ABS toughens due diligence guidelines for future SGX listings

It aims to improve the quality of issuances.

The Association of Banks in Singapore (ABS) has enhanced the standard of its guidelines for due

diligence activities its member banks carry out on all companies wanting to list on Singapore Exchange (SGX).

Some of the major enhancements to the guidelines include better quality of the board and key management, the type of corporate structure, the business model, the financial position and liquidity of the company.

Under the new guidelines, banks are required to query potential issuers about recent resignations among management, directors and controlling shareholders.

The scope of checks and enquiries should extend beyond on-site visits to material production facilities and properties including material assets which may include inventory and biological assets such as livestock and crop.

Another enhancement includes the review of cash deposits. The new guidelines stipulate that there should be checks on whether there are restrictions on remittances of cash from the issuer’s overseas subsidiaries to the relevant holding company and whether there are any charges or encumbrances on such cash deposits.

The amounts of taxable income and revenue or cost declared in the tax filings should also be reviewed for consistency with the issuer’s audited financial statements, and whether the amounts of taxes paid may indicate any irregularities.

Lastly, any unnecessarily complex group structures should be questioned as it could raise suspicion on the legitimacy of the issuer’s activities.

“The newly-enhanced ABS: Listings Due Diligence Guidelines formalise best practices already adopted by many of our members. They are extremely comprehensive, reflecting the thoroughness and importance of due diligence for IPOs and RTOs or reverse takeovers. The improvements made to the Guidelines will help Singapore draw more quality listings and grow investors’ trust and participation in our market,” said Ong –Ang Ai Boon, Director ABS said.