Listing in Singapore
LISTING IN SINGAPORE
The Singapore equity market provides an important avenue for Singapore and foreign companies to raise long-term capital
through public issue of their shares on the Singapore Exchange Securities Trading Limited (SGX-ST) Main Board or the
SGX-ST Dealing and Automated Quotation System (SESDAQ).
The Singapore Advantage
Singapore’s financial market has been built on a robust and competent legal and judicial framework. In 2006, the Political
and Economic Risk Consultancy survey distinguished Singapore as having one of the best judicial systems in Asia.
Entrepreneurs and investors favour Singapore as a choice destination for its pro-business environment, established infrastructure,
transparent regulations, political stability, and investor-friendly government policies. Companies considering listing are further
attracted by the following factors:
Benefits and Drawbacks of Listing
Creates a market for the company’s shares
Enhances the status and financial standing of the company
Increases public awareness and public interest in the company and its products
Provides the company with an opportunity to implement share option incentive schemes for its employees
Increases avenues for future fund-raising via the issuance of new shares or other securities
Facilitates acquisition opportunities by use of the company’s shares
Offers existing shareholders a ready means of realising their investment
• Increases accountability to public shareholders
• Needs to maintain dividend and profit growth trends
• Becomes more vulnerable to unwelcome takeover
• Needs to observe and adhere strictly to the rules and regulations by governing bodies
• Increases costs in complying with higher level of reporting requirements
• Relinquishes some control of the company following the public offering
• Suffers loss of privacy as a result of media interest
(i) The company must be a going concern.
(ii) The company should be in a healthy financial position.
(iii) The company’s management team, directors and shareholders should have the experience, expertise, character and
integrity to lead and run a listed company.
(iv) The company should eliminate or resolve all conflict of interest situations prior to listing.
Foreign companies seeking listing will need to:
(i) Release all information and documents in English, and all securities will be quoted in Singapore dollars, unless approved
by SGX or MAS.
(ii) Appoint at least two independent directors resident in Singapore.
SGX Main Board and SGX SESDAQ Requirements
Companies considering listing in Singapore may choose to list on either the SGX Main Board or SGX SESDAQ.
The tables below set out the principal criteria for listing on the above-mentioned Boards.
For listing on the SGX Main Board, companies must satisfy one of the following criteria:
SGX SESDAQ was established to enable sound local and foreign companies which are not able to meet the criteria for listing on the Main Board but still wish to enjoy the benefits of listing to obtain listing. There are no quantitative requirements for listing on SGX SESDAQ.
Following listing on SGX SESDAQ, companies may apply to be transferred to the Main Board if they satisfy its criteria in the future.
At the time of publication, SGX has proposed to develop a New Board to replace the SGX SESDAQ. The New Board will be
similar to the Alternative Investment Market in the United Kingdom. It will be a sponsor-supervised board tailored to create a
conducive environment for growing companies to list, and to easily raise capital and acquire assets post-listing.
Methods of Listing
A company may seek either a primary listing or secondary listing, where the company is already listed on another stock exchange.
Companies seeking primary listing will need to comply with SGX’s regulations in full, while companies seeking secondary listing will
not need to do so, on condition of adhering to the requirements with respect to secondary listings.
SGX has set minimum public float requirements for the amount of post-invitation share capital, based on market capitalisation.
The table below sets out the requirements:
Pricing of the Shares
The issue price is largely dependent on the company’s present and future earnings. It is therefore important to prepare a two-year
business plan for review by the issue manager.
For companies without historical records of positive earnings, it is still possible for them to obtain a listing. The issue price may be
based on future earnings, and expert assessment may be required of the company.
When considering a listing, a company should ascertain its reasons for such an exercise, and be aware that the preparation and process
of listing will consume a considerable amount of the company’s time and resources. The following are some of the areas that should be
completed or taken into account when considering a listing:
Timeline to IPO
Professional Help to Pave the Way
The key professionals that an IPO aspirant will require include:
1. The Issue Manager
The listing process kicks off with the appointment of an issue manager, who will assume the position as the company’s sponsor. The issue manager is usually a member of SGX, a merchant bank or similar institutions acceptable to SGX. The issue manager has an active role in priming the company for listing. In addition to managing the IPO, the issue manager also submits the listing application on behalf of the company, and coordinates with SGX on all matters arising from the listing application.
The company has to appoint a lawyer to undertake the legal aspects of listing. This will include the need for an overseas legal counsel if it has overseas subsidiaries, and if required by the issue manager, another legal counsel to advise the issue manager on the issue.
The appointed certified public accountant’s role is to audit the accounts of the company and highlight any weaknesses in the internal controls of the company.
The business advisors are able to assist the management in the entire IPO preparation. They will conduct a preliminary appraisal of the company’s readiness to undertake a listing exercise. The business advisors will also prepare the company for IPO by optimising the business value of the company, guiding the company through restructuring the business (if necessary), identifying and resolving issues, compiling and analysing its financial statements, preparing the prospectus and business plan, as well as facilitating the company in upgrading its internal control procedures.
Public Relations Consultant
Before and during the IPO launch, the company will need to engage a competent public relations firm to assist in increasing investor awareness of the company.
Costs Involved in a Listing Exercise
Corporate governance and transparency
A successful IPO is only the beginning for greater corporate governance and transparency. Listed companies will
need to maintain good corporate governance and disclosure policies, in accordance with the requirements of SGX.
Duties and responsibilities of directors
Directors of a listed company will have to undertake additional statutory duties to ensure that the company is well-managed.
Directors and management of companies considering a listing on SGX must be ready to take on the responsibilities that
accompany their respective designations after the listing.
It is also a pre-listing requirement to disclose if directors have prior experience or have undergone training in the role and
responsibilities as directors of listed companies.
The Board of Directors
The practice of good corporate governance is expected of companies listed on SGX. The Board of Directors has to comprise
at least two independent directors, and to participate in the following committees that are to be formed upon listing:
(a) Audit Committee
(b) Nominating Committee (c) Remuneration Committee
Announcement and reporting requirements
A listed company will have to act in accordance with the financial reporting requirements and obligations as established by SGX.
Below are some of the regulations as stipulated by SGX:
The company and its officers are prohibited from trading in the company’s securities one month before the half-year or full financial
year results are announced.
The Corporate Disclosure Policy stipulates that directors are to disclose any material information of the company, clarify/confirm any
rumours or reports, and report any unusual trading activity.
SGX also stipulates that financial statements for the full financial year must be announced within 60 days of the financial year-end,
and within 45 days for the first half of the financial year. For companies with market capitalisation exceeding S$75 million, they are
also required to announce their quarterly results within 45 days from the end of each quarter. The listed company must also hold its
Annual General Meeting within 4 months after the end of the company’s financial year. Effective 1 September 2006, interim results
require a “negative assurance” confirmation from the Board of Directors that, to the best of their knowledge, nothing has come to
their attention that may render the financial results to be false or misleading.
Sources: IE Singapore and RSM Chio Lim, 2007.