SGX's proposed review changes may hold IPO managers to higher standards

Issue managers must be independent from the firm listing on the mainboard.

The Singapore Exchange Regulation (SGX RegCo) is seeking market feedback on its proposed changes to its listing review process which will hold mainboard IPO managers more accountable for the the firms they help take public, an announcement revealed.

The Singapore Exchange (SGX) is proposing amendments to its Mainboard rules 111 and 112, and the introduction of Mainboard rule 112B to clearly set out the responsibilities of issue managers which include complying with the due diligence guidelines issued by the Association of Banks in Singapore or such other satisfactory processes and notifying the Exchange of relevant information in a timely manner including significant changes to corporate structure whether due to mergers and acquisitions (M&As), resignation of key personnel and the like.

“The proposal of a more efficient listings review process and enhancements in the regulation of issue managers are part of our efforts to support market development,” SGX RegCo CEO Tan Boon Gin said in a statement. “Market professionals have indicated to us that listing aspirants need shorter exposure to uncertainty in the macro environment during the listing process.”

In its proposed amendment, SGX also underlined how an issue manager must be independent of an applicant for a new listing regardless on whether it is an initial public offering, a listing by way of an introduction or a reverse takeover.

“Where there is more than one issue manager appointed for a new listing, at least one issue manager must be independent of the application,” the Exchange said. “The Exchange retains the discretion to deem an issue manager independent or otherwise.”

SGX pointed to how issue managers could have other relationships with the listing applicant including having an ongoing banking relationship or having an interest in equity securities of the listing applicant which could present potential conflicts in the manager’s responsibilities to provide impartial advice.

A proposed practice note will be set out the circumstances and relevant threshold limits that will act as guidance on the assessment of an issue manager’s independence, the announcement also revealed.

If implemented, the rule changes will take effect in Q1 of 2019. Market consultation is open until 28 December and is available on SGX RegCo’s website.