SGX amends listing rules

The bourse said the revisions will strengthen corporate governance practices and foster greater corporate disclosure.

A regulatory announcement said, “These amendments are undertaken to keep abreast of the challenges and developments of the industry and are part of SGX’s ongoing efforts to enhance the quality of the marketplace.”

Consultation for the rule amendments concluded in January 2010 and, according to SGX, they received overwhelming response on many of the proposals consulted. SGX said, “Care was taken to explore possible alternatives to address regulatory concerns highlighted and appropriately re-calibrate the proposed rules.”

The amendments are effective from 29 September 2011 and will apply to the Mainboard Listing Rules. The same amendments will apply to the Catalist Rules where applicable.

The key amendments include:

Strengthening Corporate Governance and Safeguarding Shareholders’ Interests
(i) Issuers are to have a robust and effective system of internal controls that addresses financial, operational and compliance risks [Rule 719].

(ii) Disclosure of issuer’s loan agreements that make reference to control or controlling shareholder interest. Issuers with such loan agreements are to require an undertaking from their controlling shareholders to provide notification when share pledging arrangements are entered into such that details of the pledge can be disclosed by the issuer [Rule 704(31) and Rule 728].

(iii) Disclosing information relating to the appointment of and changes to the legal representative(s) (or person(s) of equivalent authority) [Rule 610(7) and Rule 704(11)].

(iv) Disclose whether any of the issuer’s independent directors has been appointed to the board of the issuer’s principal subsidiaries based in jurisdictions other than Singapore. On an ongoing basis, announcement is required for the appointment and cessation of such independent directors to the board of these principal subsidiaries [Rule 610(8) and Rule 704(12)].

(v) Unless approved by the Exchange, no transfer of securities will be allowed during a trading suspension [Rule 729].

Role of Board Directors, Key Executive Officers and Auditors
(vi) Under specific circumstances, such as where the issuer is the subject of an investigation of irregularities or other wrongdoing, the Exchange’s approval may be required for appointments of directors, chief executive officers (CEOs) and chief financial officers (CFOs). The Exchange’s right to take action against directors or key executive officers, such as public censure or objecting to their appointments to the boards of other issuers is also codified in this rule. [Rule 720].

(vii) Requiring a negative confirmation from the audit committee of the issuer on the character and integrity of the CFO [Rule 610(6)].

(viii) Requiring auditing firms appointed by the issuer to be registered with and/or regulated by the Accounting and Corporate Regulatory Authority (“ACRA”) or an independent audit oversight body acceptable to the Exchange [Rule 712]. Existing issuers who are unable to comply with this rule will be given one year from the date of implementation of this rule to fulfill this requirement.

Providing Clarity and Codifying Current Practices
(ix) Introducing new Practice Note 4.1 and 12.1 to provide clarity on the wordings for responsibility statements, use of Right of First Refusal Agreements and submission of profit estimates, projections and forecasts.

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