[SINGAPORE] Singapore Exchange (SGX) has unveiled its most detailed proposals yet on setting a minimum share price for the mainboard and on creating industry-led enforcement committees.
It is also seeking additional disciplinary powers - all with the goal of improving market quality - especially following the 2013 collapse of penny stocks.
Richard Teng, SGX's head of regulation, said: "Trust and confidence are paramount in any marketplace, and we are always on a continuous journey to enhance trust and confidence and quality of the marketplace."
SGX is seeking public feedback on its proposals via two consultation papers.
New rules for a 20 Singapore cent threshold for mainboard companies could be announced in March 2015 and be implemented the year after. Companies whose six-month volume-weighted average price are too low from March 2016 will be placed on a watch list; they will have up to three years to resolve the issue or face delisting, according to the proposals.
To help with the transition, SGX will waive its share-consolidation fees until 2017 for companies that need to consolidate their shares to meet the new requirements. As at June 30, 222 companies had six-month volume-weighted average prices that were too low.
The watch list is currently for mainboard-listed companies which have reported three straight years of losses and have market capitalisations below S$40 million. These criteria will stay, although SGX will tweak certain aspects to make it more consistent with the minimum-share-price rules.
Companies which are on the watch list for failing to meet both the share price and financials criteria will remain on the watch list until both issues are resolved.
Associate Professor Mak Yuen Teen of the National University of Singapore welcomed the proposal to impose a minimum share price: "I think we have become too much of a penny stock kind of market."
SGX is also spelling out proposed details of three new independent committees that will comprise members of the corporate finance, accounting, legal and investment communities.
The exchange plans to refer listing applications, including reverse takeovers, to the listing advisory committee if there are issues such as unusual structures or public-interest concerns.
A disciplinary committee will have all the disciplinary powers of SGX, as well as the power to require the resignation of directors and key officers from any listed company. Other additional powers that this committee could have include censuring issue managers and restricting issuers' access to capital markets.
An appeals committee will have the power to review decisions by the disciplinary committee.
SGX is also seeking additional disciplinary powers for itself against issuers, such as the authority to impose fines and to require the appointment of special auditors and compliance advisers.
The proposed additional powers for the disciplinary committee raised some eyebrows.
Lawyer Robson Lee of Shook Lin & Bok said: "These are very powerful instruments and they must be very carefully calibrated."
Not having had a chance to carefully study the papers yet, he said he wondered whether such additional powers would require legislative backing.
Prof Mak said there could be concern that if committee members are too aligned with industry, they might be inclined towards having more listings. It would be good if the committees could include investor advocates and individuals with regulatory backgrounds, he suggested.
"At the end, the composition of those committees is going to be so important, because people are going to look at that and see if they're credible," he said.
David Gerald, the president of the Securities Investors Association of Singapore, said the widening of SGX's enforcement powers will lead to greater responsibility and accountability.
"This move should give comfort to minority shareholders, who are often in a bind when companies are subject to forced delisting, putting their investments in jeopardy."
The public consultation lasts until the end of Oct 16, 2014.