This content is from: Local Insights

Singapore

The relaxation of the law that prohibits companies from buying back their own shares is now under review by the Registry of Companies.

This follows the move by the Malaysian government in August to allow companies to buy back their own shares and give financial aid to third parties to buy their shares.

A number of prominent listed companies, including Singapore Airlines and Temasek Holdings, have stated they are looking into the pros and cons of share buybacks.

The stock exchange has written to listed companies for their views on the matter.

If the prohibition is lifted, the Companies Act will have to be amended, in particular, the sections that govern the reduction of capital and prohibit companies giving financial aid to third parties buying back their own shares. There is also a possibility that the section relating to the use of the share premium account will be affected.

It is also likely the stock exchange's Listing Manual will have to be amended to incorporate guidelines on listed companies to protect shareholders and to ensure transparency.

At the moment, those foreign-incorporated companies listed on the stock exchange which have the right to buy back their own shares must comply with stock exchange guidelines. These guidelines are prescribed from case to case.

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