No easy move to Catalist from mainboard: SGX

Catalist is more attractive as the Minimum Trading Price rule of 20 cents a share and the SGX watchlist do not apply to firms on this board.
Catalist is more attractive as the Minimum Trading Price rule of 20 cents a share and the SGX watchlist do not apply to firms on this board.ST FILE PHOTO

Mainboard-listed firms teetering on consecutive losses will not get an easy transfer to the Catalist board, the Singapore Exchange said yesterday.

It reminded firms that are in danger of going on the watchlist of financially embattled firms, and those already on it, that they will have to pass a list of requirements before moving to the secondary board.

Ms June Sim, SGX's head of listing compliance, said: "A few mainboard companies already, or at risk of being placed, on the watchlist under the financial entry criteria, have indicated interest to transfer to Catalist."

Investment holding firm Innopac holdings said on Dec 21 that it plans to transfer. Others like building firm Ley Choon Group Holdings and construction and civil engineering firm MMP Resources have tried, but failed.

Catalist is more attractive as the Minimum Trading Price (MTP) rule of 20 cents a share and the SGX watchlist do not apply to firms on this board.

Ms Sim said: "The Catalist board provides greater flexibility for a company to raise funds either to implement its growth strategy or to improve its financials. Catalist companies benefit from higher general share issue mandate and thresholds for acquisitions and disposals."

The financial entry criteria includes mainboard-listed firms going on the watchlist if they record three straight years of losses and also have had an average daily market capitalisation of less than $40 million over the previous 120 trading days. However, from March 1, a firm could go on the list if it records three straight years of losses and its average market capitalisation is less than $40 million over the previous six months.

Firms applying for a transfer to the Catalist board must comply with these guidelines and ensure they have an "SGX-authorised sponsor at all times to supervise them on compliance with SGX rules".

For instance, if the firm has been loss-making for several years and is at risk of being on the watchlist under the financial entry criteria, its appointed sponsor - which should be able to conduct corporate finance advisory work - has to run through several things like corporate actions relating to fund raising.

The SGX reminded firms that it "may impose additional conditions on a case-by-case basis".

It also listed guidelines for those planning to sponsor a firm seeking a transfer to the Catalist board. These include undertaking a thorough assessment of the company's needs, and being satisfied with the firm's compliance track record and level of internal controls.

Ms Sim said: "The sponsorship regime on (the) Catalist enables companies to benefit from the sponsor's guidance and advice on rule compliance and governance matters, and in some cases, capital market and corporate finance advice, too."

A version of this article appeared in the print edition of The Straits Times on January 05, 2016, with the headline 'No easy move to Catalist from mainboard: SGX'. Print Edition | Subscribe