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SGX to hold mainboard IPO managers to higher standards

ISSUE managers that advise firms seeking to list on the mainboard of the Singapore Exchange (SGX) could soon be held more accountable for the companies they help take public, if new rule changes proposed by the SGX are implemented.

Currently, the SGX does not require mainboard issue managers to be independent from the firms they advise. Issue managers are allowed to have banking relationships with their clients, and an interest in their equity securities. 

"Such involvement could present potential conflicts with the issue manager's responsibilities to provide impartial advice to the listing applicant, discharge its obligations and be satisfied that the listing applicant meets the relevant admission requirements and is suitable to be listed," the SGX said.

The SGX is hence proposing to require mainboard issue managers to be independent of listing applicants, and to hold them to higher standards of due diligence. Catalist listing rules already set out procedures and practices on the independence of sponsors from the Catalist issuers they sponsor.

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The SGX is seeking market feedback on this and other rule changes, including a rule to clarify that an issuer's directors and executive officers are responsible for ensuring that information submitted to the SGX during an initial public offering or reverse takeover is complete, accurate and not misleading.

If implemented, the rule changes will take effect in the first quarter of 2019.

A proposed practice note will set out the circumstances and relevant threshold limits that will act as guidance on the assessment of an issue manager's independence. In cases where joint issue managers are appointed, at least one must be independent.

The public consultation is open till Dec 28.