SGX consultation on enhancements to the regulatory regime for property valuation and auditors
Yin Mei Lock
Joint Managing Partner
Prakash Raja Segaran
Kai Hsien Yang
Wee Teck Lim
Professional Legal Support
02 March 2020
Singapore Exchange Regulation (SGX RegCo) issued a Consultation Paper on Enhancements to the Regulatory Regime for Property Valuation and Auditors on 16 January 2020.
The Consultation Paper deals with the following:
- proposals to enhance the disclosure regime for valuation reports for property and the qualifications for property valuers; and
- proposals to enhance the regulatory regime for audits to safeguard the interests of shareholders.
The consultation closed on 14 February 2020.
Valuation reports and valuers
A property investment/development company that is applying to be listed on the Singapore Exchange (SGX) must appoint a property valuer to conduct a valuation of its principal freehold and leasehold properties. SGX RegCo has proposed that any property valuer so appointed must meet the following minimum requirements:
- He is professionally qualified and is a member or licensee in good standing of either the Singapore Institute of Surveyors and Valuers (SISV) or another similar professional body;
- He has at least five years of relevant professional experience in the valuation of the type of real property in which the valuation is to be conducted;
- He is independent of the issuer;
- He is not a sole practitioner; and
- He does not have an adverse compliance track record.
It is further proposed that the property valuation report should meet the following requirements:
- Where the report is in respect of real properties in Singapore, the report must be prepared in accordance with the standards set by the SISV;
- Where the report is in respect of real property located outside Singapore, the report must be prepared in accordance with either the International Valuation Standards or the standards set by the SISV;
- It should state the name and professional qualifications of the property valuer in charge of the valuation; and
- It should state the standard employed by the valuer.
The property valuation report should be made available for inspection at the issuer’s registered office, while a summary of the report must be included in the offer document. The summary report must contain the information required for prospectuses and circulars as set out under the standards set by the SISV.
The Listing Rules currently allow foreign issuers to appoint foreign auditors not registered with the Accounting and Corporate Regulatory Authority (ACRA). SGX RegCo is proposing that all issuers must appoint an auditing firm and audit partner registered with the ACRA. A foreign issuer that wishes to appoint foreign auditors must also appoint an auditor registered with the ACRA to act as a joint auditor. For secondary listings, issuers from countries that are on the SGX's list of Developed Markets will not need to appoint a joint auditor. For issuers from countries that are not on this list of Developed Markets, the SGX will make an assessment of whether there is a need for a joint auditor on a case-by-case basis.
The SGX currently has the power to require issuers to appoint independent professionals, as well as special auditors, for specified purposes. SGX RegCo proposes to amend the Listing Rules to allow the SGX to direct an issuer to appoint an additional auditor to conduct a second audit of the issuer’s financial statements. The SGX may also require that the additional auditor provide a second independent opinion on the issuer’s financial statements or to act as a joint auditor. The Consultation Paper explains that the SGX may exercise this power if it has concerns with the issuer’s overall audited financial statements.