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SGX starts half-yearly updates on long-suspended companies

Move aimed at boosting transparency; it's also improving admissions process to boost oversight and mulling use of rejected IPOs as learning tool

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The Singapore Exchange (SGX) has started publishing half-yearly updates on long-suspended counters and will unveil improvements to the admissions process as part of its efforts to enhance its oversight of companies, the market operator announced on Thursday.

Singapore

THE Singapore Exchange (SGX) has started publishing half-yearly updates on long-suspended counters and will unveil improvements to the admissions process as part of its efforts to enhance its oversight of companies, the market operator announced on Thursday.

SGX is also exploring publishing details on rejected initial public offering (IPO) applicants to improve transparency and as an educational initiative for the market, SGX chief regulatory officer Tan Boon Gin said in a media briefing.

Details about the improvements to the admissions process have not been disclosed, but they will be announced jointly with the Association of Banks on Friday. Market sources have said that updated guidelines for due diligence on IPOs are expected.

"Our oversight of companies occurs at two stages - the first is at the admission stage, when companies are seeking to list on SGX, and the second is when companies are already listed and we regulate their continuing obligations," Mr Tan said. "I believe we can improve on both fronts."

The new report includes notes on the current status of the 20 SGX-listed companies that have been suspended for at least a year.

Of those, 11 are exploring trading resumptions or reverse takeovers. Four are being delisted, of which two are exploring making an exit offer. Three are in the midst of litigation or have been placed under judicial management. Another two have yet to fully respond to SGX's queries.

The median length of suspension for those companies is just under three years. Fibrechem Technologies, which is currently exploring a reverse takeover after being placed under provisional liquidation, has had the longest suspension, dating back to Feb 25, 2009. The shortest suspension is from Golden Energy And Resources, which completed a reverse takeover in 2015 and has until June 30, 2016 to restore its public float. Golden Energy has been suspended since April 23, 2015.

Some of the information in the updates were discovered by SGX through communications with the companies and have not been announced to the market.

For example, in the case of China Sun BioChem Technology Group Co, SGX's report revealed that the company's directors last informed the exchange that the company had no viable business or financial resources to maintain its listing status. The company, which was suspended in March 2009, last made an announcement in 2012.

"In many instances, the companies have been making few, or even no, disclosures in recent times," Mr Tan said. "SGX has therefore decided in these instances to provide updates on our engagement with the companies, so as to make transparent to shareholders our engagement efforts."

Mr Tan added that SGX generally tries to help companies to resume trading or to extract an exit offer for shareholders. It allows delistings without exit offers only when the company is found to have insufficient resources to fund an offer.

Veteran trader Mano Sabnani welcomed the updates.

"Some of these companies have literally stopped announcing anything," he said. "Even if it's a blank, it's good for the stock exchange to say."

David Gerald, president of the Securities Investors Association of Singapore, said: "This report is useful as it improves transparency, provides updates to investors on the progress of investigation, and helps investors keep track of their investments as some companies can be and have been revived in the past."

Corporate lawyer Stefanie Yuen Thio of TSMP Law Corp said it sent a positive signal about the market operator: "The principal benefit of the SGX's update on developments in suspended companies is that it enhances transparency in the stock market and boosts confidence in the exchange. It's heartening to know that 11 out of 20 companies are on the path to possible rehabilitation; hopefully shareholders holding such suspended securities will be able to see a resumption of listing in the near future."