Rights-issue limit relaxed to help firms raise funds

Singapore Exchange (SGX) headquarters at Shenton Way.
Singapore Exchange (SGX) headquarters at Shenton Way.PHOTO: ST FILE

The bourse operator is now allowing companies listed here to seek a general mandate to issue pro-rata renounceable rights of up to 100 per cent of their share capital - up from 50 per cent previously, the Singapore Exchange (SGX) said yesterday.

The more relaxed rights-issue limit is aimed at helping companies raise funds "expediently" for expansion activities or to use as working capital.

SGX chief regulatory officer Tan Boon Gin said the move to enhance this fund-raising avenue is intended to help listed companies respond to current global developments, including the emergence of disruptive forces and economic restructuring.

"We will closely monitor disclosures of companies tapping the market via enhanced rights issues. Investors should actively participate in the whole process, including taking part in the shareholder vote," Mr Tan said.

Company boards are advised to take advantage of such rights issues only if they have formed the view that the enhanced share issue mandate is in the interests of the company and its shareholders.

The board must also disclose why the rights issue is in the interest of the company, including the rationale for the discount at which the rights issue is priced.

In addition, if the rights issue takes place within one year of a previous equity-raising exercise by the company, the issuer must detail the equity funds raised within the past 12 months, the use of those proceeds and the intended use of any unused sum.

Companies must also make periodic announcements on the use of the proceeds as and when the funds are materially disbursed and provide a status report on the use of proceeds in the annual report.

Companies intending to raise funds using the enhanced rights-issue limit must first seek shareholder approval. The rights shares arising from the enhanced rights-issue limit must be listed and issued by Dec 31 next year.

A version of this article appeared in the print edition of The Straits Times on March 14, 2017, with the headline 'Rights-issue limit relaxed to help firms raise funds'. Print Edition | Subscribe