SGX suspends watch-list entry, raises share issue limit

SINGAPORE Exchange Regulation (SGX RegCo) will suspend entry into its financial watch-list and enable faster fund raising efforts in light of the difficult economic climate during the Covid-19 outbreak.

"Covid-19 has caused a drastic global deterioration in business conditions for all companies, with many experiencing significant loss of revenue and profitability. Share prices of companies have also fallen, translating to sharp declines in market capitalisation. Companies are also likely to face liquidity crunch at this time as banks are tightening credit," SGX RegCo said on Wednesday.

SGX operates a financial watch-list and places companies on the list to compel them to turn around their financial performance after 3 years of losses and when their market capitalisations fall below S$40 million.

In consultation with the Monetary Authority of Singapore, SGX RegCo felt that placing issuers on the financial watch-list during this trying period might cause "undue prejudice to companies in navigating the business challenges in this climate".

"Accordingly, SGX RegCo will provisionally suspend the half-yearly reviews on the first market days of June 2020 and December 2020 to place issuers on the financial watch-list. The suspension is to enable our issuers to focus on meeting the current business and economic challenges and dealing with any resultant liquidity crunch," SGX RegCo said.

Companies that meet the exit criteria under the listing rules will continue to be able to exit the watch-list.

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To expedite fund raising in light of the liquidity crunch, mainboard issuers are able to seek a general mandate for an issue of pro-rata shares and convertible securities of up to 100 per cent of their share capital. This is up from compared to 50 per cent previously.

The enhanced share issue limit excludes treasury shares and subsidiary holdings in each class, and is effective from April 8, 2020 until Dec 31, 2021.

SGX RegCo stressed that the limit on the total number of shares and convertible securities issued other than on a pro-rata basis remains at not more than 20 per cent. Shareholders' approvals must be obtained at an annual general meeting or extraordinary general meeting.