Firms eyeing listing face more checks

One of the key changes introduced by the Association of Banks In Singapore recommends that issue managers query a listing applicant if there has been a recent resignation among the management, directors or controlling shareholders. (Above) The Marina
One of the key changes introduced by the Association of Banks In Singapore recommends that issue managers query a listing applicant if there has been a recent resignation among the management, directors or controlling shareholders. (Above) The Marina Bay financial district.ST PHOTO: KUA CHEE SIONG

Guidelines for conducting due diligence boosted for issue managers, listing sponsors

Guidelines for conducting due diligence on companies seeking a listing here have been strengthened.

The new protocols from the Association of Banks In Singapore (ABS) outline the process and principles that issue managers and listing sponsors among ABS member banks should follow when helping companies get listed. They include recommendations to ask issue managers to take extra steps in assessing an applicant's management, business model and potential money-laundering risks, among other areas.

One of the key changes recommends that issue managers query a listing applicant if there has been a recent resignation among the management, directors or controlling shareholders. Issue managers should also visit the applicant's material production facilities and asset inventory, while applicants with unnecessarily complex corporate structures should be met with extra caution.

IN THE INTEREST OF INVESTORS

The spirit of these guidelines is to make sure companies that choose to list in Singapore can meet the standards necessary for the protection of the interests of the investing community.

MS TAY TOH SIN, chair of the ABS' listing due diligence guideline committee.

Another change is asking issue managers to review the amounts of taxable income and revenue or cost declared in the tax filings of listing applicants to ensure consistency with their audited financial statements.

The guidelines, last updated in December 2013 and taking effect immediately, were drawn up after nine months of industrywide discussion, said Ms Tay Toh Sin, chair of ABS' listing due diligence guideline panel.

Ms Tay, who is also OCBC Bank's senior coverage banker, told a briefing yesterday: "The spirit of these guidelines is to make sure companies that choose to list in Singapore can meet the standards necessary for the protection of the interests of the investing community."

Singapore Exchange (SGX) chief regulatory officer Tan Boon Gin said at the briefing that the enhanced guidelines can help issue managers make better sense of the due diligence process under the bourse's new listing admission requirements rolled out last July.

"We now have a two-stage listing process. In the first part, we expect all the key issues to be teased out, followed by a more detailed review of the listing prospectus filed to us.

"The guidelines can help issue managers on how the listing requirements should be met. If key issues cannot be resolved in the first stage, a listing will not proceed. There will be saving of time and resources."

The ABS announcement came just a day after the SGX released the first bi-yearly report on firms suspended for a year or more. The report aims to improve transparency on SGX dealings with these firms.

While the industry and regulators continue to raise the bar for listing applicants and listed firms, observers do not think the tougher climate will deter potential listing applicants.

United Overseas Bank equity capital market head Khong Choun Mun said: "Many banks have constantly updated their due diligence, and most of what we see in the enhanced guidelines are already practised by the industry. In a sense they are not new, they just formalise the standards."

DBS capital markets head Tan Jeh Wuan said: "We welcome the new guidelines... They will increase investors' confidence in the quality of listings."


Firms suspended for a year or more

• Fibrechem Technologies

• Sino Techfibre

• PT Berlian Laju Tanker Tbk

• Sinopipe Holdings

• Eratat Lifestyle

• Fung Choi Media Group

• Fujian Zhenyun Plastics Industry

• Swee Hong

• JES International Holdings

• Changjiang Fertilizer Holdings

• Golden Energy And Resources

• Celestial Nutrifoods

• DMX Technologies Group

• Anwell Technologies

• China Milk Products Group

• China Hongxing Sports

• Sunmart Holdings

• Lankom Electronics

• China Sun Bio-Chem Technology Group

• China Paper Holdings


Correction note: An earlier version of this article mentioned that Ms Tay Toh Sin was OCBC Bank's corporate finance head. This has been corrected. We are sorry for the error.

A version of this article appeared in the print edition of The Straits Times on May 14, 2016, with the headline 'Firms eyeing listing face more checks'. Print Edition | Subscribe