THE Singapore Exchange Regulation (SGX RegCo) on Monday (Mar 7) suspended the admission to trading of PJSC Gazprom global depositary receipts (GDR) due to sanctions by the Singapore government amid Russia's invasion of Ukraine.

PJSC Gazprom is a Russian energy company that deals with oil and gas.

On Saturday, the Ministry of Foreign Affairs said it was banning banks and other financial institutions from doing business with 4 Russian banks, as well as banning the export of certain goods as part of the sanctions.

Among others, Singapore is also prohibiting transactions and financial services that facilitate fund raising to the Russian government and entities owned or controlled by them.

The prohibition applies to the buying and selling of new securities, providing financial services that facilitate new fundraising, and participation in the making of any new loans.

SGX RegCo noted that the Russian government is the ultimate controlling party of Gazprom and has a controlling interest - including both direct and indirect ownership - of over 50 per cent in the company.

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SGX RegCo will suspend the admission to trading of the GDRs "to ensure that the market is fair, orderly and transparent", and such that the exchange "does not act contrary to the interests of the investing public".

In its regulator’s column on Monday, SGX RegCo said issuers should assess on an ongoing basis if they have exposure to sanctions-related risks, and have put in place adequate safeguards against such risks. They may obtain legal advice to determine if their dealings violate any applicable sanction if appropriate.

If aware of a material change in their risk exposure, issuers should then immediately announce these risks, including financial and operational impact, any restrictions imposed by stakeholders, and obtain board confirmation that steps are being taken or will be taken, to mitigate these sanctions-related risks. 

Issuers should also suspend trading in its securities when the impact is material or when it affects the issuer’s ability to operate as a going concern, or when sanctions risks cannot be remediated within a reasonable period of time.

SGX RegCo said that it will not grant approval for trading resumptions if the suspended issuer is a sanctioned subject or is engaging in any sanctioned activity, or if the proceeds raised will likely be used to benefit sanctioned subjects or sanctioned activities.

It noted that the issuer should remain suspended until it has demonstrated that it is no longer a sanctioned subject or it has ceased the sanctioned activity; it should also submit a proposal to SGX within 12 months from the suspension date on the proposed remediation measures to cease to be a sanctioned subject or the sanctioned activity.

If the issuer fails to submit its remediation proposals within the 12 months, SGX RegCo may remove the issuer from its official list. 

In exceptional circumstances, SGX RegCo may also remove the issuer from the official list at any time as per listing rules, such as when exposure to sanctions-related risks has materially undermined the issuer’s business, or when the sanctions-related risks to its shareholders or SGX are likely to be significant.

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