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Singapore Exchange Limited

CONSULTATION PAPER

Proposed Amendment To The Listing Rules

30 May 2005

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Singapore Exchange Limited

RESPONDING TO THIS CONSULTATION PAPER

SGX invites comments on this Consultation Paper between 30 May and 1 July 2005 via:Ø Electronic mail: Ø Facsimile: Ø Mail: [email protected] (65) 6535-1475 Listing Manual Review Issuer Regulation Risk Management and Regulation Group Singapore Exchange Limited 2 Shenton Way #19-00 SGX Centre 1 Singapore 068804

Respondents to this Consultation Paper are asked to identify the specific proposal or listing rule that they are commenting on. SGX reserves the right to publish responses received and to change the proposals.

This Consultation Paper is available for download from the SGX's website at www.sgx.com

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CONTENTS

Introduction ........................................................................... 1. Background 2. Scope of the Consultation Paper 3. Identification of Amendments 4. References Extract of the proposals................................................................ Details of the proposals................................................................. 1. Guide for Operating and Financial Review 2. Initial Listing Requirements 3. Continuing Listing Obligations 4. Annual General Meeting and Annual Report 5. Debt Securities 6. Miscellaneous Amendments Annexure A: Proposed amendments to the listing rules.........................

3 3 3 3 3 4 8 8 10 15 18 21 22 25

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INTRODUCTION

1. 1.1

BACKGROUND This Consultation Paper sets out proposed amendments to the listing rules. SGX invites comments on the proposals in this paper. The proposals may change in response to comments, or otherwise. Amendment of the listing rules is subject to the approval of the Monetary Authority of Singapore ("Authority"). SCOPE OF THE CONSULTATION PAPER This paper proposes amendments to the listing rules to support recommendations made by the Council on Corporate Disclosure and Governance ("CCDG"). Other key areas include enhancements of corporate governance standards, expansion of the role of intermediaries and clarifications with respect to requirements on annual general meetings and debt securities. Details of the proposals are provided on pages 8 to 24. IDENTIFICATION OF AMENDMENTS The listing rules (reflecting the proposals as if implemented) are reproduced in Annexure A. The purpose of amendment is also given. The method used to identify the proposed amendments is as follows:Ø Ø Additions are underlined. Deletions are struck through.

1.2

2. 2.1 2.2

2.3 3. 3.1

4. 4.1

REFERENCES References to "listing rules" or "Rule" mean the listing rules that came into effect on 1 July 2002 and as amended from time to time.

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EXTRACT OF THE PROPOSALS

Part 1.

Guide for Operating and Financial Review Proposal 1: A practice note will be issued to publish the OFR Guide. In addition, Rule 1207(4) will be amended to encourage issuers to follow the OFR Guide when preparing the operating and financial review in their annual reports.

Part 2.

Initial Listing Requirements Proposal 2: Rule 246 will be amended to require the following confirmations to be submitted in connection with a new listing application: (i) the issue manager to provide a confirmation the directors of an applicant have been informed of their obligations under the listing rules as well as the relevant Singapore laws and regulations; and (ii) the listing applicant to provide a confirmation that it has obtained all requisite approvals, and is in compliance with laws and regulations, that would materially affect its business operations. Practice Note 2.1 will be amended to give the Exchange power to require the appointment of a compliance adviser for:(i) selected listing applicants; (ii) an issuer which had breach the listing rules, particularly when such breaches are repeated or give rise to concerns about the issuer's compliance arrangements. Rule 221 will be amended to require a foreign issuer to have:(i) at least two independent resident directors; and (ii) either of the following:(a) a qualified person in Singapore to advise the issuer on Singapore laws and assist directors with respect to obtaining company information. This person could be the compliance adviser (for issuers required by the Exchange to appoint a compliance adviser); or

Proposal 3:

Proposal 4:

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(b) (c) Proposal 5:

another director resident in Singapore (in addition to the two independent resident directors required by (i) above) ; or an officer in executive capacity resident in Singapore.

A new Rule 720 will be introduced to require all issuers to have the minimum number of independent directors prescribed by Rule 210(5) on a continuing basis. In addition, Rule 720 will require a foreign issuer to have the minimum number of independent resident directors (as well as a Singapore adviser, another resident director or a resident executive, as applicable) prescribed by Rule 221 on a continuing basis. As a transitional arrangement, existing listed issuers which do not currently satisfy Rules 210(5) or 221 will be given a grace period of 2 years to comply with Rule 720. Rule 113 will be amended to codify the existing requirement for an issuer to include a prominent statement to identify the sponsor of its initial public offering in all announcements made by it and all information documents issued by it to shareholders. It is also proposed that the sponsorship disclosure requirement be extended from one year to two years after listing. Rule 1015 will also be amended to codify the existing sponsorship disclosure requirement for reverse takeovers. It is also proposed that the sponsorship disclosure requirement be extended from one year to two years after completion of the transaction. Rule 210(5)(a) will be amended to codify the existing requirement for an issuer to announce via SGXNET, for each director, whether the person has prior experience (and what) or, if the person is a new director, whether the person has undertaken training in the roles and responsibilities of a director of a listed company. The announcement must be made before the listing of the issuer's securities.

Proposal 6:

Proposal 7:

Proposal 8:

Part 3.

Continuing Listing Obligations Proposal 9: The Exchange seeks comments on the proposal to amend Rule 705 to require an issuer's directors to provide a confirmation that, to the best of their knowledge, nothing has

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come to the attention of the board of directors which may render the interim financial results to be false or misleading. Proposal 10: The Exchange seeks comments on the proposal to amend Rule 710 to require a confirmation from the Board and CEO that:(i) responsibilities for staffing internal control functions are explicitly assigned; (ii) procedures exist for assessing the effectiveness of the company's internal controls; (iii) channels for reporting significant risk and internal control matters to the Board and chief executive officer are clearly specified; and (iv) nothing has come to the attention of the Board and chief executive officer with regards to internal controls that would have a materially adverse effect on the company. Proposal 11: Rule 1007 will be amended so that where the disposal of an issuer's interest in a subsidiary is undertaken in conjunction with an issue of shares by that subsidiary, the relative figures in Rule 1006 must be computed based on the disposal and the issue of shares. Part 4. Annual General Meeting and Annual Report Proposal 12: Rule 707 will be amended to clarify that the timeframe for the holding of annual general meeting (as set out in Paragraph 10 of Appendix 2.2) applies to both Singapore and foreignincorporated issuers. Proposal 13: Rule 717 will be amended such that an issuer does not need to disclose in its annual report the names of accounting firms for Singapore-incorporated subsidiaries that are not significant. Such disclosure will only be required for subsidiaries and associated companies (whether Singapore- or foreignincorporated) that are significant. Part 5. Debt Securities Proposal 14: Rule 309(4) will be amended such that where an issue of debt securities is offered (in whole or in part) to retail investors, the post-listing financial results of the issuer must be prepared in accordance with approved accounting standards.

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Part 6.

Miscellaneous Amendments Proposal 15: To rationalize and consolidate the provisions relating to dealings in securities, Rule 710(2) and the Best Practices Guide will be deleted while Rule 1207 will be amended to require an issuer to state whether it has complied with the best practices on dealings in securities recommended by the Exchange. Proposal 16: Appendix 7.1 (Paragraph 21) will be amended to clarify that an issuer must disclose material information when it arises, even if during trading hours. The issuer is expected to request a trading halt to facilitate the dissemination of the material information during trading hours. Proposed 17: The listing procedures prescribed by Transitional Practice Notes 2 and 3 will be incorporated in Rules 243 and 244 (for equity securities) and Rules 310 and 311 (for debt securities), respectively. Transitional Practice Notes 2 and 3 will be deleted. Proposal 18: A new Rule 887 will be introduced to set out the requirements with respect to placement of new units by REITs.

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DETAILS OF THE PROPOSALS

PART I GUIDE FOR OPERATING AND FINANCIAL REVIEW Council on Corporate Disclosure and Governance 1.1 On 15 January 2004, CCDG issued a guide for the operating and financial review ("OFR Guide") for listed companies. The OFR Guide helps listed companies prepare the operating and financial review in their annual report. CCDG said that the objective of the operating and financial review in annual reports is to give users an understanding of the company by providing an analysis of the company's businesses as seen through the eyes of the directors and management. The OFR facilitates assessment of the company's business and business objectives, its principal drivers of performance, the dynamics of the business, and the performance and financial condition of the company. Please refer to www.ccdg.gov.sg for the full details on the OFR Guide. CCDG Recommendations and the Listing Rules 1.4 CCDG recommended that:(i) adherence to the OFR Guide by listed companies would be voluntary; and (ii) the OFR Guide be included as a practice note in the SGX-ST Listing Manual. Listing Rule 1207(4) requires an issuer's annual report to contain, amongst other things, a review of the operating and financial performance of the issuer and its principal subsidiaries in the last financial year and, an analysis of the business outlook. While compliance with the OFR Guide is voluntary, the Exchange encourages issuers to adopt the best practices set out in the OFR Guide when providing the information required by Listing Rule 1207(4). In line with CCDG's recommendation, the Exchange will issue a practice note to publish the OFR Guide.

1.2

1.3

1.5

1.6

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1.7

In addition, Rule 1207(4) will be amended to encourage issuers to follow the OFR Guide when preparing the operating and financial review in their annual reports.

Proposal 1: A practice note will be issued to publish the OFR Guide. In addition, Rule 1207(4) will be amended to encourage issuers to follow the OFR Guide when preparing the operating and financial review in their annual reports.

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PART 2 INITIAL LISTING REQUIREMENTS New Listing Application 2.1 Rule 246 requires an issue manager, when submitting a listing application, to provide confirmations that:(a) (b) (c) (d) 2.2 having made due and careful enquiry, the issuer satisfies the admission requirements; all documents required by the listing rules to be included in the application has been or will be supplied to the Exchange; any other matters known to the issue manager which should be taken into account have been disclosed in the prospectus or otherwise in writing; a nd if any further information becomes available before listing, it will inform the Exchange.

Apart from the above confirmations, amendment is proposed to Rule 246 to require the issue manager to provide a confirmation that the directors of an applicant have been informed of their obligations under the listing rules as well as the relevant Singapore laws and regulations. Amendment is also proposed to Rule 246 codify the Exchange's current practice of requiring a listing applicant to provide a confirmation that it has obtained all requisite approvals, and is in compliance with laws and regulations, that would materially affect its business operations.

Proposal 2: Rule 246 will be amended to require the following confirmations to be submitted in connection with a new listing application:(i) the issue manager to provide a confirmation the directors of an applicant have been informed of their obligations under the listing rules as well as the relevant Singapore laws and regulations; and (ii) the listing applicant to provide a co nfirmation that it has obtained all requisite approvals, and is in compliance with laws and regulations, that would materially affect its business operations.

2.3

Compliance Adviser 2.4 Small to medium enterprises and overseas companies who are new to Singapore rules and regulations, may encounter difficulties in making the transition to a publicly listed company on SGX. While these companies may have adopted the necessary corporate

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governance structure and practices, they may not have acquired the essential experience to properly implement the governance practices. For such companies, it may be necessary to have a compliance adviser to advise the board on the applicable rules and regulations. 2.5 The Exchange will, if it thinks appropriate, require an issuer to appoint a compliance adviser. Nevertheless, the Exchange recognizes that the appointment of such compliance adviser would have cost implications for the issuers. For this reason, the Exchange will only require the appointment of a compliance adviser on a selective and "need-to" basis. This will prevent unnecessary increase in the compliance costs for companies which are already equipped to fulfill their obligations. Practice Note 2.1 will be amended to give the Exchange power to require the appointment of compliance adviser for selected listing applicants as well as listed companies which have breached the listing rules, particularly if such breaches are repeated or give rise to concerns about the issuer's compliance arrangements. This proposal is consistent with the practices in Hong Kong and UK. The Hong Kong Exchanges and Clearing Limited ("HKEx") requires all newly listed companies to appoint a compliance advisor for a pre-determined period. HKEx also has the power to direct the appointment of a compliance adviser when a listed company breaches the listing rule.

Proposal 3: Practice Note 2.1 will be amended to give the Exchange power to require the appointment of a compliance adviser for:(ii) selected listing applicants; (iii) an issuer which had breach the listing rules, particularly when such breaches are repeated or give rise to concerns about the issuer's compliance arrangements.

2.6

2.7

Board Composition 2.8 Rule 210(5) requires an issuer's board to have at least two non-executive directors who are independent and free of any material business or financial connection with the issuer. In addition, Rule 221 requires a foreign issuer to have at least two independent directors, at least one of whom must be resident in Singapore. To ensure sufficient local representation on the board of a foreign issuer and the ability to take steps promptly and effectively in the event of a problem, it is proposed that Rule 221 be amended to require a foreign issuer to have:(i) at least two independent resident directors; and

2.9 2.10

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(ii)

either of the following:(a) a qualified person in Singapore to advise the issuer on Singapore laws and assist directors with respect to obtaining company information. This person could be the compliance adviser (for issuers required by the Exchange to appoint a compliance adviser); or (b) another director resident in Singapore (in addition to the two independent resident directors required by (i) above) ; or (c) an officer in executive capacity resident in Singapore.

Proposal 4: Rule 221 will be amended to require a foreign issuer to have:(i) at least two independent resident directors; and (ii) either of the following:(a) a qualified person in Singapore to advise the issuer on Singapore laws and assist directors with respect to obtaining company information. This person could be the compliance adviser (for issuers required by the Exchange to appoint a compliance adviser); or (b) another director resident in Singapore (in addition to the two independent resident directors required by (i) above) ; or (c) an officer in executive capacity resident in Singapore.

2.11

Rules 210(5) and 221 are initial and not continuing listing requirements. To ensure that issuers continue to satisfy the requirements of Rules 210(5) and 221 after listing, it is proposed that Rules 210(5) and 221 be applied as continuing listing obligations. A new Rule 720 will be introduced to require issuers to comply with Rules 210(5) and 221 on a continuing basis. There may be existing listed issuers which do not currently satisfy the requirements in Rules 210(5) or 221. As a transitional arrangement, such issuers will be given a grace period of 2 years to comply with the new requirements.

Proposal 5: A new Rule 720 will be introduced to require all issuers to have the minimum number of independent directors prescribed by Rule 210(5) on a continuing basis. In addition, Rule 720 will require a foreign issuer to have the minimum number of independent resident directors (as well as a Singapore adviser, another resident director or a resident executive, as applicable) prescribed by Rule 221 on a continuing basis. As a transitional arrangement, existing listed issuers which do not currently satisfy Rules 210(5) or 221 will be given a grace period of 2 years to comply with Rule 720.

2.12

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Sponsorship Disclosure 2.13 Rule 111 states that an applicant must appoint an issuer manager who will act as sponsor for its listing on the Exchange. Rule 113 says that the sponsorship ends with the listing, although the rule adds that the Exchange recommends that the applicant retains the sponsor's services after listing. In Practice Note 2.1, the Exchange requires an issuer, regardless of whether it continues with the sponsorship after listing, to include a prominent statement to identify the sponsor of its initial public offering in all announcements made by it and all information documents issued by it to shareholders ("sponsorship disclosure requirement"). This requirement applies for a period of one year after listing. Amendment is proposed to Rule 113 to codify the sponsorship disclosure requirement. In addition, it is proposed that the sponsorship disclosure requirement be extended from one to two years. This is to ensure that issue managers, in safeguarding their reputation, will exercise greater care in sponsoring an issuer as they will be associated with the issuer for a longer period of time.

Proposal 6: Rule 113 will be amended to codify the existing requirement for an issuer to include a prominent statement to identify the sponsor of its initial public offering in all announcements made by it and all information documents issued by it to shareholders. It is also proposed that the sponsorship disclosure requirement be extended from one year to two years after listing.

2.14

2.15

2.16

Paragraph 6.3 of Practice Note 2.1 says that the sponsorship disclosure requirement also applies to reverse takeovers. Amendment is proposed to Rule 1015 to codify the aforesaid requirement. In addition, it is proposed that the sponsorship disclosure requirement be extended from one year to two years after completion of the transaction.

Proposal 7: Rule 1015 will also be amended to codify the existing sponsorship disclosure requirement for reverse takeovers. It is also proposed that the sponsorship disclosure requirement be extended from one year to two years after completion of the transaction.

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Director Disclosure 2.17 2.18 Rule 210(5) says that directors (and executive officers) should have appropriate experience and expertise to manage the group's business. In Practice Note 2.1, the Exchange encourages new directors (who do not have prior experience as a director of a public listed company in Singapore) to undertake training in the roles and responsibilities of a director of a listed company. Practice Note 2.1 also says that, as part of pre-quotation required of an issuer, a statement must be released on SGXNET identifying, for each director, whether the person has prior experience (and what) or, if the person is a new director, whether the person has undertaken training in the roles and responsibilities of a director of a listed company. Amendment is proposed to Rule 210(5)(a) to codify the above director disclosure requirement.

Proposal 8: Rule 210(5)(a) will be amended to codify the existing requirement for an issuer to announce via SGXNET, for each director, whether the person has prior experience (and what) or, if the person is a new director, whether the person has undertaken training in the roles and responsibilities of a director of a listed company. The announcement must be made before the listing of the issuer's securities.

2.19

2.20

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PART 3 CONTINUING LISTING OBLIGATIONS

Interim Financial Results 3.1 Currently, the Companies Act requires companies to report annual financial accounts and directors to certify that the company's annual financial accounts are true and fair. There are no similar obligations on directors for interim financial results. To strengthen accountability for interim financial results, the Exchange is considering a proposal to require an issuer's directors to provide a confirmation that, to the best of their knowledge, nothing has come to the attention of the board of directors which may render the interim financial results to be false or misleading. The confirmation may be signed by 2 directors on behalf of the board of directors. This is similar to the approach in Companies Act for directors' statement on annual accounts. The requirement for a "negative assurance" confirmation for interim results would not trigger an obligation to audit the interim results and should not increase compliance costs. It is also less onerous than requiring the directors to certify that the accounts are true and fair. The Exchange would like to invite comments from the public before it makes a determination on the adoption of the proposal as well as the form of the final rule.

Proposal 9: The Exchange seeks comments on the proposal to amend Rule 705 to require an issuer's directors to provide a confirmation that, to the best of their knowledge, nothing has come to the attention of the board of directors which may render the interim financial results to be false or misleading.

3.2

3.3

3.4

3.5

Internal Control System 3.6 3.7 For the proper running of a listed company, it is important for the company to have adequate internal controls. Various jurisdictions require some form of assurance from a company's key officers on its internal controls. Under the US Sarbanes-Oxley Act, the chief executive officer ("CEO") and the chief financial officer ("CFO") are required to certify that they are responsible for maintaining internal controls of the company and present the management's assessment of effectiveness of internal controls, which is attested to by the external auditor. Australia, on the other hand, adopts a non-mandatory approach.

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The Australian Stock Exchange's "Principles of Good Corporate Governance and Best Practice Recommendations" recommends that the CEO and CFO provide an internal certification on effectiveness of internal controls and risk management to the Company's directors. 3.8 The Exchange is mindful that while an assurance on the adequacy of internal controls is useful, it should be suited to local conditions and be balanced against higher compliance costs. The Exchange is considering a proposal to require an issuer's Board and CEO to provide a "negative assurance" confirmation on the issuer's internal controls. Such a proposal would be less onerous than one which requires broad certification on the effectiveness of internal controls, imposes external audit requirement and attracts severe criminal penalties if breached. Essentially, the proposal will require the Board and CEO to confirm the following:(i) (ii) (iii) (iv) responsibilities for staffing internal control functions are explicitly assigned; procedures exist for assessing the effectiveness of the company's internal controls; channels for reporting significant risk and internal control matters to the Board and chief executive officer are clearly specified; and nothing has come to the attention of the Board and chief executive officer with regards to internal controls that would have a materially adverse effect on the company.

3.9

3.10

3.11

The Exchange would like to invite comments from the public before it makes a determination on the adoption of the proposal as well as the form of the final rule.

Proposal 10: The Exchange seeks comments on the proposal to amend Rule 710 to require a confirmation from the Board and CEO that:(i) responsibilities for staffing internal control functions are explicitly assigned; (ii) procedures exist for assessing the effectiveness of the company's internal controls; (iii) channels for reporting significant risk and internal control matters to the Board and chief executive officer are clearly specified; and (iv) nothing has come to the attention of the Board and chief executive officer with regards to internal controls that would have a materially adverse effect on the company.

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Dilution of Interest in a Principal Subsidiary 3.12 Rule 805(2) requires an issuer to obtain shareholders approval if its principal subsidiary issues shares, convertible securities or options that will or may result in:(i) (ii) 3.13 the principal subsidiary ceasing to be a subsidiary of the issuer; or a percentage reduction of 20% or more of the issuer's equity interest in the principal subsidiary.

The objective of Rule 805(2) is to ensure that shareholders' approval is sought for any material dilution of an issuer's interest in its principal subsidiary. The latter normally accounts for a significant proportion of the issuer's profits. There may be instances where an issuer's interest in its principal subsidiary is diluted in ways other than issue by the subsidiary. For example, if a principal subsidiary issues new shares in an IPO (resulting in 15% dilution) and at the same time, the issuer sells down part of its interest as vendor shares in the IPO (resulting in another 15% dilution), shareholders' approval will not be required as the dilution from the issue of new shares by the subsidiary is only 15%. However, it may be argued that shareholders' approval should be required as the two separate instances of dilution, taken together, will result in the issuer's interest in the principal subsidiary being diluted to a material extent. Chapter 10 will also not apply to the issue of new shares by the principal subsidiary although it will apply to the disposal of vendor shares. Thus, even though the total dilution may be material, no shareholders approval is required by Chapter 10. To deal with the above situation, it is proposed that the materiality tests under Chapter 10 be applied to the total dilution effect on the issuer arising from the issue of new shares and the disposal of vendor shares. The amendment will be effected in Rule 1007.

Proposal 11: Rule 1007 will be amended so that where the disposal of an issuer's interest in a subsidiary is undertaken in conjunction with an issue of shares by that subsidiary, the relative figures in Rule 1006 must be computed based on the disposal and the issue of shares.

3.14

3.15

3.16

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PART 4 ANNUAL GENERAL MEETING AND ANNUAL REPORT

Annual General Meeting 4.1 4.2 Appendix 2.2 of the Listing Manual sets out the provisions which must be included in an issuer's Articles of Association or other constituent documents ("Articles"). In the last round of listing rule amendments, Paragraph 10 of Appendix 2.2 was amended such that the interval between the close of an issuer's financial year and the date of its annual general meeting ("AGM") must not exceed:(a) (b) 4.3 five months in the case of an issuer whose financial year commences before 1 January 2003; four months in the case of an issuer whose financial year commences on or after 1 January 2003.

The amendment was made to align Paragraph 10 of Appendix 2.2 with Section 201 of the Companies Act. Section 201 says that that a public company listed or quoted on a securities exchange must lay at its annual general meeting a profit and loss account for the period since the preceding account, made up to a date not more than 4 months before the date of the meeting. The amendment created an uncertainty as to whether the new requirements apply to foreign issuers given that the Companies Act does not apply. The listing rules only require an issuer's Articles to be made consistent with all the prevailing listing rules at the time it decides to amend its Articles. To make it clear that the timeframe for holding AGMs applies to all issuers regardless of the country of incorporation, it is proposed that Rule 707 be amended to reflect the requirements in Paragraph 10 of Appendix 2.2.

Proposal 12: Rule 707 will be amended to clarify that the timeframe for the holding of annual general meeting (as set out in Paragraph 10 of Appendix 2.2) applies to both Singapore and foreign-incorporated issuers.

4.4

4.5

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Disclosure of Names of Accounting Firms in Annual Report 4.6 Rule 717 requires an issuer to disclose in the annual report the names of the accounting firms for the following:(i) (ii) 4.7 Singapore-incorporated subsidiaries and significant associated companies; and Significant foreign-incorporated subsidiaries and associated companies.

The Exchange has received feedback that the requirement to disclose the names of the accounting firms for all Singapore-incorporated subsidiaries (regardless of their significance) is cumbersome, particularly if the issuer has numerous Singaporeincorporated subsidiaries. This requirement tends to result in the disclosure of an inordinate amount of detail that is not significant. The objective of Rule 717 is to allow investors to assess the suitability of the accounting firms appointed for an issuer's subsidiaries. To make the rule less cumbersome, it is proposed that Rule 717 be amended such that an issuer does not need to disclose in its annual report the names of accounting firms for Singaporeincorporated subsidiaries that are not significant. Disclosure will only be required for subsidiaries and associated companies (whether Singapore- or foreign-incorporated) that are significant.

Proposal 13: Rule 717 will be amended such that an issuer does not need to disclose in its annual report the names of accounting firms for Singapore-incorporated subsidiaries that are not significant. Such disclosure will only be required for subsidiaries and associated companies (whether Singapore- or foreign-incorporated) that are significant.

4.8

Participation at Shareholder Meeting 4.9 The Exchange has received feedback that there is an increasing demand from both institutional and individual investors to allow them to pa rticipate in the shareholder meetings of companies in which they own a beneficial interest through shares held by nominee companies. However, as pointed out in the Consultation Paper on Proposed Revisions to the Code of Corporate Governance issued by the CCDG in December 2004:(i) (ii) investors who hold shares through nominee companies are often not able to attend shareholder meetings; institutional investors are not able to be represented at shareholder meetings of companies because the fund managers who represent them are unable to participate thereat,

4.10

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due in part to restrictions on the number of proxies permitted to be appointed by members of the company who are nominee companies. These restrictions are commonly found in the articles of association of listed companies. 4.11 CCDG has proposed that companies be encouraged to amend their articles to avoid imposing a limit on the number of proxies so that shareholders who hold shares through nominees can attend shareholder meetings as proxies. Section 181(1)(b) of the Companies Act provides that a shareholder of a company cannot appoint more than two proxies to attend and vote at the same meeting unless the articles of the company state otherwise. The Act does not require companies to allow more than two proxies for each member but permit the same if the company's articles so allow. The Exchange seeks comment on whether it should require the articles of an issuer to allow for the issuance of an unrestricted number of proxy forms to shareholders such that both individual investors who hold shares through nominee companies as well as representatives from institutional investors may attend at the meetings and participate in the voting. No amendment is proposed to the listing rules for the time being, p ending the conclusion of the consultation by CCDG and public feedback on the above.

4.12

4.13

4.14

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PART 5 DEBT SECURITIES

Listing of Debt Securities 5.1 Typically, issuers offer debt securities solely to sophisticated and institutional investors (as defined under section 274 and 275 of the Securities and Futures Act 2001("SFA")). Such offers can be made without a prospectus and consequently, they need not comply with the accounting standard requirements that apply to offers that must be made with a prospectus. There are also issues that include a portion that is offered to retail investors. Under the SFA, when issuers offer debt securities to retail investors, the financial statements included in their prospectuses must comply with prescribed accounting standards (Singapore Financial Reporting Standards, International Financial Reporting Standards, US Generally Accepted Accounting Principles or such other standards as may be approved by the Authority). However, there is no listing rule to require the issuers to observe the same accounting standards when they do their periodic reporting after listing. For retail investors' protection and to be in line with the SFA prospectus requirements, it is proposed that where an issue of debt securities is offered, in part or full, to retail investors, the post-listing financial results of the issuer must be prepared in accordance with approved accounting standards. This amendment will be effected in Rule 309(4).

Proposal 14: Rule 309(4) will be amended such that where an issue of debt securities is offered (in whole or in part) to retail investors, the post-listing financial results of the issuer must be prepared in accordance with approved accounting standards.

5.2

5.3

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PART 6 MISCELLANEOUS AMENDMENTS

Dealings in Securities 6.1 6.2 6.3 Currently, the requirements and practices on dealings in securities by an issuer and its officers are found in Rule 710(2) and the Best Practices Guide ("BPG"). Rule 710(2) requires an issuer to state in its annual report whether and how it has complied with the section on dealings in securities in the BPG. The BPG provides guidance on dealings in securities by a listed issuer and its officers which was previously governed by the Securities Industry Act. The Security Industry Act was repealed in October 2001 and the laws on insider trading are now found in the Securities and Futures Act 2001. In particular, the BPG recommended the following best practices:(i) Each listed issuer should devise and adopt its own internal compliance code to provide guidance to its officers with regard to dealing by the listed issuer and its officers in its securities. An officer should not deal in his company's securities on short-term considerations. A listed issuer and its officers should not deal in the listed issuer's securities during the period commencing two weeks before the announcement of the company's financial statements for each of the first three quarters of its financial year, or one month before half year or financial year, as the case may be, and ending on the date of announcement of the relevant results.

(ii) (iii)

6.4

To rationalize and consolidate the provisions relating to dealings in securities, it is proposed that:(i) (ii) The BPG and Rule 710(2) be deleted; and Rule 1207 be amended to require an issuer to state whether and how it has complied with the best practices on dealings in securities (as stated in paragraph 6.3 above) recommended by the Exchange.

Proposal 15: To rationalize and consolidate the provisions relating to dealings in securities, Rule 710(2) and the Best Practices Guide will be deleted while Rule 1207 will be amended t require an issuer to o state whether and how it has complied with the best practices on dealings in securities recommended by the Exchange.

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Corporate Disclosure Policy (Appendix 7.1) 6.5 Appendix 7.1 (Paragraph 21) provides guidance on the dissemination of material information during trading hours. Amendment is proposed to Appendix 7.1 (Paragraph 21) to clarify that an issuer is required to disclose material information when it arises, even if during trading hours. The issuer is expected to request a trading halt to facilitate the dissemination of the material information during trading hours.

Proposal 16: Appendix 7.1 (Paragraph 21) will be amended to clarify that an issuer must disclose material information when it arises, even if during trading hours. The issuer is expected to request a trading halt to facilitate the dissemination of the material information during trading hours.

Transitional Practice Notes 6.6 Transitional Practice Note 2 and Transitional Practice Note 3 were issued in June 2002 for purpose of the transition to the Listing Manual which came into effect on 1 July 2002. The two transitional practice notes deal with the listing procedures for equity and debt securities. As the transition is completed, it is proposed that the listing procedures set out in these transitional practice notes be incorporated in Rules 243 and 244 (for equity securities) and Rules 310 and 311 (for debt securities). Transitional Practice Notes 2 and 3 (which are not rules) will be deleted.

Proposal 17: The listing procedures prescribed by Transitional Practice Notes 2 and 3 will be incorporated in Rules 243 and 244 (for equity securities) and Rules 310 and 311 (for debt securities), respectively. Transitional Practice Notes 2 and 3 will be deleted.

6.7

6.8

Placement of New Units by REITs 6.9 In relation to real estate investment trusts ("REITs"), it is proposed that a placement of new units by a REIT may be made without specific approval of unitholders in a general meeting if:(i) the placement (together with any other issue of units via placement in the same financial year) would not exceed 10% of the value of the REIT at the

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end of the last financial year; or (ii) the following requirements are complied with:(a) unitholders have given a general mandate, by ordinary resolution in a general meeting, for the issue of units of an amount not exceeding 20% of the value of the REIT at the end of the last financial year; and (b) the placement (together with any other issue of units via placement in the same financial year, from the time the mandate is passed) does not exceed 20% of the value of the REIT at the end of the last financial year.

6.10

The general mandate may remain in force until the earlier of the following:(i) the end of the financial year in which the mandate is passed; or (ii) it is revoked or varied by ordinary resolution of the unitholders in a general meeting. A new Rule 887 will be introduced to set out the above requirements with respect to placement of new units by REITs.

Proposal 18: A new Rule 887 will be introduced to set out the requirements with respect to placement of new units by REITs.

6.11

Others 6.12 Amendments are proposed to other listing r ules (as set out in Annexure A) to improve clarity. The relevant rules are 315(5), 747(2), Appendix 2.2 (Paragraph 10), Practice Note 2.1 (Paragraphs 6, 7 and 8) and Practice Note 13.1 (Paragraph 2.1).

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ANNEXURE A

PROPOSED AMENDMENTS TO THE LISTING RULES The following sets out the relevant listing rules reflecting the proposals as if implemented. The purpose of the amendment is also given.

Definitions and Interpretation

1.1

To introduce a new term as follows. Term "OFR Guide" Meaning Guide for the operating and financial review issued by the Council on Corporate Disclosure and Governance. To introduce a new term for which reference is made

Purpose of amendment:

in the Listing Manual.

Listing Rule 113

1.2

Listing Rule 113 be amended as follows. (1) The requirement to have an issue manager ends once the issuer is admitted to listing, although it is recommended that the issuer retain the services of the issue manager for at least one year following its listing. Regardless of whether an issuer continues the sponsorship after listing, it must comply with the following disclosure requirements:(a) For two years after listing, the issuer must prominently include a statement that the initial public offering of its shares was sponsored by [name of issue m anager] in all announcements made by it (on SGXNET or otherwise) and in all information documents issued by it to shareholders. Unless exceptional circumstances exist, "prominently" in Rule 113(2)(a) means in print no smaller than the main text of the announcement, and positioned on the front page of the announcement. However, the statement must not be drafted or positioned in such a way as to imply that the issue manager endorses

(2)

(b)

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the current transaction (unless the issue manager is involved in the transaction). (3) The sponsor is not required to be involved in all matters relating to the issuer's compliance with the listing rules. However, the Exchange encourages issuers to consider engaging their sponsors to assist them post listing.

To codify the practice of requiring issuers to include the name of their IPO sponsors in all the announcements and information documents issued by them. Also, the amendment extends the sponsorship disclosure requirement from one year to two years after listing.

Purpose of amendment: Listing Rule 210(5)(a)

1.3

Listing Rule 210(5)(a) be amended as follows. 210 An issuer applying for listing of its equity securities on the SGX Mainboard must meet the following conditions:(5) Directors and Management (a) The directors and executive officers should have appropriate experience and expertise to manage the group's business. As a pre-quotation disclosure requirement, an issuer must release a statement via SGXNET identifying for each director, whether the person has prior experience (and what) or, if the director has no prior experience as a director of a listed company, whether the person has undertaken training in the roles and responsibilities of a director of a listed company.

Rule 210(5)(a) will be amended to codify the practice of requiring issuers to announce the directors' prior experience or training prior to listing.

Purpose of amendment: Listing Rule 221

1.4

Listing Rule 221 be amended as follows. 221 A foreign issuer must have:- at least two independent directors, at least one of whom must be resident in Singapore. (1) (2) at least two independent resident directors; and either of the following:(a) a qualified person in Singapore to advise the issuer on Singapore laws and assist directors with respect to obtaining company information. This person could be the compliance

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(b) (c)

adviser (for issuers required by the Exchange to appoint a compliance adviser); or another director resident in Singapore (in addition to the two independent resident directors required by (1) above) ; or an officer in executive capacity resident in Singapore.

To ensure sufficient local representation on the board of a foreign issuer and the ability to take steps in the event of a problem.

Purpose of amendment: Listing Rule 243

1.5

Listing Rule 243 be amended as follows. 243 Unless the Exchange prescribes otherwise, the following sets out the usual main steps in the listing process:(1) (2) (3) The applicant submits to the Listings Department, one copy of the listing application prepared in compliance with Rules 245 and 246. The Exchange considers the application and may issue approval inprinciple to list (with or without conditions). Where a prospectus or offering memorandum is required to be issued, pursuant to the provisions in the Companies Act or any other equivalent provisions, the applicant lodges and registers the final copy of the prospectus or offering memorandum with the Registrar of Companies and Businesses or any competent authority (if applicable) and the Exchange. The applicant then issues the prospectus, offering memorandum or introductory document. If the listing entails an offer of securities to the public, the applicant invites applications to subscribe for or purchase the securities. After the offer closes, the applicant announces the outcome of the offer, and where appropriate, the level of subscription and the basis of allocation and allotment, and the subscription rate reflecting the true level of demand for the offer. In computing the subscription rate, subscriptions by connected persons and the persons mentioned in Rule 240 must be excluded. On satisfaction of the conditions expressed in the approval inprinciple, the issuer is admitted to the Official List at the discretion of the Exchange. Trading of its listed securities commences on a date determined by the Exchange either on a deferred settlement basis or ready basis or such other basis as the Exchange may approve.

(4)

(5)

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An applicant may consult the Exchange to resolve specific issues prior to the submission of an application. Unless the Exchange prescribes otherwise, the following sets out the usual main steps in the listing process:(1) (2) The applicant submits (to the Listings Function) one copy of the listing application prepared in compliance with Rules 245 and 246; The Exchange considers whether the application satisfies the listing requirements and will decide whether to issue an eligibility-to-list letter (with or without conditions). Listing will not be permitted until all conditions set out in the eligibility-to-list letter have been satisfied; Where a prospectus or offering memorandum is required to be issued, the applicant lodges the prospectus or offering memorandum with the relevant authority (if applicable) and submits a copy to the Exchange. The lodged copy of the prospectus should not be materially different from the prospectus or offering memorandum on which the eligibility-to-list letter was issued. The applicant must submit a written confirmation to the Exchange to this effect. If there are material differences, the Exchange may withdraw the eligibility-to-list letter; The Exchange will inform the applicant of any further information (additional to what is prescribed) that is required to be disclosed prior to commencement of trading. The applicant decides whether to include this information in its prospectus or offering memorandum, or to make pre-quotation disclosure through an announcement to the Exchange. Pre-quotation disclosure must be made not later than the market day before trading commences. Preferably, it should be made before the launch of the offer; If the listing entails an offer of securities to the public, the applicant invites applications to subscribe for or purchase the securities. After the offer closes, the applicant announces the outcome of the offer, and where appropriate, the level of subscription and the basis of allocation and allotment, and the subscription rate reflecting the true level of demand for the offer. In computing the subscription rate, subscriptions by connected persons and the persons mentioned in Rule 240 must be excluded; On satisfaction of the conditions expressed in the eligibility-to-list letter, the issuer is admitted to the Official List at the discretion of the Exchange. Trading of its listed securities commences on a date determined by the Exchange either on a deferred settlement basis or ready basis or such other basis as the Exchange may approve. To incorporate the procedures prescribed by

(3)

(4)

(5)

(6)

Purpose of amendment:

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Transitional Note 2 into Rules 243 and 244.

Listing Rule 244

1.6

Listing Rule 244 be amended as follows. 244 The Exchange will normally decide on an application that is complete in all material aspects, within six weeks of the date of submission. In the case of an application for secondary listing, the decision can normally be expected within 3 weeks of receipt of an application that is complete in all material aspects. However, the time taken may be longer depending on the circumstances. The Exchange will decide whether to issue an eligibility-to-list letter as soon as practicable after receipt of a complete application. If the applicant makes material amendments to the prospectus, the time may start to run from the date the material amendment is notified to the Exchange. On a case-by-case basis, the Exchange may agree to vary the procedures or time indicated if an issue involves a concurrent dual listing or international offering. Any proposed variation in procedures and timetable must be agreed with the Exchange before the submission of the application. To incorporate Transitional Note 2 into Rules 243 and 244.

Purpose of amendment:

the

procedures

prescribed

by

Listing Rule 246(4)

1.7

Listing Rule 246(4) be amended as follows. 246 The application must include:(4) Confirmation by the issue manager that:(a) (b) (c) (d) (e) having made due and careful enquiry, the issuer satisfies the admission requirements; all documents required by the listing rules to be included in the application has been or will be supplied to the Exchange; any other matters known to the issue manager which should be taken into account have been disclosed in the prospectus or otherwise in writing; and if any further information becomes available before listing, it will inform the Exchange; and the directors of an applicant have been informed of their obligations under the listing rules as well as the relevant Singapore laws and regulations.

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To require the issue manager to provide a confirmation that the directors of an applicant have been informed of their obligations under the listing rules as well as the relevant Singapore laws and regulations.

Purpose of amendment: Listing Rule 246(12)

1.8

A new sub-rule 246(12) be introduced as follows. 246 The application must include:(12) Confirmation by the applicant that it has obtained all requisite approvals, and is in compliance with laws and regulations, that would materially affect its business operations.

To require the applicant to provide a confirmation that it has obtained all requisite approvals, and is in compliance with laws and regulations, that would materially affect its business operations.

Purpose of amendment: Listing Rule 309(4)

1.9

Listing Rule 309(4) be amended as follows. 309 A trust deed required by Rule 308(5) must include the following provisions:(4) Within three months of the expiration of the full year and the half year, the issuer must provide the trustee the consolidated profit and loss account and balance sheet (which must be prepared in accordance with the approved accounting standards) of the issuer and of any guarantor company. The accounts relating to the full year must be audited.

Where an issue of debt securities is also offered to retail investors, the issuer must report its post-listing financial results in accordance with the approved accounting standards.

Purpose of amendment: Listing Rule 310

1.10

Listing Rule 310 be amended as follows. 310 The following sets out the usual steps in the listing process for debt securities:(1) The issuer submits the listing application which comprises the following:-

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(a) (b) (2) (3)

Prospectus, offering memorandum or introductory document prepared in compliance with Rules 312 to 313; and Supporting documents set out in Rule 314.

The Exchange decides on the application and may grant approval inprinciple for the application (with or without conditions). On satisfaction of any conditons expressed in the Exchange's approval in-principle, the debt securities are admitted to the Official List.

An applicant may consult the Exchange to resolve specific issues prior to the submission of an application. Unless the Exchange prescribes otherwise, the following sets out the usual main steps in the listing process. (1) The applicant submits (to the Listings Function) one copy of the listing application. The listing application comprises the prospectus, offering memorandum or introductory document prepared in compliance with Rules 312 to 313 and, the supporting documents set out in Rule 314. The prospectus, offering memorandum or introductory document which forms p of the listing application art must be in final form; The Exchange considers whether the application satisfies the listing requirements and will decide whether to issue an eligibility-to-list letter for listing (with or without conditions). Listing will not be permitted until all conditions set out in the eligibility letter have been satisfied; Where a prospectus, offering memorandum or introductory document is required to be issued, the applicant lodges the prospectus, offering memorandum or introductory document with the relevant authority (if applicable) and submits a copy to the Exchange. The lodged copy of the prospectus, offering memorandum or introductory document should not be materially different from the prospectus, offering memorandum or introductory document on which the eligibility-to-list letter was issued. The applicant must submit a written confirmation to the Exchange to this effect. If there are material differences, the Exchange may withdraw the eligibility-tolist letter; The Exchange w inform the applicant of any further information ill that is required to be disclosed prior to commencement of trading. The applicant decides whether to include this information in its prospectus, offering memorandum or introductory document, or to make pre-quotation disclosure through an announcement to the

(2)

(3)

(4)

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Exchange. Pre-quotation disclosure must be made not later than the market day before commencement of trading of the debt securities; (5) On satisfaction of the conditions expressed in the eligibility-to-list letter, the issuer's debt securities will be listed and quoted on the Exchange. the procedures prescribed by

To incorporate Transitional Note 2 into Rules 310 and 311.

Purpose of amendment: Listing Rule 311

1.11

Listing Rule 311 be amended as follows. 311 The Exchange will normally decide on an application that is complete within one week of submission. The Exchange will decide whether to issue an eligibility-to-list letter as soon as practicable after receipt of a complete application. If the applicant makes material amendments to the prospectus, offering memorandum or introductory document, the time may start to run from the date the material amendment is notified to the Exchange. To incorporate Transitional Note 2 into Rules 310 and 311.

Purpose of amendment:

the

procedures

prescribed

by

Listing Rule 315(5)

1.12

Listing Rule 315(5) be amended as follows. 315 After the issuer receives approval in-principle from the Exchange, the following documents must be submitted before the listing of the debt securities:(5) In the case of a foreign debt issuer, the names and addresses of its representatives in Singapore, with whom the Exchange may liaise in respect of future correspondence regarding the debt securities. The representatives must be easily contactable by the Exchange; and

To require the issuer's representatives to be easily contactable instead of being situated in Singapore.

Purpose of amendment:

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Listing Rule 705

1.13

Listing Rule 705 be amended to include a new sub-rule (4) as follows. 705(4) In the case of an announcement of interim financial statements (quarterly or half-yearly, as applicable), an issuer's directors must provide a confirmation that, to the best of their knowledge, nothing has come to the attention of the board of directors which may render the interim financial results to be false or misleading. The confirmation may be signed by 2 directors on behalf of the board of directors. To strengthen accountability for interim financial results by requiring a "negative assurance" confirmation from the issuer's directors.

Purpose of amendment:

Listing Rule 707

1.14

Listing Rule 707 be amended as follows. 707(1) (2) The time between the end of an issuer's financial year and the date of its annual general meeting (if any) must not exceed four months. An issuer must issue its annual report to shareholders and the Exchange at least 14 days before the date of its annual general meeting.

To clarify that the timeframe for the holding of annual general meeting (as set out in Paragraph 10 of Appendix 2.2) applies to both Singapore and foreign incorporated issuers.

Purpose of amendment: Listing Rule 710

1.15

Listing Rule 710 be amended as follows. 710 An issuer must:(1) describe its corporate governance practices with specific reference to the principles of the Code in its annual report. It must disclose any deviation from any guideline of the Code together with an appropriate explanation for such deviation in the annual report; and state in its annual report whether and how it has complied with the section on dealings in securities in the Best Practices Guide. include in its annual report a confirmation by the directors and chief executive officer that:

(2) (2)

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(i) (ii) (iii) (iv)

responsibilities for staffing internal control functions are explicitly assigned; procedures exist for assessing the effectiveness of the company's internal controls; channels for reporting significant risk and internal control matters to the Board and chief executive officer are clearly specified; and nothing h come to the attention of the Board and chief as executive officer with regards to internal controls that would have a materially adverse effect on the company.

Purpose of amendment:

(i) (ii)

To rationalize and consolidate the provisions relating to dealings in securities in Rule 1207. To require a "negative assurance" confirmation on the issuer's internal controls from the issuer's directors and CEO.

Listing Rule 717

1.16

Listing Rule 717 be amended as follows. 717 An issuer must disclose in the annual report the names of the accounting firms(s) for the following:(1) (2) its significant Singapore-incorporated subsidiaries and significant associated companies; and significant foreign-incorporated companies. subsidiaries and associated

Amended so that an issuer does not need to disclose in its annual report the names of accounting firms for Singapore-incorporated subsidiaries that are not significant. Such disclosure will only be required for subsidiaries and associated companies (whether Singapore- or foreign-incorporated) that are significant.

Purpose of amendment: Listing Rule 720

1.17

Listing Rule 720 be amended as follows. Board Composition 720 An issuer must comply with Rule 210(5) and Rule 221 (if applicable) on a continuing basis.

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Purpose of amendme nt:

continuing listing obligations.

Listing Rule 747(2)

To extend the requirements in Rules 210(5) and 221 as

1.18

Listing Rule 1007 be amended as follows. 747 A debt issuer must announce:(2) the details of any interest payment(s) to be made (except for fixed rate notes listed solely on the Bonds Market)

To clarify that the exception in Rule 747(2) applies only to fixed rate notes listed on the Bonds Market.

Purpose of amendment: Listing Rule 887

1.19

A new Listing Rule 887 will be introduced as follows. PART XIV REAL ESTATE INVESTMENT TRUST

887(1) A placement of new units by a REIT may be made without the prior specific approval of unitholders in a general meeting if:(i) (ii) the placement (together with any other issue of units via placement in the same financial year) would not exceed 10% of the value of the REIT at the end of the last financial year; or the following requirements are complied with:(a) unitholders have given a general mandate, by ordinary resolution in a general meeting, for the issue of units of an amount not exceeding 20% of the value of the REIT at the end of the last financial year; and (b) the placement (together with any other issue of units via placement in the same financial year, from the time the mandate is passed) does not exceed 20% of the value of the REIT at the end of the last financial year.

(2) The general mandate referred to in Rule 887(1)(ii)(a) may remain in force until the earlier of the following:(i) the end of the financial year in which the mandate is passed; or (ii) it is revoked or varied by ordinary resolution of the unitholders in a general meeting. To set out the requirements with respect to placements of new units by REITs.

Purpose of amendment:

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Listing Rule 1007

1.20

Listing Rule 1007 be amended as follows. 1007(1) If any of the relative figures computed pursuant to Rule 1006 is a negative figure, this Chapter may still be applicable to the transaction at the discretion of the Exchange, and issuers should consult the Exchange. Where the disposal of an issuer's interest in a subsidiary is undertaken in conjunction with an issue of shares by that subsidiary, the relative figures in Rule 1006 must be computed based on the disposal and the issue of shares.

(2)

To apply the materiality tests in Rule 1006 to the total dilution effect arising from both the disposal of shares in a subsidiary and the issue of shares by that subsidiary.

Purpose of amendment: Listing Rule 1015

1.21

Listing Rule 1015 be amended to include a new sub-Rule (8) as follows. 1015(8) Rule 113(2) applies to an issuer which is the subject of a very substantial acquisition or a reverse takeover, with the necessary adaptations. To codify the sponsorship disclosure requirement for

Purpose of amendment:

reverse takeovers.

Listing Rule 1207

1.22

Listing Rule 1207 be amended to include a new sub-Rule (18) as follows. 1207 The annual report must contain enough information for a proper understanding of the performance and financial conditions of the issuer and its principal subsidiaries, including at least the following:(18) Dealings in Securities A statement whether and how the issuer has complied with the following best practices on dealings in securities:(i) A listed issuer should devise and adopt its own internal compliance code to provide guidance to its officers with

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regard to dealing by the listed issuer and its officer in its securities; (ii) (iii) An officer should not deal in his company's securities on short-term considerations; and A listed issuer and its officers should not deal in the listed issuer's securities during the period commencing two weeks before the announcement of the company's financial statements for each of the first three quarters of its financial year, or one month before half year or financial year, as the case may be, and ending on the date of announcement of the relevant results. To consolidate the provisions relating to dealings in

Purpose of amendment:

securities in Rule 1207.

Listing Rule 1207(4)

1.23

Listing Rule 1207(4) be amended as follows. (a) A review, in as much detail as possible appropriate, of the operating and financial performance of the issuer and its principal subsidiaries in the last financial year. The review must include each of the following: (i) Any development subsequent to the release of the issuer's preliminary financial statement, which would materially affect the issuer's operating and financial performance; , must be identified.

(b)

(b)(ii) An analysis of the business outlook; (c)(iii) Prospectus-type information relating to the background of directors and key management staff; and (d)(iv) Prospectus-type information relating to risk management policies and processes. (c) Issuers are encouraged (but not required) to follow the OFR Guide when preparing their reviews. To support the recommendation of CCDG.

Purpose of amendment:

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Appendix 2.2 (Paragraph 10)

1.24

Appendix 2.2 (Paragraph 10) be amended as follows. The interval between the close of an company's issuer's financial year and the date of the company's its annual general meeting (if any) shall not exceed four months. :(a) (b) five months in the case of a company whose financial year commences before 1 January 2003; and four months in the case of a company whose financial year commences on or after 1 January 2003.

To rationalize the rule as the commencement of financial year has become irrelevant.

Purpose of amendment: Appendix 7.1 (Paragraph 21)

1.25

Appendix 7.1 (Paragraph 21) be amended as follows. If Material information needs to must be disclosed when it arises, even if during trading hours, . The Exchange will expect the issuer to request a trading halt to facilitate the dissemination of the material information during trading hours. As a guide, a trading halt requested for dissemination of material information will last an hour after the release of the material information, or such other period as the Exchange considers it appropriate. The issuer may request a temporary suspension if it is unable to release the material information by the end of the trading halt. Otherwise, the Exchange will consider whether a temporary suspension in trading of the issuer's securities is necessary to enable the material information to be properly disseminated. As a guide, the temporary suspension may last an hour after the announcement has been released to the Exchange. Where material announcements are broadcast before 7.30am, between 12.30pm and 1pm, or after 5.05pm, a trading halt or a temporary suspension will not be necessary. To make it clear that issuers are required to release material announcements during trading hours.

Purpose of amendment:

Practice Note 2.1 (Paragraph 6)

1.26

Paragraph 6 in Practice Note 2.1 will be deleted in its entirety. 6. 6.1 Sponsorship Disclosure Rule 111 states that an applicant must appoint an issue manager who will act as the sponsor for its listing on the Exchange. Rule 113 says that the

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sponsorship ends with the listing, although the rule adds that the Exchange recommends that the applicant retain the sponsor's services after listing. 6.2 Regardless of whether an issuer continues the sponsorship after listing, it must comply with the following disclosure requirement as a condition of listing: a. For one year after listing, the issuer must prominently include a statement that the initial public offering of its shares was sponsored by [name of issue manager]· In all announcements made by it (on MASNET or otherwise), and · In all information documents issued by it to shareholders. b. Unless exceptional circumstances exist, "prominently" means in print no smaller than the main text of the announcement, and positioned on the front page of the announcement. However, the statement must not be drafted or positioned in such a way as to imply the issue manager endorses the current transaction (unless the issue manager is involved in the transaction).

6.3 6.4

Reverse takeovers must satisfy initial listing requirements, so the requirement in paragraph 6.2 extends to reverse takeovers, with necessary adaptation. The sponsor is not required to be involved in all matters relating to the issuer's compliance with the listing rules. However, the Exchange encourages issuers to consider engaging their sponsors to assist them post-listing. The requirements in paragraph 6 will be incorporated

Purpose of amendment:

in Rules 113 and 1015.

Practice Note 2.1 (Paragraph 7)

1.27

Paragraph 7 in Practice Note 2.1 will be deleted in its entirety. 7. 7.1 Director Disclosure Rule 210(5) says that directors (and executive officers) should have appropriate experience and expertise to manage the group's business. The Exchange encourages new directors (who do not have prior experience as a director of a public listed company in Singapore) to undertake training in the roles and responsibilities of a director of a listed company. As part of the pre-quotation required of an issuer, a statement must be released on MASNET identifying, for each director, whether the person has prior experience (and what) or, if the person is a new director, whether the person has undertaken training in the roles and responsibilities of a director of

7.2

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a listed company.

Purpose of amendment:

in Rule 210(5)(a).

Practice Note 2.1 (Paragraph 8)

The requirements in paragraph 7 will be incorporated

1.28

Paragraph 8 in Practice Note 2.1 will be re-numbered as paragraph 6 and amended as follows. 86. FOREIGN APPLICANT'S CONNECTION TO SINGAPORE 8.1 6.1 The Exchange looks at the connection to Singapore of every foreign applicant. This is to ensure sufficient local representation and the ability to take steps in the event of a problem. Rule 221 says that a foreign issuer must have at least two independent directors, at least one of whom must be resident in Singapore requires a foreign issuer to have a certain minimum number of resident directors. To meet the objective of sufficient connection, residence means either citizenship or permanent residence status. 8.2 6.2 The assessment of an applicant's connection to Singapore is made on a caseby-case basis, and depends on all the circumstances. In addition to Rule 221, the Exchange may ask the applicant to also install company secretarial functions here, or add a second resident director.

Purpose of amendment:

Consequential upon the amendment to Rule 221.

Practice Note 2.1

1.29

A new paragraph will be added to Practice Note 2.1 as follows. 7. 7.1 7.2 COMPLIANCE ADVISER The Exchange may require an applicant to appoint a compliance adviser for a specified period of time after listing. The Exchange may require an issuer to appoint a compliance adviser if it breaches the listing rules, particularly if the breaches are repeated or give rise to concerns about the issuer's compliance arrangements. The compliance adviser is expected to advise the board on the applicable rules and regulations. The Exchange would normally accept a lawyer, a corporate finance adviser or other professional parties, who are familiar with the rules and regulations applicable to a listed company, to be a compliance adviser.

7.3

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To give the Exchange power to require the appointment of a compliance adviser on a selective and "need-to" basis.

Purpose of amendment: Practice Note 13.1 (Paragraph 2.1)

1.30

Practice Note 13.1 (Paragraph 2.1) be amended as follows. Our trading hours is from 9.00 am to 12.30 pm and 2.00 pm to 5.00 pm. Opening Routine is a 30-minute session before trading commences at 9.00 am, i.e. 8.30 am to 9.00 am. Closing Routine will run for 6 minutes after 5.00 pm, i.e. 5.00 pm to 5.06 pm. Issuers should preferably release material price sensitive announcements before 7.30 am or after 5.05 pm. To make it clear that issuers are required to release material announcements during trading hours.

Purpose of amendment:

Best Practices Guide

1.31

Best Practices Guide be deleted as follows. BEST PRACTICES GUIDE INTRODUCTION 1. This booklet is issued by the SGX-ST (formerly Stock Exchange of Singapore) to provide guidance on the principles and best practices in corporate governance and dealings by listed issuers and their directors and employees in the securities of the listed issuers. Listed issuers should devise their own codes of best practices, and in doing so, they are encouraged to refer to these guides to best practices in assessing the appropriateness of their own codes. Compliance with these guides on best practices is not mandatory, but listed issuers should note that they and their directors and employees continue to be subject to requirements set out in applicable law. The Exchange believes that by observing these best practices, listed issuers will raise the standard of corporate governance, thereby promoting investor confidence in their management, and in the fairness and integrity of the securities market. The Exchange may, from time to time, revise or issue further guides on best practices in these and other areas.

2.

DEALINGS IN SECURITIES

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1.

It is an offence under the Securities Industry Act for a listed issuer or its officers (defined in the law to include the listed issuer's directors and employees) to deal in the listed issuer's securities as well as securities of other listed issuers when the officers are in possession of unpublished material price-sensitive information in relation to those securities. While a listed issuer and its officers should be free to deal in the securities of the listed issuer and securities of the other listed issuers, those who engage in dealings should be mindful of the law on insider dealing, and ensure that their dealings would not contravene the law. The SGX-ST considers it desirable that each listed issuer should devise and adopt its own internal compliance code to provide guidance to its officers with regard to dealing by the listed issuer and its officers in its securities. The Exchange believes that proper adherence to these best practices would promote a fair market, thereby enhancing investor confidence in the market. Listed issuers should remind their officers that the law on insider dealing is applicable at all times, notwithstanding that their internal codes may provide certain window periods for them or their officers to deal in their securities. Guidance on Best Practices (a) (b) An officer should not deal in his company's securities on short-term considerations. A listed issuer and its officers should not deal in the listed issuer's securities during the period commencing two weeks before the announcement of the company's financial statements for each of the first three quarters of its financial year, or one month before half year or financial year, as the case may be, and ending on the date of announcement of the relevant results.

2.

3.

4.

To rationalize and consolidate the provisions relating to dealings in securities in Rule 1207.

Purpose of amendment:

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Transitional Practice Note 2

1.32

Transitional Practice Note 2 be deleted as follows. SGX-ST Listing Rules Transitional Practice Note 2 Transitional arrangements regarding Equity Securities Listing Procedures

Details Cross references Enquiries

Issue date: 14 June 2002

Listing Rules Please contact Issuer Regulation 109(2), 245 & 246 Department:Effective date: 1 July 2002 6-236-8896 Daisy Tan 6-236-8887 June Sim 6-236-8264 Lorraine Chay 6-236-8895 Siew Wun Mui 6-236-8880 Tang Yeng Yuen 1. 1.1 Introduction With effect from 1 July 2002, the Exchange will have regard to the Fifth Schedule o the Securities & Futures (Offers of Investments)(Shares and f Debentures) Regulations 2002 and Practice Note 6.1 1 when considering the adequacy of disclosure. Arrangements The following procedures will be adopted for listing applications submitted to the Exchange from the date on which the Securities & Futures (Offers of Investments)(Shares and Debentures) Regulations 2002 comes into effect. An applicant may consult the Exchange to resolve specific issues prior to the submission of an application. Unless the Exchange prescribes otherwise, the following sets out the usual main steps in the listing process. 2.2.1 2.2.2 The applicant submits (to the Listings Department) one copy of the listing application prepared in compliance with Rules 245 and 246; The Exchange considers whether the application satisfies the listing requirements and will decide whether to issue an eligibility-to-list letter (with or without conditions). Listing will not be permitted until all conditions set out in the eligibility-to-list letter have been satisfied; Where a prospectus or offering memorandum is required to be issued, the applicant lodges the prospectus or offering memorandum with the relevant authority (if applicable) and submits a copy to the Exchange.

2. 2.1

2.2

2.2.3

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The lodged copy of the prospectus should not be materially different from the prospectus or offering memorandum on which the eligibility-to-list letter was issued. The applicant must submit a written confirmation to the Exchange to this effect. If there are material differences, the eligibility-to-list letter will be void; 2.2.4 The Exchange will inform the applicant of any further information that is required to be disclosed prior to commencement of trading. The applicant decides whether to include this information in its prospectus or offering memorandum, or to make pre-quotation disclosure through an announcement to the Exchange. Pre-quotation disclosure must be made not later than the market day before trading commences. Preferably, it should be made before the launch of the offer; If the listing entails an offer of securities to the public, the applicant invites applications to subscribe for or purchase the securities. After the offer closes, the applicant announces the outcome of the offer, and where appropriate, the level of subscription and the basis of allocation and allotment, and the subscription rate reflecting the true level of demand for the offer. In computing the subscription rate, subscriptions by connected persons and the persons mentioned in Rule 240 must be excluded; On satisfaction of the conditions expressed in the eligibility-to-list letter, the issuer is admitted to the Official List at the discretion of the Exchange. Trading of its listed securities commences on a date determined by the Exchange either on a deferred settlement basis or ready basis or such other basis as the Exchange may approve.

2.2.5

2.2.6

2.3

The Exchange will normally decide whether to issue an eligibility-to-list letter within 21 days after receipt of a complete application. If the applicant makes material amendments to the prospectus, the time may start to run from the date the material amendment is notified to the Exchange. On a case-by-case basis, the Exchange may agree to vary the procedures or time indicated if an issue involves a concurrent dual listing or international offering. Any proposed variation in procedures and timetable must be agreed with the Exchange before the submission of the application. __________ 1 Practice Note 6.1 deals with pre-quotation information. The Exchange will be issuing Practice Note 6.1 shortly.

The deletion is proposed consequential on the transfer of the information in Transitional Practice Note 2 to Rules 243 and 244.

Purpose of amendment:

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Singapore Exchange Limited

Transitional Practice Note 3

1.33

Transitional Practice Note 3 be deleted as follows. SGX-ST Listing Rules Transitional Practice Note 3 Transitional arrangements regarding Debt Securities Listing Procedures

Details Cross references Enquiries

Issue date: 14 June 2002 Effective date: 1 July 2002

Listing Rules 109(2) & 310

Please call Issuer Regulation Department:6-236-8896 Daisy Tan 6-236-8887 June Sim 6-236-8885 Yik Chih-Hoe 6-236-8895 Siew Wun Mui 6-236-8880 Tang Yeng Yuen

1. 1.1

Introduction With effect from 1 July 2002, the Exchange will have regard to the Seventh Schedule of the Securities & Futures (Offers of Investments)(Shares and Debentures) Regulations 2002 when considering the adequacy of disclosure. If the debt securities are to be offered primarily to sophisticated investors or institutional investors without a prospectus, the offering memorandum or introductory document submitted to the Exchange must be in final form containing information that such investors would customarily expect to see in such documents. Arrangements The following procedures will be adopted for listing applications of debt securities submitted to the Exchange from the date on which the Securities & Futures (Offers of Investments)(Shares and Debentures) Regulations 2002 comes into effect. An applicant may consult the Exchange to resolve specific issues prior to the submission of an application. Unless the Exchange prescribes otherwise, the following sets out the usual main steps in the listing process:2.2.1 The applicant submits (to the Listings Department) one copy of the listing application prepared in compliance with Rule 310. The prospectus, offering memorandum or introductory document which forms part of the listing application must be in final form;

2 2.1

2.2

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2.2.2

The Exchange considers whether the application satisfies the listing requirements and will decide whether to issue an eligibility-to-list letter for listing (with or without conditions). Listing will not be permitted until all conditions set out in the eligibility letter have been satisfied; Where a prospectus, offering memorandum or introductory document is required to be issued, the applicant lodges the prospectus, offering memorandum or introductory document with the relevant authority (if applicable) and submits a copy to the Exchange. The lodged copy of the prospectus, offering memorandum or introductory document should not be materially different from the prospectus, offering memorandum or introductory document on which the eligibility-to-list letter was issued. The applicant must submit a written confirmation to the Exchange to this effect. If there are material differences, the eligibility-to-list letter will be void; The Exchange will inform the applicant of any further information that is required to be disclosed prior to commencement of trading. The applicant decides whether to include this information in its prospectus, offering memorandum or introductory document, or to make pre-quotation disclosure through an announcement to the Exchange. Pre-quotation disclosure must be made not later than the market day before commencement of trading of the debt securities; On satisfaction of the conditions expressed in the eligibility-to-list letter, the issuer's debt securities will be listed and quoted on the Exchange; The Exchange will normally decide whether to issue an eligibility-tolist letter within one week after receipt of a complete application. If the applicant makes material amendments to the prospectus, offering memorandum or introductory document, the time may start to run from the date the material amendment is notified to the Exchange.

2.2.3

2.2.4

2.2.5

2.2.6

The deletion is proposed consequential on the transfer of the information in Transitional Practice Note 2 to Rules 310 and 311.

Purpose of amendment:

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New Practice Note 7.3

1.34

To publish new Practice Note 7.3 as follows. SGX-ST Listing Rules Practice Note 7.3 Guide for Operating and Financial Review

Details Cross references Enquiries

Issue date: [ ] 2005 Effective date: [ ] 2005

Listing 1207(4)

Rule Please contact Issuer Regulation:6-236-8896 Daisy Tan 6-236-8887 June Sim 6-236-8264 Lorraine Chay 6-236-8895 Siew Wun Mui 6-236-8880 Tang Yeng Yuen

1. 1.1

Introduction This Practice Note publishes the guide provided by the Council on Corporate Disclosure and Governance on the Operating and Financial Review in an annual report. Issuers are encouraged to follow the OFR Guide, but it is not compulsory. OFR Guide The OFR Guide is enclosed.

1.2 2. 2.1

Purpose of amendment:

To support the recommendation of CCDG.

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GUIDE FOR OPERATING AND FINANCIAL REVIEW

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CONTENTS Introduction.................................................................. Objectives and Tenets of the Operating and Financial Review......... Principles and Guidelines................................................... 1 2 3

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INTRODUCTION 1 The objective of the Operating and Financial Review ("OFR") in annual reports is to provide users with an understanding of the company by providing an analysis of the company's businesses as seen through the eyes of the directors and management. The OFR serves to facilitate assessment of the company's business and business objectives, its principal drivers of performance, the dynamics of the business, and the performance and financial condition of the company. 2 Companies listed on the Singapore Exchange ("SGX") are currently required to include a discussion of their operating and financial performance and business outlook under the SGX listing rules1. This Guide provides a set of best practice guidance to listed companies in the preparation of the OFR in their annual reports, which will complement and supplement the financial statements. 3 The approach taken in this Guide is to set out general guidance, in the form of Principles and Guidelines, on the OFR, rather than to prescribe a set of mandatory rules or requirements. Adherence with the Guide is voluntary. The Principles set out in the Guide should be regarded as fundamental to the preparation of a good OFR. The Guidelines elaborate on how those principles can be applied. 4 Listed companies are encouraged to apply these best practices for disclosure of information in their OFRs. It is recognised that not all items in the guidelines may be relevant to all companies, as companies vary by size, industry group and other factors. The guidance should also not be regarded as a comprehensive list of the matters that might be considered by the directors and management to be relevant to an assessment of the company. The OFR should focus on those matters that are considered significant to that company as a whole. It is for the directors and management to decide how best to apply the framework of this Guide to the particular circumstances of the company.

1

______________

Rule 1207(4) of the Listing Manual of the Singapore Exchange.

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OBJECTIVES AND TENETS OF THE OPERATING AND FINANCIAL REVIEW ___________________________________________________________________ 1 The objective of the OFR is to provide users with a good understanding of the company by providing a historical and prospective analysis of the company's businesses as seen through the eyes of the directors and management. The OFR should assist the user's assessment of its performance and understanding of the future direction of the company. The OFR should focus on matters of significance to the company as a whole. 2 The focus of the OFR is on explanations and analysis. It should contain analytical description, rather than replicate information in the financial statements. It should discuss and interpret the performance and financial condition of the company, in the context of opportunities and risks impacting the operations of the company and known or reasonably expected changes in the environment in which it operates. The OFR should discuss known trends and factors relevant to forming a view as to likely future performance. An explanation of the trends and uncertainties known to be facing the company would not require a forecast of the outcome of such uncertainties. Rather, the explanation should be sufficient to permit readers of the financial report to form their own judgements of the outcomes of such uncertainties. 3 The benefits of particular disclosures should be balanced against any potential commercial risks to the company from the disclosure of commercially sensitive information. This Guide does not expect that disclosure be made by listed companies of information of a commercially prejudicial or sensitive nature that a reasonable person would not expect to be disclosed, for example where:a) the information concerns a trade secret; b) the information concerns an incomplete proposal or negotiation; or c) information comprises matters of supposition and is insufficiently definite to warrant disclosure. 4 Information and analysis contained in the OFR should, as far as possible, be neutral and free from bias, dealing even-handedly with both good and bad aspects. The directors and management should ensure that material information is not omitted. Where the information in the OFR relates to financial information, it should be consistent with information in the audited financial statements. This should not be taken to mean that an audit of the OFR is required.

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PRINCIPLES AND GUIDELINES A) Presentation of the OFR

Principle 1 1 The OFR should focus on matters that are relevant to investors. It should be easy for users of financial reports to understand. Guidelines 1.1 The OFR should be written in a style that is clear and readily understood. It should avoid the use of technical language as far as possible. Figures and graphics may be useful to assist understanding of discussions in the OFR. 1.2 To facilitate reference to OFR disclosures by users of the annual report, it could be useful to include the key discussions of the OFR in a distinct, standalone section of the annual report. However, companies may decide that, in the context of the format of their annual report, it would be preferable to incorporate some of the discussion within other sections of the annual report, such as the Chairman's statement or the Chief Executive Officer's statement. 1.3 While the approach adopted for the presentation of the OFR may evolve over time, or differ from that adopted by other companies, disclosure should be sufficient for the user to be able to compare the information presented in the OFR of the company with that in previous periods, and with information about other companies in the same industry or sectors, where practical. B) Company Overview, Objectives and Strategy

Principle 2 2 The OFR should describe the nature of the company, its objectives and broad strategies, and explain the main areas of operation of the company's business, as context for the discussion and analysis of performance and financial position. The discussion in the OFR should cover the group business of the listed company, including its principal subsidiaries. Guidelines 2.1 The OFR should discuss the objectives for the business and broadly, management's strategy for achieving them. Objectives may be defined in terms of financial performance. Non-financial objectives may also be discussed, where relevant.

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2.2 Depending on the nature of the business, discussion of the company's business and operations might cover areas such as:· · · · the industries, locations and markets in which the company operates; its main products and services, business processes and distribution methods, and intellectual property; the structure of the company and main operating facilities; and any significant changes to the legal, social, political and regulatory environments that influence the company.

Principle 3 3 The key financial and non-financial performance indicators used by management to assess the company and its performance should be discussed. Guidelines 3.1 The OFR would normally include a range of financial and non-financial measures used to measure the company's performance. Comparability would be enhanced if the measures disclosed are accepted and widely used within the industry sector or more generally. Where practical, performance indicators should be compared with previous periods to outline trends. 3.2 The measures used should be defined, and the basis for calculation explained. Comparative amounts should be disclosed. Material changes in the financial measures disclosed, including significant changes in the underlying accounting policies applied, should be identified and explained. Comparative amounts should be restated on the new basis, where practical. C) Operating Review

Principle 4 4 The OFR should discuss the significant features of performance for the period covered by the fina ncial report, focusing on the overall company as well as those business or geographic segments that are relevant to an understanding of the performance as a whole.

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Guidelines 4.1 The OFR should identify and explain the main factors that affect the activities and performance of the company, and in particular discuss those that either have varied in the past or are expected to change in the future. Discussion of past performance should be supplemented by known trends and factors that are likely to affect future performance. 4.2 Key components of the result of operations should be discussed, including major sources of revenues, where appropriate. The OFR should also discuss any significant changes in capital employed. The OFR should discuss the results in comparison with prior periods and any projections publicly disclosed by the company. 4.3 The OFR should set out the analysis of any significant effect on performance of changes in the industry or the environment in which the company operates and of developments within the company, for example:· · · · · changes in market conditions; the introduction or announcement of new products and services; new activities, discontinued activities and other acquisitions and disposals; asset impairments; and results of any material acquisition, and extent to which published expectations at the time of acquisition have been realised.

4.4 The analysis should cover any other special factors that have affected performance in the period under review, even where the effect cannot be quantified. Where unusual or infrequent events or transactions have affected the result for a period, the OFR should discuss their nature and impact on the company. The discussion should comment on the impact on future operations of significant post-balance sheet events. The OFR should enable users to assess the significance of the ongoing and core activities of the company and the sustainability of performance relating to those activities. Principle 5 5 The OFR should discuss the dynamics and risk factors of the business.

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Guidelines 5.1 This should include a discussion identifying the significant opportunities, risks and threats facing the business, together with a commentary on the strategies and processes applied to managing them, and in qualitative terms, the nature of their potential impact on performance. Known factors and influences that may have a material effect on future performance and financial position, particularly within the 12 months from the date when the financial statements are authorised for issue, should be discussed. 5.2 A commentary on the strengths and resources of the business that should assist the company in the pursuit of its objectives would be useful. This could include items that are not reflected in the balance sheet, e.g corporate reputation and brand equity, licences, patents, copyrights and trademarks, and research and development. Principle 6 6 The OFR should comment on investments and measures to maintain and enhance the position and profitability of the company. Guidelines 6.1 The nature of activities and expenditure by the company to maintain and enhance the position and profitability of the company should be discussed. It could include description of major projects that involve capital expenditure being undertaken by the company. Qualitative information as to the benefits expected from such activities and expenditure could be given. D) Financial Review

Principle 7 7 The OFR should identify and explain significant matters which affect the company's financial condition. It should discuss the capital structure and capital management policies of the company, its treasury policy, the dynamics of the company's financial position and its funding and liquidity position. Guidelines 7.1 The OFR should contain a discussion of the capital structure of the company, including the maturity profile of its debt, type of financial instruments used and currency and interest rate exposures. This could include comments on the company's debt rating and relevant ratios such as interest cover and

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debt/equity ratios. The purpose and effect of major financing transactions undertaken up to the date the financial statements are authorised for issue should be explained. 7.2 The discussion should cover the capital funding and treasury policies and objectives that are significant to the company's performance. The types of items that might be discussed include:· · · · · · · · the currencies in which borrowings are made and in which cash and cash equivalents are held; maturity profile of borrowings and extent of fixed-rate borrowings; mix between equity and debt financing; significant investments held; risk management policies; hedging policies and the use of financial instruments for hedging; use of special purpose entities and other off-balance sheet arrangements; and capital management, including share buy-backs and capital restructuring.

7.3 To assist understanding of the cash flow and liquidity position of the company, the cash generated from operations, and other cash flows during the period under review should be discussed. The OFR should comment on any special factors that influenced cash flows in the current period and any known factors that may have a significant effect on future cash flows. 7.4 The company's liquidity and funding at the end of the period under review should be discussed. Discussion of significant funding requirements for capital expenditure and servicing of borrowings would be useful. The OFR could also comment on the level of borrowings, the seasonality of borrowing requirements, undrawn financing facilities and the maturity profile of both borrowings and undrawn committed borrowing facilities. 7.5 Where the company has entered into covenants with lenders which could have the effect of restricting the use of credit facilities and a material breach of a covenant has occurred or is expected to occur, the measures taken or proposed to remedy the situation should be disclosed.

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7.6 To facilitate the user's understanding of the financial statements, it would be useful for the OFR to identify and discuss the critical accounting policies, estimates and judgements made that are key to the interpretation of the company's financial statements. Such information would be particularly relevant for areas where subjective judgements are involved or for companies with complex financial structures. Principle 8 8 The OFR should discuss the overall return attributable to shareholders, including distributions and share repurchases. Guidelines 8.1 All forms of shareholder returns, including share buy-backs, dividend distribution, other forms of return of capital and shareholder plans should be discussed and their effects should be explained. The OFR should also include a commentary on the various factors (including profitability) contributing to the dividend for the financial year, including the overall dividend policy.

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