THE Singapore Exchange (SGX) on Monday outlined steps that mainboard companies should take in deciding to transfer to the Catalist board, making a distinction between companies to be placed on the watch-list because they do not meet the minimum trading price (MTP) requirement, and those that are on the watch-list due in part to sustained financial losses.
Mainboard firms that are placed on the watch-list only because of non-compliance with the MTP rule can choose to transfer to Catalist by appointing a sponsor and applying to SGX for the transfer. The sponsor should be satisfied with the company's plans to improve its business fundamentals, and that the transfer to Catalist is necessary for the company to address its funding needs and execute its plans, SGX said in a regulator's column.
The requirements change for any loss-making mainboard company that is at risk of being placed on the watch-list. From March 1, at-risk companies would refer to those that would soon register three straight years of losses, and that have their average market capitalisation heading under S$40 million over a period of six months.
SGX said that such a company must consult the bourse on plans to transfer to the Catalist board. The company must also engage a sponsor. The sponsor should give the company advice on corporate actions relating to fund raising, reverse takeover, or acquisitions - demonstrating that the business is viable.
"SGX may impose additional conditions on a case-by-case basis," said the bourse. "The company can proceed to apply to SGX for a transfer once SGX issues a no-objection."
Companies placed on the watch-list from March 1 will have up to three years to improve their financial situations, or comply with the MTP. Failing that, they will be delisted.
A mainboard company whose six-month volume-weighted average trading share price is below 20 Singapore cents after March 1 will be placed on a watch-list. Companies that have completed share consolidations before March 1 will have a six-month extension, and will only be assessed for compliance on Sept 1, 2016.