VALUERS who have fallen short have been referred to their relevant disciplinary bodies, said the chief executive of Singapore Exchange Regulation (RegCo), as he served notice that these referrals will continue to be made down the road.

Speaking at the Reit Association of Singapore (Reitas) Conference 2021 on Tuesday (Nov 9), Tan Boon Gin said: "Suffice to say that we have made full use of (the) ability to refer valuers who we think have fallen short and should be held to account to their respective disciplinary bodies. We will no doubt, do so again wherever appropriate."

In January, SGX RegCo enhanced requirements on valuers in order to raise the standard of property valuers and property valuations. Following the changes, valuers now have to fulfil certain professional qualifications and independence criteria; valuation reports have to be in line with international standards and contain a minimum level of prescribed information.

For instance, property valuers are required to have at least five years relevant practical experience in valuing properties in a similar industry and area as the property to be valued, to ensure familiarity with local market conditions and requirements.

Tan said: "I want to emphasise this as our Reits become more international, are starting to hold more properties overseas, and are diversifying into new and highly specialised assets."

Under the enhanced rules, property valuers either here or abroad are required to belong to a professional body that can hold them accountable.

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This year, SGXRegCo also enhanced disclosures relating to sponsor leases where the sponsor is the master lessee of the properties in the Reit's portfolio. Such disclosures must now be made whether the sponsor material leases were entered into at market rates or not.

Tan also mentioned the need to improve communication, given that the pandemic has engendered a shift towards virtual unitholder meetings. He said more guidance on virtual meetings can be expected in due course.

He said: "The next step is to see how we can improve the quality of communication to reap the benefits of both virtual and face-to-face formats. There have been calls to improve the timeliness of issuers' responses to shareholders' or unitholders' questions, so that shareholders or unitholders have the benefit of seeing the questions answered before they vote, especially for important corporate actions like a rights issue or privatisation."

In his speech, he also emphasised that if listed companies receive a letter of demand for a substantial sum of money which will have a material impact on the company, they will have to disclose it. While disclosures may not necessarily be required if a claim or action is reasonably deemed "bound to fail", he pointed out that more issuers have been seeking to rely on this exception.

He said: "Mere optimism that both parties are close to settling a claim is not enough. Nor is legal advice that one has a good chance of winning. An issuer is fully entitled to explain the merits of a case in its favour. But it must be contained in the announcement disclosing the receipt of the letter of demand."

Tan outlined that, as a rule of thumb, disclosures must be made for letters of demand which add up to 10 per cent of an issuer's net asset value (NAV). Typically, when a letter or letters of demand add up to over 10 per cent of NAV, the issuer would seek bankruptcy protection.

He added: "However, in the absence of bankruptcy protection, a balance must be struck between having to disclose every single letter of demand received thereafter and keeping the market informed." In such a case, subsequent letters of demand should be disclosed in bands of at least 10 per cent of NAV, he went on to say.

Raffles Education Corp has lately been under fire for failing to disclose a RM410 million (S$133 million) writ and statements of claims filed by Affin Bank in May in Malaysia's High Court. These stemmed from loans taken out by subsidiaries of Raffles Education, which disclosed the writ to SGX only at the end of July, claiming that it was "bound to fail".