ST Explains: What are Singtel special discounted shares and how will changes affect holders?

SINGAPORE – Singaporeans who hold Singtel special discounted shares (SDS) will be able to hold and manage their shares directly if a Bill is passed.

Singtel Group said on April 7 that it has plans to transfer these shares from the Central Provident Fund (CPF) Board to the Central Depository (CDP) accounts of SDS holders.

A Bill was introduced in Parliament on April 7 to allow the CPF Board to work with Singtel, CDP and other stakeholders to facilitate the transfer, which is planned for Nov 21.

The SDS scheme was introduced in 1993 to give Singaporeans a stake in the nation’s economic success through share ownership.

If the Bill is passed, SDS holders with individual CDP accounts will have their Singtel SDS automatically transferred to their CDP accounts on Nov 21.

SDS holders who also own other Singtel ordinary shares will have both sets of shares consolidated in the same CDP account for easier management.

Those without individual CDP accounts will have their Singtel SDS transferred to a designated CDP account created in their name.

The designated CDP account is one that is used to hold and manage only Singtel SDS and its related entitlements. Dividends from shares in the designated CDP account will be paid to the SDS holder’s CPF Ordinary Account.

What are Singtel SDS?

Singtel SDS were issued in 1993 to eligible CPF members to encourage the public to own shares.

The shares were offered in two main tranches at a discount to the market for Singapore CPF members.

Singtel is the only company that has issued SDS in Singapore so far. Some 615,000 people hold Singtel SDS.

A median SDS holder owns 1,360 SDS at a total cost of around $2,000. These shares are worth about $6,800 as at April 1.

The median SDS holder today would have also received around $5,000 in cumulative dividends.

Why is the transfer being announced?

Singaporeans today are more savvy about share ownership. Of the 615,000 SDS holders, close to three in five have their own CDP accounts, Singtel said.

Having the shares in CDP accounts will allow shareholders to consolidate their holdings and better track and manage them.

It will also give Singtel more flexibility in carrying out corporate actions.

For those who want to sell their shareholdings, CPF withdrawal conditions will be waived for Singtel sale proceeds. Hence, SDS holders can withdraw the sale proceeds in cash, instead of retaining them in their CPF Ordinary Account.

This will take effect from April 8.

What do I need to do as an SDS holder?

By end-April, all SDS holders will receive a hard copy letter from CPF Board and Singtel informing them of their Singtel SDS holdings, the options available to them and relevant touchpoints if they require clarifications.

SDS holders can also log in to sds.singtel.com using Singpass to check if they have Singtel SDS.

For those who want to keep their SDS holdings, no action is required.

Those who wish to sell their Singtel SDS holdings can do so through the Phillip Securities’ website, SingPost branches or select SGX retail brokers.

They can then withdraw the sale proceeds in cash or retain them in their CPF Ordinary Account.

For those who want to receive the sale proceeds in cash, payment will be made to their registered bank account with the CPF Board within 14 business days from the date of an SDS holder’s sale instruction.

Those who sold their Singtel SDS between Jan 1, 2025, and April 7, 2026, and had their sale proceeds credited to their CPF accounts will be given a similar concession.

This means that CPF withdrawals will be waived for their Singtel SDS sale proceeds and they can write in to apply to withdraw their sale proceeds in cash.

SDS holders should also beware of scams.

If they receive a message, e-mail or QR code allegedly directing them to the SDS website, they should verify the URL of the website to ensure that it is the official SDS website at sds.singtel.com before performing any transactions.

What does this mean for Singtel shareholders?

Ms Carmen Lee, OCBC head of equity research, said she does not expect this to result in a strong flow of shares into the market as most of these investors have held on to their shares for an extremely long time.

She added that most investors are already “in the money”, thanks to the outperformance of Singtel shares, which are up 9.2 per cent year to date and reached a recent high of $5.27.

“Dividend yield is still decent at an estimated 3.7 per cent. For long-term holders, unless there are compelling personal reasons, we do not expect all the SDS holders to liquidate their positions because of this development,” she said.

Morningstar equity analyst Dan Baker said the number of shares potentially impacted are relatively small.

“Despite the prospect of a sudden cash unlock, Singtel management does not expect a disruptive market sell-off,” he said.

“Even if all SDS holders without existing CDP accounts decided to sell, the volume would represent a minor fraction of Singtel’s total outstanding shares and could be easily absorbed by standard daily trading volumes.”

Maybank Securities analyst Hussaini Saifee also agreed that there should not be a direct impact on Singtel shareholders in general.

“While this should increase free float and trading liquidity to some extent, Singtel did not face a liquidity issue to begin with,” he said.

“As such, we do not see this as a completely new source of liquidity.”