Singapore Introduces New Corporate Disclosure Regime
Wednesday, October 10, 2012
From November 19, 2012, the Monetary Authority of Singapore will introduce
a new disclosure of interests (DOI) regulatory regime to streamline and enhance
the existing requirements for disclosure by directors and substantial shareholders of listed entities.
Currently, directors and substantial shareholders of any listed company are
required to report their interests, and changes in interests, in securities
to the company under the Companies Act, and to the Singapore Exchange Limited
(SGX) under the Securities and Futures Act (SFA). Reporting requirements for
business trusts and real estate investment trusts (REITs) are found in the Business
Trusts Act and the SFA respectively. Separately, the listed entity is required
to announce such information to the market under the SGX Listing Rules.
Under the new regime, all DOI notification requirements in respect of interests
in listed entities (corporations, business trusts and REITs) will be streamlined
and consolidated in the SFA.
Furthermore, directors and substantial shareholders will no longer be required
to separately report their interests, and changes in interests, in securities
to the SGX. This is intended to simplify the reporting process and reduce the
compliance burden on directors and substantial shareholders. As listed entities
will be required to disclose the relevant information to investors, this change
to the reporting process will not reduce market transparency.
In addition, only the holding company will be required to aggregate the interests
of every related corporation for its reporting purposes. For each subsidiary,
it will need only to report its own interests. This will cut down the volume
of reporting by large corporate groups and reduce compliance costs.
To ensure that investors are kept informed of any changes in holdings of directors
and substantial shareholders on a timely basis, it will also be made a legal
requirement for listed entities to notify investors of interests or changes
in interests as soon as possible and no later than the end of the following
The notification requirements applicable to directors will be extended to CEOs
who are not directors. Even if the CEO is not a director, he is a key decision
maker in respect of operating and financial policies of the listed entity, and
information on his dealings in the entity’s securities is thought to be
relevant to investors.
Importantly, the legal obligations for directors and substantial shareholders
to report their interests or changes in interests, which currently apply only
to Singapore-incorporated listed companies, will be extended to foreign-incorporated
corporations with a primary listing on the SGX. This should level the playing
field between local and foreign listed companies and enhance investors’
For business trusts (BTs) and REITs where business and assets are externally
managed by the manager, and where investors are likely to be concerned with
the identity of the persons controlling the manager, a shareholder of the manager
of a BT or REIT will be required to give notification when his shareholdings
in the manager reaches, crosses or falls below the strategic levels of 15%,
30%, 50% and 75%. Any acquisition or disposal of interest in the securities
of the BT or REIT by the manager must also be disclosed.
The MAS will introduce a stiffer penalty of up to SGD250,000 (USD200,000) and/or
imprisonment for a term not exceeding two years for material contraventions
which are committed intentionally or recklessly. Civil penalties may also be
imposed for such flagrant breaches of the law. This will enable MAS to take
enforcement action proportionate to the seriousness of the offence.
The MAS has also developed electronic notification forms for use by directors,
CEOs and substantial shareholders. This removes the need for manual entries
by the listed entity and increases the efficiency of the reporting process.
The requirement to use prescribed notification forms also standardizes the information
disclosed to the market.
In formulating all of the amendments, the MAS has confirmed that it has carefully
considered all feedback received from various rounds of public consultations.
Over the next few weeks, the MAS will work with industry participants and their
professional organizations to familiarize relevant stakeholders with the new
notification requirements (including the new electronic notification forms).