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Catalist transition measures

Following the launch of Catalist on November 26 2007, to date only a handful of Catalist companies have taken steps to appoint a continuing sponsor, whose primary responsibilities comprise the rendering of advice to the Catalist companies on rule compliance.

To address the issue, and although the deadline for the appointment of a continuing sponsor for each catalyst company will fall on February 5 2010, on September 1 2008 the Singapore Exchange Limited (SGX) announced measures to encourage as many Catalist non-sponsored (Catalist NS) companies to appoint continuing sponsors before the deadline. The SGX hoped that these measures would promote a smooth transition process.

The transition measures, which came into effect on September 1 2008, are as follows.

Quarterly progress reports

Each Catalist NS company must submit a quarterly progress report to the SGX of its transition plans containing, among other things, a timetable for its search for suitable continuing sponsors and its alternative plans (if any) for appointing a continuing sponsor (for instance, undergoing a reverse takeover, effecting M&A or upgrading to the main board). The first report from each Catalist NS company must be submitted to the SGX by November 1 2008.

Apprising shareholders and the general public

From January 1 2009, within 45 days after the end of each of the three quarters and 60 days after the end of the financial year, each Catalist NS company must announce (and update, where appropriate) via SGXNET the information contained in its first report submitted to the SGX.

Large corporate actions

From January 1 2009, each Catalist NS company must appoint a continuing sponsor and comply with the Catalist rules when undertaking large corporate actions, including any fundraising from its shareholders or the investing public, undertaking any large acquisitions and disposals of assets, entering into any interested person transaction that will require its shareholders' approval and entering into any scheme of arrangement.

The transition measures may not yield quick results. As most Catalist NS companies are by definition companies with a low market capitalisation, it would be unlikely that such companies would readily appoint a continuing sponsor before the deadline in view of the high annual costs involved in the appointment of a continuing sponsor, who will generally charge between S$100,000 ($67,000) and S$200,000.

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