Knowledge & Insights

SGX RegCo, in consultation with MAS, has announced here that it will introduce additional measures to support issuers amid the challenging business and economic climate due to COVID-19, including enabling the acceleration of fund-raising efforts.  Two such measures were announced on 8 April 2020 in respect of Mainboard issuers: 

1.    Temporary Increase in Pro Rata Share Issue Limit: The upper limit for pro-rata issue of shares and convertible securities under a general mandate pursuant to Mainboard Rule 806(2) will be increased from the existing 50% to 100% (based on the issuer’s total number of issued shares, excluding treasury shares and subsidiary holdings) (“Enhanced Share Issue Limit”), effective from 8 April 2020 until 31 December 2021, subject to certain conditions. An issuer may seek shareholders’ approval for the Enhanced Share Issue Limit either at its annual general meeting (AGM) or an extraordinary general meeting (EGM). The notice of general meeting does not have to be cleared with SGX RegCo and no circular is required. Issuances other than on a pro rata basis remain capped at 20%.

The Enhanced Share Issue Limit is subject to the following conditions:

Confirmation from the issuer’s board of directors (Board) to SGX RegCo that the Enhanced Share Issue Limit is in the interest of the issuer and its shareholders;

•    The issuer’s compliance with any applicable legal requirements governing the issuer and its constitution/trust deed (or the equivalent in the issuer’s country of incorporation) arising from the Enhanced Share Issue Limit;

•    The issuer shall not issue more than 100% of the issuer’s total number of issued shares (excluding treasury shares and subsidiary holdings) in each class at the conclusion of the first annual general meeting of the issuer following the passing of the resolution on the general mandate for the Enhanced Share Issue Limit; 

•    In its notice of general meeting seeking the Enhanced Share Issue Limit, the issuer shall disclose: 

• why the Board is of the view that the Enhanced Share Issue Limit is in the interest of the issuer and its shareholders, and the Board’s basis for forming such views;
• that the Enhanced Share Issue Limit may be renewed annually during the issuer’s AGM and is only valid until 31 December 2021, by which date the shares issued pursuant to the Enhanced Share Issue Limit must be listed; and no further shares shall be issued under this limit; and
• if the issuer is seeking shareholders’ approval via an EGM and has utilised any part of its then-existing share issue mandate ("Existing Amount Used"), the issuer is to disclose (as at the date before the EGM for the passing of the Enhanced Share Issue Limit resolution) the remaining balance that would be available under the Enhanced Share Issue Limit after deducting the Existing Amount Used.

•    The issuer notifying SGX RegCo of the following, by way of email to enhancedsharelimit@sgx.com when the general mandate for the Enhanced Share Issue Limit has been approved by shareholders: (a) name of issuer; and (b) date on which such general mandate is approved by shareholders; and

•    In its announcement of any issue of shares or convertible securities in reliance of the Enhanced Share Issue Limit, the issuer shall disclose that it is utilising the Enhanced Share Issue Limit. 

SGX RegCo has also stated that it will work closely with issuers in effecting the above measures and giving expedited clearance to their fund-raising efforts. 

Issuers may recall that a similar provisional waiver was granted back in 2017, as set out in the former Practice Notice 8.3 here, which was also introduced to enable issuers to finance business needs through utilising the enhanced limit (similarly increased to 100%) accorded under the waiver.  While the 2017 waiver was limited to only renounceable rights issues, it appears SGX RegCo has not imposed such a restriction on the Enhanced Share Issue Limit. 

2.    Temporary Suspension of Entry into Financial Watch-List: An issuer which has recorded pre-tax losses for its last three consecutive financial years and a market capitalisation of less than S$40 million, may be placed by SGX RegCo on the financial watch-list pursuant to Mainboard Rule 1311(1).  In light of current conditions, which are both unprecedented and unforeseen, SGX RegCo recognises that placing issuers on the financial watch-list during this period might cause undue prejudice to issuers in navigating the business challenges in this climate. Accordingly, SGX RegCo will provisionally suspend the half-yearly reviews on the first market days of June 2020 and December 2020 to place issuers on the financial watch-list. This will enable issuers to focus on meeting the current business and economic challenges and dealing with any resultant liquidity crunch. 

Issuers which meet the exit criteria under the listing rules will continue to be able to exit the watch-list. SGX RegCo will determine if it is appropriate for the provisional suspension to be further extended in due course.

Please refer to the SGX media release here for further details.

If you would like information on this or any other area of law, you may wish to contact the partner at WongPartnership whom you normally work with or the following Partners:

Annabelle YIP 
Senior Consultant; Joint Head – Corporate Governance and Compliance
d +65 6416 8249
e annabelle.yip@wongpartnership.com
Click here to view Annabelle's CV.

Vivien YUI 
Joint Head – Employment 
d +65 6416 8009
e vivien.yui@wongpartnership.com
Click here to view Vivien's CV.

Gail ONG
Head – Equity Capital Markets
d +65 6416 8205
e gail.ong@wongpartnership.com
Click here to view Gail's CV.

Kevin HO
Deputy Head – Corporate Governance and Compliance
d +65 6416 2555
e kevin.ho@wongpartnership.com
Click here to view Kevin's CV.

Karen YEOH
Partner – Capital Markets
d +65 6416 2482
e karen.yeoh@wongpartnership.com
Click here to view Karen's CV.