SGX may tweak requirements for quarterly reporting in H2 2018

THE Singapore Exchange (SGX) is proposing possible changes to quarterly reporting (QR), which could be implemented in the second half of this year if they are adopted.

The regulator is seeking public feedback on whether to retain quarterly reporting amid persistent complaints about compliance costs, notably among smaller companies. It is looking at several options, including using market capitalisation to determine whether companies should report quarterly or not.

"Stakeholders, including investors, have also expressed concerns about compliance cost. We have weighed these concerns and international developments in coming up with our proposals on possible changes to quarterly reporting," Tan Boon Gin, chief executive officer of SGX Regulation, said on Thursday.

One possible option is to raise the market value of companies required to report quarterly to S$150 million, from S$75 million now. This is to address the relatively higher costs that small companies incur.

SGX acknowledged that while the number might be perceived as arbitrary, "we have suggested this threshold to strike a balance between the costs and benefits of QR". It noted that when quarterly reporting was first implemented in 2003, some 37 per cent of listed companies were required to report quarterly. Today, about 70 per cent do so.

Another option is to require companies with a market value of S$150 million and a shareholder with at least 15 per cent stake to report quarterly. Minority shareholders of a listed company can also vote to opt out of quarterly reporting every three years.

"Each of the different quarterly reporting approaches has its benefits. Allowing minority shareholders to decide whether or not a reporting company can opt out of QR is guided by concerns about investors' lack of access to management," Mr Tan explained.

To ease the reporting burden of companies, SGX has also proposed to simplify the format of the first and third-quarter reports by cutting back the content. If adopted, Q1 and Q3 reports will only reflect balance sheet, income statement, cashflow statement, review of performance commentary of significant trends and board confirmation. Items that are deemed unlikely to fluctuate on a quarterly basis such as share capital, accounting policy and financial indicators will be omitted.

Mr Tan believes that steps have been taken to strengthen the continuous disclosure regime, including launching a guide to help companies manage confidential information and proposing more disclosures in areas of concern.

"These help address the information asymmetry between controlling and minority shareholders," he said.

Mr Tan said that putting forward the various options for consultation will allow SGX to gauge the level of market readiness and receptiveness.

The public has up to Feb 9 to submit feedback on the proposals.