SGX raises pro-rata renounceable rights issue cap

It will now be 100% of the share capital.

Singapore Exchange (SGX) has enabled companies to seek a general mandate for an issue of pro-rata renounceable rights shares of up to 100% of the share capital, up from 50% previously.

The enhanced rights issue limit is aimed at helping companies raise funds expediently for expansion activities or working capital.

SGX chief regulatory officer Tan Boon Gin said the enhancement of the fundraising avenue is to recognise that listed companies have to be responsive 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,” said Tan.

As part of the change, the boards of companies proposing such a rights issue must have formed the view that the enhanced share issue mandate is in the interests of the issuer and its shareholders. More so, firms 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.

It is also important to note that companies intending to raise funds using the enhanced rights issue limit must seek shareholder approval either via a specific vote or through an enhanced share issue mandate at its annual general meeting. The rights shares arising from the enhanced rights issue limit must be listed and issued by 31 December 2018.

The board will also be required to disclose the reason why the rights issue is in the interest of the company including the rationale for the discount at which the rights issue is priced. If the rights issue takes place within one year from the company’s previous equity fund-raising, the issuer must detail the equity funds raised within the past 12 months, the use of those proceeds, and the intended use of any unutilised amount.