SGX raises transaction disclosure requirement

From Dec 1, privy list a must for deals that can have an impact on a firm or its share price

The SGX said while the list will be widened from Dec 1, companies will have the freedom to decide the level of details they include.
The SGX said while the list will be widened from Dec 1, companies will have the freedom to decide the level of details they include.ST FILE PHOTO

The rule requiring companies to keep a list of certain transactions which contain details of parties who are privy to the deal so the Singapore Exchange can undertake more efficient investigations will soon be widened.

Currently, the privy list is needed only for what are known as significant transactions, such as takeovers or major acquisitions.

But from Dec 1, the rule will apply to all material transactions, the bourse announced yesterday.

Material transactions are those that can have a tangible impact on a company or its share price, including significant transactions such as acquisitions, or smaller events such as loss of a major contract.

The list, which was implemented in March last year, will remain confidential, with only the SGX enabled to request it for regulatory purposes, chiefly insider-trading investigations.

And while the rule will be broadened from Dec 1, companies will have the freedom to decide the level of details they include.

"Due to concerns about the privacy of personal data, companies will be given the flexibility of deciding what information the list will contain. More personal data can be provided at a later stage," the SGX said.

The Securities Investors Association (Singapore) - Sias - which was consulted by the SGX on the new requirement, welcomes the initiative.

Sias chief executive David Gerald told The Straits Times: "Any effort to reduce the instances of regulatory breaches will certainly benefit investors."

Activist investor Mano Sabnani backed the move, adding that the SGX has been on the right track in improving its regulatory regime, but there is still room for further enhancements.

"One thing that I hope to see is for the corporate governance code to move towards becoming actual listing rules rather than just guidelines, which some companies have simply sidestepped," he added.

The SGX also announced yesterday that it will scrap the requirement that asks listed companies or their controlling shareholders to privately notify the bourse of significant transactions.

The change takes effect from Dec 1.

"Feedback received showed an overall lack of consensus on the right timing for such private notifications," the SGX noted.

Mr Robson Lee, a partner at law firm Gibson, Dunn & Crutcher, said the notification requirement, which was also rolled out in March last year, was impractical and the SGX was right to drop it.

"Currently, parties involved in a negotiation that may lead to merger and acquisition transactions are expected to notify SGX immediately. But these negotiations usually take a long time, with multiple start-stops along the way," Mr Lee said.

Mr Gerald noted that amid the new rules, it is still important for retail investors to exercise due diligence. "Ultimately, buyers beware remains the key discipline. You should not approach an investment expecting the laws to protect you."

A version of this article appeared in the print edition of The Straits Times on October 28, 2015, with the headline 'SGX raises transaction disclosure requirement'. Subscribe