SGX Consults on Voluntary Delistings, the Listings Review Process and Responsibilities of Issue Managers
Yin Mei Lock
Prakash Raja Segaran
Kai Hsien Yang
Wee Teck Lim
Professional Legal Support
28 December 2018
The SGX is proposing various amendments to the voluntary delisting regime. In a separate consultation, it is also proposing removing the power of the Listings Advisory Committee to look into applications not referred to it. That consultation also proposes requiring issue managers to be independent from the listing applicant.
- A Consultation Paper on proposed amendments to the voluntary delisting regime (Delisting Regime Consultation); and
- A Consultation Paper on proposed changes to the listings review process and regulation of issue managers (Listings Consultation).
Proposed amendments to the voluntary delisting regime
Exit offers must be both fair and reasonable. Currently, exit offers are only required to be reasonable.
The Offeror Concert Party Group (offeror and parties acting in concert with it) must abstain from voting on the delisting resolution. Currently, the Offeror Concert Party Group can vote on a delisting resolution; no abstaining is required for a delisting resolution.
The approval threshold for the delisting resolution should be reduced to 50% from the current threshold of 75%.
The blocking threshold for a delisting resolution should be removed. Currently, if 10% of shareholders vote against the delisting resolution, the resolution will not pass.
The exit offer must include a cash alternative as the default alternative.
Delistings pursuant to schemes of arrangement must also be fair and reasonable.
In a general offer context:
Delistings following a compulsory acquisition will not be subject to the exit offer requirements and the shareholders’ approval requirements.
- Delistings where the offeror cannot exercise a right of compulsory acquisition but the free float falls below 10% and the offeror does not intend to take steps to restore the public float will be subject to the SGX’s consultation on the applicability of the shareholders’ approval requirements.
Proposed amendments to the listings review process and regulation of issue managers
Discharge its obligations with due care, diligence and skill;
Conduct due diligence, including, at a minimum, complying with the due diligence guidelines issued by The Association of Banks in Singapore (where applicable) or such other satisfactory and no less strict due diligence guidelines or processes; and
Notify the SGX of relevant information in a timely manner, including significant changes to the corporate structure.
An issue manager will also be required to be independent of a listing applicant. The factors for independence will be set out in new practice note. It is proposed that an issue manager will not be considered to be independent if:
Loans or guarantees issued by the issue manager group exceed certain percentage thresholds; or
The issue manager group will have an interest in 5% or more in the equity securities of the applicant.
An “issue manager group” will comprise the following persons:
The issue manager and its subsidiaries;
The controlling shareholder(s) of the issue manager and their associates;
The directors, chief executive officer and key officers of the issue manager who are directly involved in the decision-making with respect to a new listing application, and their associates; and
Persons that the issue manager in fact exercises control over.