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SGX AND “WATCH-LIST”

March 2009 - Finance. Legal Developments by Loo & Partners.

More articles by this firm.

On 6th December 2007, the SGX has amended its Listing Manual and introduced a “Watch-list” for companies listed on the Mainboard (“Mainboard companies”).

This is part of the SGX’s ongoing efforts to promote investor confidence, and improve the overall quality of listed companies in Singapore. It should be noted that the Watch-list rules do not apply to real-estate investment trusts, business trusts, investment funds, global depository receipts (GDRs) and secondary-listed companies listed on the Mainboard.

The Watch-List rules came into effect on 1 March 2008. Quarterly reviews will be carried out on the Mainboard companies and the Watch-List will be revised accordingly, where necessary.

Under the new Part V of Chapter 13 of the Listing Manual, Mainboard companies will be placed on the "Watch-List" if they register:-

1. pre-tax losses for the three most recently completed consecutive financial years (based on the latest announced full year consolidated accounts, excluding exceptional or non-recurrent income and extraordinary items); and

2. an average daily market capitalisation of less than S$40 million over the last 120 market days on which trading was not halted or suspended for the full day.

Trading in the Watch-List companies will continue as usual, unless a trading halt or a suspension is effected.

The Watch-List companies may apply for removal from the Watch-List upon meeting either one of the following requirements:-

(a) it records consolidated pre-tax profit for the latest completed financial year and has an average daily market capitalisation of $40 million or more over the last 120 market days of full-day trading; or

(b) it satisfies the Mainboard admission criteria contained in Rule 210(2) (a) or (b) of the Listing Manual.

On 4th March 2008, the SGX took steps to place nine Mainboard companies under its first watch list. These companies were required to make an immediate announcement of the Watch-List status, and to provide the market with quarterly updates on their financial situation, including their future directions and any other material developments that may have a significant impact on their financial position.

Unless a Watch-List company satisfies the criteria for removal from the "Watch-List" within 24 months from the date on which it acquires the Watch-List status, the SGX may either delist it or suspend its trading with a view to delisting.

Loo & Partners LLP  mail@loopartners.com.sg

http://www.loopartners.com.sg