong

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