The Monetary Authority of Singapore (MAS) has announced that share buybacks will be made legal by the fourth quarter of 1998, following feedback from industry bodies and financial market participants. Companies will be permitted to repurchase shares on the market in round lots out of distributable profits at any time within the period mandated by shareholders. The proposed legislation, which will complement the provisions permitting capital reduction in the Singapore Companies Act, will provide appropriate safeguards to ensure that creditors' interests are preserved and to minimize abuse, while providing sufficient flexibility to companies.
Singapore Telecom has stated that it plans a share buyback exercise within the next seven months when the new legislation is in place.
Stock exchange reform
Besides share buybacks, the MAS also approved a number of other recommendations of the government-appointed Stock Exchange of Singapore (SES) Review Committee, including the following:
- freely negotiable commissions for all share transactions by January 1 2003;
- stamp duty and goods and services tax on all securities transactions to be eliminated from January 1 2000;
- stockbrokers to be permitted to expand into other activities, such as fund management, corporate finance, derivatives and futures trading;
- liberalization of foreign ownership of SES member firms; and
- relaxation of margin account rules to give SES member firms more discretion to decide on the securities they want to finance, subject to safeguards..