More firms feared to join SGX watch-list as minimum trading price rule gains steam

There are currently 36 firms on the watch-list.

The Securities Investors Association (Singapore) warned that the SGX watch-list is expected to grow as the SGX’s minimum trading price rule gains steam.

The rule, which formally kicked in last month, requires firms to have a minimum trading price of $0.20. The SGX will give affected firms a one-time transition period of 12 months from the date of introduction of the minimum trading price requirement, after which they will be placed on the watch-list.

“In view of the recent SGX announcement to have a minimum trading price of $0.20, we expect that some companies would have difficulty meeting this criteria, and expect the watch-list to grow,” stated David Gerald , CEO of SIAS.

There are currently 36 companies on the SGX watch-list, nine of which were added within the first three months of 2015.

“It is our experience that not all retail investors seem to understand the significance of a company being put under it. They are not paying sufficient or any attention to these companies,” Gerald noted.

“When a company is unable to comply with SGX’s requirements to exit the watch-list, then the company faces suspension and forced delisting, by which time it is too late for minority shareholders. The shares would have lost value. It is usually at this stage that minority shareholders rush to SIAS for help. Minority shareholders must appreciate that the whole purpose of putting a company on the watch-list is to alert shareholders to pay more attention to such companies and to seek accountability from the Board and management on how the company plans to get out of the watch-list,” he added.