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Singapore Exchange Limited

CONSULTATION PAPER

Proposed Amendments To The Listing Rules In Relation To DASC Recommendations And Continuing Listing Matters

30 August 2002

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RESPONDING TO THIS CONSULTATION PAPER

SGX invites comments on this Consultation Paper between 30 August 2002 and 23 September 2002 via:! Electronic mail: ! Facsimile: ! Mail: [email protected] (65) 6535-1475 Listing Manual Review Issuer Regulation Department Risk Management and Regulation Division 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. Recommendations of the DASC 2. General share issue mandate and convertible securities 3. Trading halt mechanism and suspension 4. Miscellaneous amendments Annexure A: Proposed amendments to the listing rules .........................

3 3 3 3 3 4 6 6 14 15 17 20

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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. SGX may issue an addendum to this Consultation Paper. Amendment of the listing rules is subject to the approval of the Monetary Authority of Singapore. SCOPE OF THE CONSULTATION PAPER This paper reviews the recommendations made by the Disclosure and Accounting Standards Committee ("DASC") and proposes amendments to the listing rules to support them. The Exchange understands that the Council on Corporate Disclosure and Governance ("CCDG") will initiate a discussion on the matter of quarterly reporting at its first meeting, which will be held in September 2002. Pending the outcome of the discussion, no amendment is proposed for the recommendations relating to quarterly reporting. A number of recommendations may not require listing rules to be amended, however respondents are invited to comment on whether SGX should make amendments. Other areas covered include trading halt and suspension, and extension of general share issue mandate to convertible securities. Details of the proposals are provided on pages 6 to 19. 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:! Additions are underlined. ! Deletions are struck through. REFERENCES References to "listing rules" or "Rule" mean the listing rules which came into effect on 1 July 2002.

1.2

2. 2.1

2.2 2.3 3. 3.1

4. 4.1

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EXTRACT OF THE PROPOSALS

Part 1.

DASC Recommendations Proposal 1: Paragraph 2 of Appendix 7.2 will be amended to require results announcements to include a statement on whether or not the financial results are prepared in compliance with the prescribed accounting standards. If not, the directors must provide a confirmation that they know of no reason why the auditors would not agree to the deviation from the prescribed accounting standards. Rule 1207(5) will be amended to require a confirmation by the auditors of their agreement to any deviation from the prescribed accounting standards for audited financial statements (in the annual report). Proposal 2: A new definition will be adopted for the term "SAS". SAS will be defined as "Singapore Statements of Accounting Standards or the equivalent accounting standards prescribed by law". Proposal 3: Appendix 7.2 will not prescribe the reporting format for income statements. Issuers can present their income statements in a form presented in their most recently audited accounts. In addition, certain new disclosure requirements have been introduced to Appendix 7.2. Proposal 4: Appendix 7.2 will be amended such that issuers need not disclose the unconsolidated income statement. Proposal 5: Rule 1207(4) will be amended to require the following additional disclosures in the annual report: (i) cash flow statement; (ii) analysis of the business outlook; (iii) prospectus-type information relating to the background of directors and key management staff; and (iv) prospectus-type information relating to risk management policies and processes. Proposal 6: Rule 1207(6) will be amended to require issuers to include in the annual report a confirmation by the audit committee that it has undertaken a review of all non-audit services provided by the auditors and that the provision of such non-audit services would not, in the audit committee's opinion, affect the independence of the auditors.

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Part 2.

Convertible Securities And Share Issue Mandate Proposal 7: The listing rules will be amended to extend the general share issue mandate to the issue of convertible securities.

Part 3.

Suspension And Trading Halt Mechanism Proposal 8: mechanism. The listing rules will be amended to introduce a trading halt

Part 4.

Miscellaneous Amendments Proposal 9: Rule 713 will be amended such that an audit partner must not be in charge of more than 5 consecutive audits, the first audit being for the financial year beginning on or after 1 January 1997, regardless of the date of listing. If the listing of an issuer occurs after 5 consecutive audits by the same audit partner in charge, the same partner may complete the audit of the financial year in which the issuer lists. Proposal 10: Rule 916 will be amended to include an exception for an issuer to make subsequent investment in, and provide loan to, a joint venture with an interested person, if certain conditions are met. Proposal 11: Rule 917(4) will be amended to allow the audit committee to obtain an independent financial adviser's opinion before forming its own views. Proposal 12: Paragraph 31 of Appendix 7.1 will be amended to require issuers and their directors to take into consideration any matters concerning the substantial shareholders of which they are aware that may account for the unusual trading activity, when responding to any query by the Exchange.

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DETAILS OF THE PROPOSALS

PART I RECOMMENDATIONS OF THE DASC DASC Report 1.1 On 7 September 2001, the Disclosure and Accounting Standards Committee issued its final report, containing 22 recommendations which have been accepted by the government. The DASC recommendations seek to improve the process by which accounting standards are set, maintained and regulated in Singapore; realign the Singapore Statements of Accounting Standards with the International Accounting Standards; and promote best practices in disclosure requirements amongst publicly-listed companies in Singapore. DASC Recommendations and the Listing Rules 1.3 Implementation of a number of the DASC recommendations requires amendment of the listing rules. The relevant recommendations are identified below together with SGX's commentary and proposals. In view of the forthcoming CCDG's discussion on quarterly reporting, no amendment is proposed at this stage for the recommendations relating to quarterly reporting. Please refer to the DASC report at www.mof.gov.sg for the full DASC views and recommendations. 1.3.1 DASC Recommendation 2: Compliance with prescribed accounting standards should be legislated. Deviations from accounting standards would be allowed if and only if such deviations are necessary in order to present a "true and fair" set of financial statements, in which event full and detailed disclosure of the nature, financial effect and justification for such deviations should be made in the financial statements. Auditors' confirmation of their agreement to the deviations is also required. In the case of listed companies, such disclosure should be made in all announcements of the listed company's financial results and financial position. SGX Commentary: Currently, any announcement of financial results must include disclosure of any changes or departures from accounting policies and methods of computation used in the last audited financial statements, including those required by an accounting standard. The reasons for the

1.2

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change and effect of the change must also be disclosed. (See paragraph 2(ii) of Appendix 7.2). These results are not required to be audited. In addition to these disclosures, we propose to require the results announcements to disclose whether or not the financial results are prepared in compliance with the prescribed accounting standards. If not, the directors must confirm that they know of no reason why the auditors would not agree to the deviation from the prescribed accounting standards. In relation to the audited financial statements (included in the annual report), where there are deviations from the prescribed accounting standards, a confirmation by the auditors of their agreement to any deviation from prescribed accounting standards would be required.

Proposal 1: Paragraph 2 of Appendix 7.2 will be amended to require results announcements to include a statement on whether or not the financial results are prepared in compliance with the prescribed accounting standards. If not, the directors must provide a confirmation that they know of no reason why the auditors would not agree to the deviation from the prescribed accounting standards. Rule 1207(5) will be amended to require a confirmation by the auditors of their agreement to any deviation from the prescribed accounting standards for audited financial statements (in the annual report).

1.3.2

DASC Recommendation 3: The Committee recommends that Singapore should

adopt the standards issued by the International Accounting Standards Board. The standards which are adopted would be the prescribed accounting standards and be termed "Financial Reporting Standards (Singapore)" or "FRS(S)". For listed Singaporeincorporated companies, the Committee recommends that they be permitted to use alternative standards allowed by the Singapore Exchange, without the need for reconciliation to FRS(S), if they are also listed on foreign exchanges that require these standards. All other Singapore-incorporated companies must use FRS(S) unless otherwise approved by the Registry of Companies and Businesses. Compliance with the prescribed accounting standards should be mandated for financial years commencing on or after 1 January 2003.

SGX Commentary: Rule 606(7)(a) requires listed companies seeking a primary listing on the Exchange to prepare their financial statements in accordance with Singapore Statements of Accounting Standards ("SAS"), International Accounting Standards ("IAS"), or US Generally Accepted Accounting Principles ("US GAAP"). For a secondary listing, the financial statements need only be reconciled to SAS, IAS or US GAAP.

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The Exchange understands that amendments to the Companies Act will permit Singapore-incorporated companies to use alternative standards allowed by the Exchange if they are also listed on foreign exchanges that require these standards. With the renaming from SAS to FRS(S), a new definition is proposed to be adopted for the term SAS in the Listing Manual. SAS will be defined as "Singapore Statements of Accounting Standards or the equivalent accounting standards prescribed by law".

Proposal 2: A new definition will be adopted for the term "SAS". SAS will be defined as "Singapore Statements of Accounting Standards or the equivalent accounting standards prescribed by law".

1.3.3

DASC Recommendation 6: The Committee recommends that all listed companies with financial years commencing on or after 1 January 2003 be required to make interim financial announcements, which are not required to be audited, on a quarterly basis for financial periods commencing on or after 1 January 2003. Such quarterly announcements should be made within 60 days of the quarter end. Listed companies are encouraged to adopt quarterly financial announcements earlier if they are able to do so. The Committee also recommends that the 60-day timeframe be reduced to 45 days for financial years commencing on or after 1 January 2004. SGX Commentary: No amendment is proposed for the time being, pending the outcome of the CCDG's discussion on quarterly reporting.

1.3.4

DASC Recommendation 7: The Committee recommends that all listed companies with financial years commencing on or after 1 January 2003 be required to make their final annual financial announcements within 60 days of the financial year-end. Listed companies are encouraged to announce their final annual financial announcements within 60 days if they are able to do so earlier. The Committee also recommends that the 60-day timeframe be reduced to 45 days for financial years commencing on or after 1 January 2004. SGX Commentary: No amendment is proposed for the time being, pending the outcome of the CCDG's discussion on quarterly reporting.

1.3.5

DASC Recommendation 8: The Committee recommends that all listed companies

should promptly issue profit warnings where their performance is expected to vary significantly (whether favourable or unfavourable) from previous estimates.

SGX Commentary: Under Rule 703(4), an issuer must observe the Corporate Disclosure Policy, which says in Paragraph 11(b) of Appendix 7.1

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that if subsequent developments indicate that the issuer's performance will not match earlier estimates or projections, the issuer must report this promptly and explain the variances. Thus, the disclosure required under this provision is already in line with the disclosure recommended by the DASC. Accordingly, no amendment is proposed. 1.3.6

with financial years commencing on or after 1 January 2003 should present their annual reports to their shareholders at their annual general meetings that are to be held within 120 days of the financial year-end. Listed companies are encouraged to adopt this recommendation earlier if they are able to do so.

DASC Recommendation 9: The Committee recommends that all listed companies

SGX Commentary: No amendment is proposed for the time being, pending the outcome of the CCDG's discussion on quarterly reporting. 1.3.7 DASC Recommendation 10: Current legislation should be changed to allow

companies to release their financial results and annual reports through other media, such as the Internet. The Committee recommends that listed companies which release their results via the Internet should do so via the Singapore Exchange website. The Committee further recommends that all listed companies should have their own websites to facilitate more effective and timely dissemination of information. Companies should also be allowed to use web-casts and dial-ins to disclose information.

SGX Commentary: The Exchange regards the timely disclosure of material information as fundamentally important to the operation of a fair and efficient market. The information should be disseminated as broadly as possible. Rule 702 and the Corporate Disclosure Policy (Paragraph 22 of Appendix 7.1) provide that public disclosure of material information must be made by an announcement released to the Exchange via the Monetary Authority of Singapore Network ("MASNET"). Investors are able to access all MASNET announcements through the SGX website. While MASNET is the official channel for public dissemination of material information, the Exchange encourages broad dissemination of information through additional means including the press, newswire services, companies' web sites, web-casts and dial-ins. The Exchange seeks comments on whether it should require all listed companies to have a website.

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1.3.8

DASC Recommendation 11: The Committee recommends that the SGX reviews Clause 1205(3) of the Listing Manual on the disclosure of material information. The review should take into account recent global trends on fair disclosure. SGX Commentary: Clause 1205(3) (now Paragraph 23 of Appendix 7.1Corporate Disclosure Policy) expressly prohibits the practice of selective disclosure, that is, the release of material non-public information to a person or group such as analysts, journalists or stockholders. The Policy also states that if material information is inadvertently disclosed, it must be publicly disseminated as promptly as possible via MASNET. In October 2000, the US Securities and Exchange Commission adopted Regulation FD to address selective disclosure. Regulation FD requires issuers to make public any material, non-public information (oral or written) that an enumerated company official discloses to the financial community and shareholders. It should be noted that, under the US framework, a company need only disclose price-sensitive information outside the usual reporting period if it chooses to, but it must do so publicly and not selectively. Thus, the US framework prescribes periodic disclosure of specific matters, as opposed to the continuous nature of disclosure obligations in other jurisdictions, including Singapore. The purpose of Regulation FD is not to create a continuous disclosure regime but to ensure that if material information is disclosed, it is to the public and "industry insiders" at the same time. Other markets also have rules prohibiting selective disclosure. Generally, the prohibition on selective disclosure is based on three key principles:(i) (ii) (iii) All investors should be given equal access to material information; If material, non-public information has been inadvertently disclosed to selected persons, it must be released to the market as soon as practicable; and Selective disclosure is acceptable only in very limited instances, such as giving information to the company's advisers.

The Exchange's rules on selective disclosure are based on these principles. Accordingly, no amendment is proposed. 1.3.9 DASC Recommendation 12: The Committee recommends that more regular reviews be undertaken to ensure that the reporting template is modified regularly and on a timely basis to reflect changes in disclosure and accounting standards. Reporting templates for the prescribed accounting standards and other allowed alternative standards should be made available to listed companies.

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SGX Commentary: Currently, issuers are required to report their income statements in the format prescribed in Appendix 7.2. We propose to amend Appendix 7.2 to remove the prescribed format for income statements to enable issuers to present their income statements in a form as presented in their most recently audited accounts. Issuers will thus be able to create their own format for the income statement in their results announcements on MASNET. Additional disclosure requirements will also be introduced to Appendix 7.2. The Exchange seeks comments on whether it should remove the prescribed format for income statements.

Proposal 3: Appendix 7.2 will not prescribe the reporting format for income statements. Issuers can present their income statements in a form presented in their most recently audited accounts. In addition, certain new disclosure requirements have been introduced to Appendix 7.2.

1.3.10 DASC Recommendation 13: The Committee recommends that a single common

template be used for interim as well as final results. This will help listed companies to prepare for the release of their financial results.

SGX Commentary: The new Listing Manual (which came into effect on 1 July 2002) already prescribes a single common reporting template in Appendix 7.2 for both half and full year results announcements. Appendix 7.2 will be further amended in accordance with Proposal 3. 1.3.11 DASC Recommendation 14: The Committee recommends that where consolidated

financial statements are prepared and presented, the parent company should not be required to present unconsolidated statement of its financial performance, although its financial statements should still be audited. The Committee further recommends that the parent company should present its balance sheet so that users can assess its financial position. This recommendation should also apply to both interim and final results announcements of listed parent companies.

SGX Commentary: Currently, an issuer is required under Paragraph 1(i) of Appendix 7.2 to disclose its unconsolidated income statement and balance sheet as well as the consolidated income statement and balance sheet of the group. Appendix 7.2 will be amended such that issuers need not disclose the unconsolidated income statement. However, issuers must still disclose both the unconsolidated and consolidated balance sheets.

Proposal 4: Appendix 7.2 will be amended such that issuers need not disclose the unconsolidated income statement.

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1.3.12 DASC Recommendation 15: The Committee recommends removing the

requirements of Section 201 of the Act in connection with the preparation and presentation of the directors' report in the annual report. For listed companies, the Committee recommends that the directors and management be required to prepare and present a detailed discussion and analysis of the financial performance, state of affairs and business operations for presentation to the shareholders. Information relating to interests of directors in shares should continue to be disclosed in the annual report. The Committee further recommends that the Statement by Directors, required under Section 201(15) of the Act, should be retained.

SGX Commentary: For the purpose of annual report disclosure, Rule 1207(4) requires a review (in as much detail as possible) of the operating and financial performance of the issuer. Thus, the disclosure required under this rule is already in line with the disclosure recommended by the DASC. Accordingly, no amendment is proposed. 1.3.13 DASC Recommendation 17: The Committee recommends that for listed

companies, certain additional information should be disclosed in the annual reports. The additional information would include: (i) the cash flow statement; (ii) management discussion and analysis of the company's financial performance, state of affairs and business operations; (iii) analysis of the business outlook; (iv) prospectus-type information relating to background of directors and key management staff, risk management policies and processes; and (v) corporate governance practices and processes. However, items (i) to (iii) should also be disclosed in the listed company's interim and final results announcements.

SGX Commentary: Currently, Rule 710(2) requires (in annual reports for annual general meetings from 1 January 2003) an issuer to describe its corporate governance practices with specific reference to the Code of Corporate Governance. In addition, Rule 1207(4) requires the annual report to include a detailed review of the company's operating and financial performance. Accordingly, no amendment is proposed. However, it is proposed that Rule 1207(4) be amended to require the following additional disclosures in the annual report: (i) cash flow statement; (ii) analysis of the business outlook; (iii) prospectus-type information relating to the background of directors and key management staff; and (iv) prospectus-type information relating to risk management policies and processes. In relation to interim and final results announcements, Appendix 7.2 currently requires disclosure of the matters recommended by the DASC. Accordingly, no amendment is proposed.

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Proposal 5:

Rule 1207(4) will be amended to require the following additional disclosures in the annual report: (i) cash flow statement; (ii) analysis of the business outlook; (iii) prospectus-type information relating to the background of directors and key management staff; and (iv) prospectus-type information relating to risk management policies and processes.

1.3.14 DASC Recommendation 22: The Committee recommends that the Boards of

Directors and Audit Committees of unlisted and listed companies respectively should undertake a review of all non-audit services provided by their auditors with the view to determine whether the provision of such non-audit services would impair the independence of the auditors. In undertaking the review, the Boards of Directors or the Audit Committees may wish to consider obtaining confirmation of independence from their auditors. The annual reports of listed companies should include a statement by the Audit Committee that it has undertaken the necessary review and that the provision of the non-audit services by the auditors would not, in its opinion, affect the independence of the auditors.

SGX Commentary: We note proposals by the Public Accountants Board regarding auditor independence, in particular the requirement for auditors to undertake a review if total fees generated by an audit client exceed certain thresholds. Rule 1207(6) will be amended to require issuers to include in the annual report a confirmation by the audit committee that it has undertaken a review of all non-audit services provided by the auditors and that the provision of such non-audit services would not, in the audit committee's opinion, affect the independence of the auditors.

Proposal 6: Rule 1207(6) will be amended to require issuers to include in the annual report a confirmation by the audit committee that it has undertaken a review of all non-audit services provided by the auditors and that the provision of such non-audit services would not, in the audit committee's opinion, affect the independence of the auditors.

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PART 2 CONVERTIBLE SECURITIES AND SHARE ISSUE MANDATE Extension of the General Share Issue Mandate to Convertible Securities 2.1 Currently, issuers must obtain specific shareholder approval for any issue of convertible securities. Shareholder approval is required because the issue of convertible securities has a dilutive effect. However, the dilutive effect is similar for the issue of shares. Therefore, we propose that the general share issue mandate may be extended to convertible securities as well. The extension of the general mandate to convertible securities would be subject to similar limits to the share issue mandate. The general mandate may authorise issuers to issue shares at the time of conversion notwithstanding that the general mandate may have ceased to be in force at the time of issuance of the shares. In addition, issuers may issue new convertible securities arising from subsequent adjustments to the "mother" convertible securities pursuant to any bonus, rights or other capitalization issue, if authorized by the mandate used to issue the "mother" convertible securities. Under the current listing rules, any placement of shares issued under a general mandate must not be priced at more than 10% discount to the weighted average price prior to the signing of the placement agreement. Similarly, this requirement (with slight modifications) should apply to the issue of convertible securities under a mandate. Where the conversion price is fixed, it must not be more than 10% discount to the prevailing market price prior to the signing of the placement agreement. If the conversion price is determined based on a formula, the formula must not allow the convertible securities holder to convert into the underlying shares at a conversion price which is more than 10% discount to the prevailing market price prior to the conversion. The mandate may not be used for issuance of convertible securities where the maximum number of shares to be issued upon conversion cannot be determined at the time of issue of such convertible securities. Each convertible security will be treated as the issue of the number of shares into which it may be converted for the purpose of calculating the 20% or 50% limit in Rule 806.

Proposal 7: The listing rules will be amended to extend the general share issue mandate to the issue of convertible securities.

2.2

2.3

2.4

2.5

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PART 3 TRADING HALT MECHANISM AND SUSPENSION Current Procedures 3.1 If an issuer needs to announce material information during trading hours, current procedures require the issuer to request for a temporary suspension in the trading of its securities. The suspension provides an opportunity for the material information to be properly disseminated. It usually lasts an hour (but may be longer) from the time the announcement has been released via MASNET. A suspension for this purpose may be misunderstood as the imposition of remedial action on an issuer. For this reason, the Exchange considers it appropriate to introduce a trading halt mechanism to complement the current suspension procedures. The trading halt mechanism is also used in other major markets such as the New York, Australian and Toronto stock exchanges. Trading Halt Mechanism 3.3 A trading halt differs from a suspension. A key difference is the treatment of orders in the Exchange's central limit order book ("CLOB"). When a trading halt is implemented, the existing orders in the CLOB will be maintained and investors can input orders, amend order quantities downwards, or withdraw orders (except that there will be no matching of orders). In contrast, when a suspension is imposed, all orders in the CLOB are purged and no new orders may be entered until the suspension ends. Another key difference is that, unlike a suspension, the Exchange cannot impose a trading halt. A trading halt can be applied only at an issuer's request (although subject to the agreement of the Exchange). An issuer may request for a trading halt at any time. A trading halt is normally on an intra-day basis and will last for at least 30 minutes. All orders in the CLOB will lapse in the usual way if the trading halt is not lifted by end of trading day. Generally, the maximum duration allowed for a trading halt is 5 market days. The reason is that it is intended to be for short-term stoppages in trading, such as to facilitate the release of material information. However, the Exchange may extend the trading halt upon request by the issuer. If the extension request is not granted, the issuer may request for a suspension. A trading halt is normally appropriate in situations where the issuer needs to announce material information during trading hours, or if information likely to affect the price or value of its securities cannot be released immediately.

3.2

3.4

3.5

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3.6

Due to our system's configuration, a trading halt can only be lifted at specific points in an hour, that is, at the 2nd, 17th, 32nd and 47th minute. As an illustration, if a trading halt is implemented at 3.00pm and the issuer makes the announcement at 3.05pm, the trading halt will only be lifted at 3.47pm (providing for a 30-minute dissemination period). Upon lifting of the trading halt, the stock will enter directly into the phase that the market is in. For example, the stock will enter into normal trading during the normal trading phase of the market. It will enter into the Opening Routine if the trading halt is lifted at 8.45am. Comments are sought on the trading halt mechanism.

Proposal 8: The listing rules will be amended to introduce a trading halt mechanism.

3.7

Modifications To Suspension 3.8 Currently, when a suspension is lifted, the stock enters into the phase the market is in. This will be modified. Under the proposed procedures, when a suspension is lifted during the normal trading phase, the stock will enter into the Adjust Phase for at least 15 minutes before resumption of normal trading. This allows the market to re-input fresh orders. During the Adjust Phase, the market can input orders, amend downwards order quantities or withdraw orders (except that there will be no matching). Normal trading can only start at specific points in an hour, that is, at the 2nd, 17th, 32nd and 47th minute.

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PART 4 MISCELLANEOUS AMENDMENTS Audit Partner 4.1 Rule 713 requires the audit partner in charge of the audit of an issuer to be changed at least once every five years. This requirement was introduced on 12 November 1996 (as Clause 9B05(2) in Chapter 9B of the Listing Manual). The transitional provisions to this requirement said that "for the purposes of Clause 9B05(2), the financial year beginning on or after 1 January 1997 shall be counted as the first year in which an incumbent partner has been in charge". When Chapter 9B was removed on 4 May 1998, the requirement was transferred to Clause 902B(2), which was subsequently renumbered Rule 713 in July 2002. There is some uncertainty amongst practitioners as to how the rule is to operate. For this reason, the Exchange proposes to reframe Rule 713 such that an audit partner must not be in charge of more than 5 consecutive audits, the first audit being for the financial year beginning on or after 1 January 1997. It is proposed that Rule 713 be applied in the following manner:(i) an audit partner, who has been in charge of the audits of a listed company for the financial years 1997 to 2001, must not be in charge of the audit for the financial year 2002 (i.e., the sixth audit). This applies regardless of the date of listing, subject to paragraph (ii). A newly-listed issuer will not be regarded as being in breach of Rule 713, even though the audit partner has been in charge for more than 5 consecutive audits at the time of listing, provided a different audit partner is put in charge of the audit of the group's annual accounts for the financial year commencing after listing. This would allow the partner to continue to be the partner in charge for the financial year in which the issuer lists.

Proposal 9: Rule 713 will be amended such that an audit partner must not be in charge of more than 5 consecutive audits, the first audit being for the financial year beginning on or after 1 January 1997, regardless of the date of listing. If the listing of an issuer occurs after 5 consecutive audits by the same audit partner in charge, the same partner may complete the audit of the financial year in which the issuer lists.

4.2

(ii)

4.3

Comments are sought on the application of Rule 713 as discussed above.

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Exception Under Rule 916(2) 4.4 Rule 916(2) creates an exception from the need to obtain shareholder approval for entering a joint venture with an interested person. It is proposed that a similar exception be extended to an issuer making a subsequent investment in, and providing loan to, a joint venture with an interested person, if certain conditions are met.

Proposal 10: Rule 916 will be amended to include an exception for an issuer to make subsequent investment in, and provide loan to, a joint venture with an interested person, if certain conditions are met.

Announcement Requirements For Interested Person Transactions 4.5 Rule 917(4) requires an announcement of interested person transactions to contain, inter alia, a statement from the audit committee whether the transaction is on normal commercial terms and the terms are not prejudicial to the interests of the issuer and minority shareholders. This rule is proposed to be amended to allow an issuer to indicate in its announcement that it will disclose the audit committee's views in a subsequent announcement. This is to enable the audit committee, who may wish to obtain an independent financial adviser's opinion, to do so before forming its own views.

Proposal 11: Rule 917(4) will be amended to allow the audit committee to obtain an independent financial adviser's opinion before forming its own views.

Market Surveillance 4.6 Paragraph 31 of Appendix 7.1 says that the Exchange may require an issuer to make an announcement in the event of unusual trading activity. The announcement must state whether the issuer and its directors and substantial shareholders are aware of the reasons for the unusual trading activity and whether there is any material information which has not been publicly disclosed. This requirement creates difficulty in the case of substantial shareholders who are not directors and are not involved in the management of the listed company. It is proposed that Paragraph 31 be amended such that the announcement need not include a statement from the substantial shareholders. Instead, the issuer and its directors will be required to take into consideration any matters concerning the substantial shareholders of which they are aware that may account for the unusual trading activity, when responding to any query by the Exchange.

4.7

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Proposal 12:

Paragraph 31 of Appendix 7.1 will be amended to require issuers and their directors to take into consideration any matters concerning the substantial shareholders of which they are aware that may account for the unusual trading activity, when responding to any query by the Exchange.

Others 4.8 Apart from the above, other amendments are proposed to the listing rules (as set out in Annexure A) to improve clarity. The relevant rules are 315(5), 316, 704(15)(c) & (d), 704(16)(c) & (d), 715, 718(1), 720(1), 747(2), 805, 811(3), 812(2), 829, 830, 917(4)(b), 921(4)(a), 1002(3)(b), 1006(b), 1008, 1009, 1010(7), and Paragraph 28 of Appendix 7.1.

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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

A new definition be introduced as follows. Term "SAS" Meaning Singapore Statements of Accounting Standards or the equivalent accounting standards prescribed by law

The new definition is introduced consequential on the proposed renaming from SAS to FRS(S) pursuant to DASC recommendation 3.

Purpose of amendment: Listing Rule 315(5)

1.2

Listing Rule 315(5) be amended as follows. In the case of a foreign debt issuer, the names and addresses of its representatives (preferably who are based in Singapore) with whom the Exchange may liaise in respect of future correspondence regarding the debt securities; The amendment is proposed to clarify that the representatives should preferably be based in Singapore.

Purpose of amendment:

Listing Rule 316

1.3

Listing Rule 316 be amended as follows. A debt issuer is required to observe only the continuing listing obligations in Part VI of Chapter 7. It must also undertake to release information to the Exchange at the same time as such information is released to the home market and must comply with such other rules as may be applied by the Exchange from time to time (whether before or after listing).

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Purpose of amendment: The amendment is proposed to remove a duplication of the requirement in Rule 745. Listing Rule 704(15)(c) and (d)

1.4

Listing Rule 704(15)(c) and (d) be amended as follows. 704(15) Any acquisition of:(c) shares resulting in a company becoming a subsidiary or an associated company of the issuer (providing the information required by Rule 1010(3) and (5)); and shares resulting in the issuer increasing its shareholding in a subsidiary or an associated company (providing the information required by Rule 1010(3) and (5)).

(d)

Purpose of amendment: The amendment is proposed to require additional information on the acquisition to be disclosed. Listing Rule 704(16)(c) and (d)

1.5

Listing Rule 704(16)(c) and (d) be amended as follows. 704(16) Any sale of:(c) shares resulting in a company ceasing to be a subsidiary or an associated company of the issuer (providing the information required by Rule 1010(3) and (5)); and (d) shares resulting in the issuer reducing its shareholding in a subsidiary or an associated company (providing the information required by Rule 1010(3) and (5)). The amendment is proposed to require additional information on the sale to be disclosed.

Purpose of amendment:

Listing Rule 713

1.6

Listing Rule 713 be amended as follows. (1) The An issuer must disclose in its annual report the date of appointment and the name of the audit partner in charge of auditing the issuer and its group of

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companies. The audit partner in charge of the audit of the issuer must be changed at least once every five years must not be in charge of more than 5 consecutive audits, the first audit being for the financial year beginning on or after 1 January 1997, regardless of the date of listing. (2) If the listing of an issuer occurs after 5 consecutive audits by the same audit partner in charge, the same audit partner may complete the audit of the financial year in which the issuer lists.

Purpose of amendment: The amendment is proposed to clarify that the audit partner must be changed after the fifth consecutive audit of an issuer's annual accounts. Listing Rule 715

1.7

Listing Rule 715 be amended as follows. Subject to Rule 716, an issuer must engage the same accounting firm based in Singapore to audit its accounts, and its Singapore-incorporated subsidiaries and associated companies in which the issuer has control (as defined in the Singapore Statements of Accounting Standards). By definition, an issuer has no control over an associated company. Thus, amendment is proposed to remove the reference to "associated companies for which the issuer has control".

Purpose of amendment:

Listing Rule 718(1)

1.8

Listing Rule 718(1) be amended as follows. An issuer must disclose in the annual report the names of the accounting firms(s) for the following:(1) (2) Singapore-incorporated subsidiaries and associated companies for which the issuer has control; and significant foreign-incorporated subsidiaries and associated companies.

Purpose of amendment: By definition, an issuer has no control over an associated company. Thus, amendment is proposed to remove the reference to "associated companies for which the issuer has control".

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Listing Rule 720(1)

1.9

Listing Rule 720(1) be amended as follows. If a valuation has been conducted of the real assets of the an issuer or its subsidiaries and is accepted by the issuer's board, the issuer must:(1) announce the following information:(a) (b) (c) (d) The date of valuation; The name of the valuer; A description of the asset; and The valued amount of the assets.

Purpose of amendment: The amendment is proposed to clarify that an issuer must announce any valuation of its real assets or those of its subsidiaries if such valuation has been accepted by its board. Therefore, certain specialist valuations (eg, for fire insurance) may not need to be announced. Listing Rule 747(2)

1.10

Listing Rule 747(2) be amended as follows. A debt issuer must announce:(1) any redemption or cancellation of the debt securities; and (2) the details of any interest payment(s) to be made (save for fixed rate notes).

Purpose of amendment: The amendment is proposed such that issuers need not announce details of interest payment for fixed rate notes.

Listing Rule 806

1.11

Listing Rule 806 be amended as follows. 806(1) Approval by an issuer's shareholders under Rule 805(1) is not required if shareholders had, by ordinary resolution in a general meeting, given a general mandate to the directors of the issuer, either unconditionally or on such conditions as specified, to issue:(a) (b) shares; or convertible securities; or

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(c)

additional convertible securities issued pursuant to Rule 829, notwithstanding that the general mandate may have ceased to be in force at the time the securities are issued, provided that the adjustment does not give the holder a benefit that a shareholder does not receive; or shares arising from the conversion of the securities in (b) and (c), notwithstanding that the general mandate may have ceased to be in force at the time the shares are to be issued.

(d)

(2) A general mandate must limit the aggregate number of shares and convertible securities that may be issued. The limit must be:(a) to not more than 50% of the issued share capital, of which the aggregate number of shares and convertible securities issued other than on a pro rata basis to existing shareholders must be limited to not more than 20% of the issued share capital.; and calculated assuming all convertible securities issued, or to be issued, under the general mandate are immediately converted.

(b)

(3) For the purpose of Rule 806(2), the percentage of issued share capital is calculated based on the maximum potential issuer's issued share capital at the time that the mandate is passed (taking into account the conversion or exercise of any convertible securities and employee share options on issue at the time that the mandate is passed, which were issued pursuant to previous shareholder approval), adjusted for any subsequent consolidation or subdivision of shares. after adjusting for:(a) convertible securities on issue when the mandate is passed, that are converted before the new shares or new convertible securities are issued; the conversion of additional convertible securities issued pursuant to an adjustment under Rule 829 for convertible securities on issue when the mandate is passed. The conversion must be carried out before the issue of new shares or new convertible securities; and any subsequent consolidation or subdivision of shares.

(b)

(c)

(4) If the general mandate is obtained before listing, the issuer may treat its postinvitation issued share capital as its issued share capital for the purpose of Rule 806(3). (5) An issuer cannot rely on the general mandate for an issue of convertible

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securities if the maximum number of shares to be issued upon conversion cannot be determined at the time of issue of the convertible securities. (4)(6) A general mandate may remain in force until the earlier of the following:(a) the conclusion of the first annual general meeting of the issuer following the passing of the resolution. By an ordinary resolution passed at that meeting, the mandate may be renewed, either unconditionally or subject to conditions; or it is revoked or varied by ordinary resolution of the shareholders in general meeting.

(b)

The amendment is proposed to extend the share issue mandate to convertible securities and accommodate pre-listing mandates.

Purpose of amendment: Part IV of Chapter 8

1.12

Part IV of Chapter 8 be amended as follows. PART IV ISSUE OF SHARES, COMPANY WARRANTS AND CONVERTIBLE SECURITIES FOR CASH (OTHER THAN RIGHTS ISSUE)

809 810

An issuer may issue shares, company warrants or other convertible securities for cash other than by way of a rights issue. An issuer which intends to issue shares, company warrants or other convertible securities for cash must announce the issue promptly, stating the terms of the issue and the purpose of the issue (including the amount of proceeds proposed to be raised from the issue).

811(1) An issue of shares must not be priced at more than 10% discount to the weighted average price for trades done on the Exchange for the full market day on which the placement or subscription agreement is signed. If trading in the issuer's shares is not available for a full market day, the weighted average price must be based on the trades done on the preceding market day up to the time the placement agreement is signed. (2) An issue of company warrants or other convertible securities is subject to the following requirements:(a) if the conversion price is fixed, the price must not be more than 10% discount to the prevailing market price of the underlying shares prior to the signing of the placement or subscription agreement.

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(b)

if the conversion price is based on a formula, the quantum of discount in the price-fixing formula must not be more than 10% of the prevailing market price of the underlying shares before conversion.

(3) Rule 811(1) and (2) is not applicable if specific shareholder approval is obtained for the issue of shares, company warrants or other convertible securities. 812(1) An issue must not be placed to any of the following persons:(a) (b) (c) The issuer's directors and substantial shareholders. Immediate family members of the directors and substantial shareholders. Substantial shareholders, related companies (as defined in Section 6 of the Companies Act), associated companies and sister companies of the issuer's substantial shareholders. Corporations in whose shares the issuer's directors and substantial shareholders have an aggregate interest of at least 10%. Any person who, in the opinion of the Exchange, falls within category (a) to (d).

(d) (e)

(2) The Exchange may agree to a placement to a person in Rule 812(1) if specific shareholder approval for such a placement has been obtained. (2)(3) The Exchange may agree to a placement to a person in Rule 812(1)(b), (c) or (d) if it is satisfied that the person is independent and is not under the control or influence of any of the issuer's directors or substantial shareholders.

Purpose of amendment: The amendments are proposed consequential on the proposal to extend the share issue mandate to convertible securities as well as to formalize the current practice of requiring shareholder approval for shares to be issued at more than 10% discount or placed to the persons specified in Rule 812(1). Listing Rule 824

1.13

Listing Rule 824 be amended as follows. Every issue of company warrants or other convertible securities not covered under a general mandate must be specifically approved by shareholders in general meeting.

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Purpose of amendment: The amendment is proposed consequential on the extension of the general mandate to convertible securities. Listing Rules 829 and 830

1.14

Listing Rule 830 be incorporated into Listing Rule 829 as sub-paragraph 3 (with the following amendments). 829 The terms of the issue must provide for:(1) adjustment to the exercise or conversion price and, where appropriate, the number of company warrants or other convertible securities, in the event of rights, bonus or other capitalisation issues; and the expiry of the company warrants or other convertible securities to be announced, and notice of expiry to be sent to all holders of the company warrants or other convertible securities at least 1 month before the expiration date; and Any material alteration to the terms of a company warrants or other convertible security securities after issue to the advantage of the holders of such securities must be approved by the Exchange shareholders, except where the alterations are made pursuant to the terms of the issue.

(2)

830

(3)

The amendment is proposed to require shareholder Purpose of amendment: approval for any material alteration to the terms of issue that will benefit the holders of the company warrants or other convertible securities.

New Listing Rule

1.15

A new listing rule be introduced as Rule 830. An issuer must announce any adjustment made pursuant to Rule 829(1).

Purpose of amendment: The rule is proposed to require disclosure of adjustments to company warrants or other convertible securities.

Listing Rule 916(2)

1.16

Listing Rule 916(2) be amended as follows. The entering into Investment in a joint venture or joint investment with an interested

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person if:(a) (b) the risks and rewards are shared pro-rata in proportion to the equity of each joint venture partner; the issuer confirms by an announcement that its audit committee is of the view that the risks and rewards of the joint venture are shared pro-rata in proportion to the equity of each joint venture partner and the terms of the joint venture or joint agreement are not prejudicial to the interests of the issuer and its minority shareholders; and the interested person does not have an existing equity interest in the joint venture or joint investment prior to the participation of the entity at risk in the joint venture.

(c)

The amendment is proposed to clarify that the exception applies to both initial and subsequent investments in a joint venture with an interested person.

Purpose of amendment: New Listing Rule

1.17

A new Listing Rule 916(3) be introduced. Existing Listing Rule 916(3) and (4) will be renumbered accordingly. 916(3) The provision of a loan to a joint venture with an interested person if:(a) (b) the loan is extended by all joint venture partners in proportion to their equity and on the same terms; the interested person does not have an existing equity interest in the joint venture prior to the participation of the entity at risk in the joint venture; and the issuer confirms by an announcement that its audit committee is of the view that:(i) (ii) the provision of the loan is not prejudicial to the interests of the issuer and its minority shareholders; and the risks and rewards of the joint venture are in proportion to the equity of each joint venture partner and the terms of the joint venture are not prejudicial to the interests of the issuer and its minority shareholders. The amendment is proposed to create an exception

(c)

Purpose of amendment:

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from the need to obtain shareholders' approval for the provision of a loan to a joint venture with an interested person if certain conditions are met.

Listing Rule 917(4)(a)

1.18

Listing Rule 917(4)(a) be amended as follows. A statement:(i) whether or not the audit committee of the issuer is of the view that:(i)the transaction is on normal commercial terms, and (ii) the terms are is not prejudicial to the interests of the issuer and its minority shareholders. ; or that the audit committee is obtaining an opinion from an independent financial adviser before forming its view, which will be announced subsequently.

(ii)

Purpose of amendment: The amendment is proposed to bring this rule in line with the circular requirements in Rule 921(4)(a) and (5) as well as to clarify that an issuer may indicate in its announcement that it will disclose the audit committee's view in a subsequent announcement. This enables the committee, who may wish to obtain an independent financial adviser's opinion, to do so before forming its own views. Listing Rule 917(4)(b)

1.19

Listing Rule 917(4)(b) be amended as follows. Transactions that satisfy Rule 916(1), and (2) and (3) are not required to comply with Rule 917(4).

Purpose of amendment: The amendment is proposed consequential on the proposed amendment to Rule 916(2) and the introduction of a new rule 916(3).

Listing Rule 921(4)(a)

1.20

Listing Rule 921(4)(a) be amended as follows. (a) an opinion in a separate letter from an independent financial adviser who is acceptable to the Exchange stating whether or not the transaction (and all other transactions which are the subject of aggregation pursuant to Rule 906):(i) (ii) is on normal commercial terms, and is not prejudicial to the interests of the issuer and its minority

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shareholders.

Purpose of amendment:

The amendment is proposed to correct a typographical

error.

Listing Rule 1002(3)(b)

1.21

Listing Rule 1002(3)(b) be amended as follows. "net profits" as defined in item 4g of Appendix 7.2. means profit or loss before income tax, minority interests and extraordinary items.

Purpose of amendment:

The amendment is proposed consequential on the

changes to Appendix 7.2.

Listing Rule 1006(b)

1.22

Listing Rule 1006(b) be amended as follows. The operating profit before income tax (as defined in item 4g of Appendix 7.2) net profits attributable to the assets acquired or disposed of, compared with the group's net profits operating profit before income tax (as defined in item 4g of Appendix 7.2).

Purpose of amendment: The amendment is proposed consequential on the proposed amendment to Rule 1002(3)(b).

Listing Rule 1008

1.23

Listing Rule 1008 be amended as follows. (1) Unless Rule 703 or Rule 1009 applies, no announcement of the transaction is required If if all of the relative figures computed on the bases set out in Rule 1006 amount to 5% or less. , subject to Rules 703 and 1009, no announcement of the transaction is required. However, if the issuer wishes to announce the transaction, the announcement must include:(a) (b) details of the consideration as required in Rule 1010(3); and the value of assets acquired or disposed of as required in Rule 1010(5). The amendment is proposed to rationalise the rule.

(2)

Purpose of amendment:

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Listing Rule 1009

1.24

Listing Rule 1009 be amended as follows. If any of the relative figures computed on the bases set out in Rule 1006 amount to 5% or less, and iIf the consideration is satisfied wholly or partly in securities for which listing is being sought, the issuer must announce the transaction as soon as possible after the terms have been agreed, stating the information set out in Part VI.

Purpose of amendment:

The amendment is proposed to rationalise the rule.

Listing Rule 1010(7)

1.25

Listing Rule 1010(7) be amended as follows. The net profits operating profit before income tax (as defined in item 4g of Appendix 7.2) attributable to the assets being acquired or disposed of. In the case of a disposal, the amount of any gain or loss on disposal;

Purpose of amendment: The amendment is proposed consequential on the proposed amendment to Rule 1002(3)(b).

Listing Rule 1207(4)

1.26

Listing Rule 1207(4) be amended as follows. (a) A review, in as much detail as possible, of the operating and financial performance of the issuer and its principal subsidiaries in the last financial year. 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; A cashflow statement; An analysis of the business outlook; Prospectus-type information relating to the background of directors and key management staff; and Prospectus-type information relating to risk management policies and processes. The amendment is proposed pursuant to DASC

(b) (c) (d) (e)

Purpose of amendment:

recommendation 17.

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Listing Rule 1207(5)

1.27

Listing Rule 1207(5) be amended as follows. (a) The annual audited accounts (consolidated); , prepared in consolidated form. The accounts incorporated in the annual report must contain at least the information required under items (3) and (4) of the preliminary financial statement set out in Appendix 7.2. The audited balance sheet (unconsolidated) of the issuer; A statement whether or not the financial statements are prepared in compliance with the prescribed accounting standards; and Disclosure of the nature, financial effect and justification for any deviation from the prescribed accounting standards, together with the auditors' confirmation of their agreement to the deviations and a statement by the auditors that the deviation is necessary to present "true and fair" financial statements. The amendment is proposed pursuant to DASC

(b) (c) (d)

Purpose of amendment:

recommendations 2 and 14.

Listing Rule 1207(6)

1.28

Listing Rule 1207(6) be amended as follows. (a) (b) The amount of non-audit fees paid to auditors. If none, make an appropriate negative statement; and Confirmation by the audit committee that it has undertaken a review of all nonaudit services provided by the auditors and they would not, in the audit committee's opinion, affect the independence of the auditors. The amendment is proposed pursuant to DASC

Purpose of amendment:

recommendation 22.

Listing Rule 1301

1.29

Listing Rule 1301 be amended as follows. This Chapter sets out:(1) the requirements relating to trading halt, voluntary suspension, and withdrawal

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by the issuer from the Exchange's Official List; and (2) the powers of the Exchange with regard to trading halt, suspension, and delisting of an issuer by the Exchange.

The amendment is proposed consequential on the introduction of a trading halt mechanism.

Purpose of amendment: Listing Rule 1302

1.30

Listing Rule 1302 be amended as follows. PART II TRADING HALT AND VOLUNTARY SUSPENSION (1) The Exchange may at any time grant a trading halt or suspend trading of the listed securities of an issuer at the request of that issuer. The Exchange is not required to act on the request. (2) The length of a trading halt cannot exceed 5 days or such other period as the Exchange agrees. (3) The Exchange may suspend trading of the listed securities of an issuer, even if the securities are subject to a trading halt. However, if an issuer requested the trading halt (without the Exchange's intervention) to prevent trading in its securities taking place in an uninformed market, the Exchange will not suspend trading in the issuer's securities before the expiry of the trading halt. The amendment is proposed consequential on the introduction of a trading halt mechanism.

Purpose of amendment:

Paragraph 21 of Appendix 7.1

1.31

Paragraph 21 of Appendix 7.1 be amended as follows. Disclosure of material information should normally not be made during trading hours. If the disclosure is made material information needs to be disclosed during trading hours, the Exchange will expect the issuer to request a temporary suspension in the trading of its listed securities before announcing the material information trading halt or suspension. This provides an opportunity for the material information to be properly disseminated. As a guide, a trading halt requested for release of material information may last for 30 minutes. Alternatively, an issuer may request a temporary suspension. Otherwise, the Exchange will consider whether a temporary suspension in trading of the issuer's securities is necessary. Such a temporary suspension provides

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an opportunity for the material information to be properly disseminated. As a guide, the temporary a suspension may last an hour (or longer) 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. Note: Material announcements should be broadcast before 7.30am, between 12.30pm and 1pm, or after 5.05pm.

Purpose of amendment: The amendment is proposed consequential on the introduction of a trading halt mechanism. Paragraph 28 of Appendix 7.1

1.32

Paragraph 28 of Appendix 7.1 be amended as follows. Persons who come into possession of material information, before its public release, are considered insiders for the purposes of the Exchange's corporate disclosure policies. Such persons include substantial shareholders, directors, executive officers and other employees, and frequently also include the issuer's lawyers, accountants, bankers, investment bankers, public relations consultants, advertising agencies, consultants, valuers and other third parties. The associates (as defined in "Definitions and Interpretation") of, and those under the control of, insiders may also be regarded as insiders. Where an issuer is involved in the negotiation of an acquisition or transaction, the other parties to the negotiation may also be regarded as insiders. Finally, for purposes of the Exchange's disclosure policy, insiders also include "tippees" who come into possession of material information. The amendment is proposed to be in line with the Securities and Futures Act 2001.

Purpose of amendment:

Paragraph 31 of Appendix 7.1

1.33

Paragraph 31 of Appendix 7.1 be amended as follows. An issuer should monitor the trading in its securities to detect any unusual trading activity. Where such unusual trading activity is observed, issuers should note Part VII above. The Exchange also monitors trading of listed securities. Where there is unusual trading activity in a listed security, and it appears to the Exchange that the unusual trading activity cannot be explained by known factors, the Exchange may require the issuer to make an announcement. The announcement should, inter alia, state whether the issuer and its directors and substantial shareholders are aware of the reasons for the unusual trading activity and whether there is any material information which has not been publicly disclosed. If the issuer or its directors are aware of any

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matters concerning the substantial shareholders that may account for the unusual trading activity, they must take this into consideration when responding to any query by the Exchange. If substantial shareholders are not directors or are not involved in the management of the issuer, the issuer will have difficulty complying with this requirement. The amendment is proposed to clarify that the issuer and its directors must take into consideration any matters concerning the substantial shareholders of which they are aware that may account for the unusual trading activity, when responding to any query by the Exchange.

Purpose of amendment:

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Appendix 7.2

1.34

Appendix 7.2 be amended as follows. FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT Cross-referenced from Rules 705, 1002(3)(b), 1006(b), and 1010(7) and 1207(5) * Delete Accordingly 1(i) (a) An issuer must include the following components in the financial statements in the form included in its most recently audited financial statements:(a) (i) income statement in the form as specified in Items 3 and 4 (for group); (b) (ii) balance sheet (for issuer and group); (c) (iii) cash flow statement (for group); and (d) (iv) statement (for issuer and group) showing either (i a) all changes in equity or (ii b) changes in equity other than those arising from capitalisation issues and distributions to shareholders. and (e) selected explanatory notes that are material to an understanding of the current period. (ii) (b) For component statement (b) 1(a)(i), the issuer must provide statements for the financial period reported on, and comparative statements as at the end of the most recently announced statements for its first half-year or full year, as the case may be, with comparative statements for the corresponding period of the preceding financial year. (c) For statement 1(a)(ii), the issuer must provide a statement as at the end of the current financial period reported on, and comparative statements as at the end of the preceding financial year. (iii) (d) For components statements (c iii) and (d iv), the issuer must provide statements for the current financial period reported on, and a comparative statements for the corresponding period of the preceding financial year. 2. The financial statements must contain (at the minimum) the following information:(i) (a) A statement as to Whether the figures have been or have yet to be audited or reviewed by the auditors. Where the figures have been audited or reviewed by the auditors, the auditor's report (including details of any qualifications and emphasis of matter) must be set out. (ii) (b) A statement that Whether the same accounting policies and methods of computation are followed in the financial statements as compared with the most recent audited annual financial statements. Where there have been any changes or departure from to the accounting policies and methods of computation, including those required by an accounting standard, this should be disclosed together with the reasons for the change and the effect of the change.

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(c) Whether the financial statements are prepared in compliance with the prescribed accounting standards. Where there are any deviations from the prescribed accounting standards, the directors of the issuer must provide a confirmation that they know of no reason why the auditors would not agree to the deviations. Date: ........................ (Name of Issuer) Financial statements for the __ months period/year* ended ___/____. Latest period to ___/___/__ $'000 Co / Group 3(a) Turnover

% increase/ (decrease) Co / Group

(b)Cost of sales or classification as followed in the most recent audited annual financial statements. (c) Gross profit/loss* (d) Investment income (e) Other income including interest income 4(a)Operating profit/loss* before income tax, minority interests, extraordinary items, interest on borrowings depreciation and amortisation, and exceptional items (b) Interest on borrowings (c)(i) Depreciation and amortisation (c)(ii)Foreign exchange gain/loss* (d)Exceptional items (provide separate disclosure of items) (e)Operating profit/loss* before income tax, minority interests, extraordinary items but after interest on borrowings, depreciation and amortisation, foreign exchange gain/loss* and exceptional items (f)Income derived from associated companies (with separate disclosure of any items included therein which are exceptional because of size and incidence)

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(g) Operating profit before income tax (h) Less income tax (indicate basis of computation) (i)(a)Operating profit/loss* after tax before deducting minority interests (i)(b)Less minority interests (j)Operating profit/loss* after tax attributable to members of the company (k)(i) Extraordinary items (provide separate disclosure of items) (ii) Less minority interests (iii)Extraordinary items attributable to members of the company (l) Operating profit/loss* after tax and extraordinary items attributable to members of the company 3. The following information, if significant, must either be included in the income statement or in the notes to the income statement for the current and comparative financial periods, with appropriate breakdowns and explanations, unless such information is disclosed in the income statements: (a) Investment income (b) Other income including interest income (c) Interest on borrowings (d) Depreciation and amortisation (e) Provision for doubtful debts and bad debts written off (f) Provision for stock obsolescence (g) Provision for diminution in value of investments (h) Foreign exchange gain/loss* (i) Pre-acquisition profits (j) Adjustments for under or overprovision of tax in respect of prior years (k) Profit or loss on sale of investments, properties and/or plant and equipment (l) Exceptional items (give details) (m) Extraordinary items (give details) Latest Period ($) Previous Corresponding Period ($)

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5(a) Operating profit [4(i)(a)above] as a percentage of turnover [3(a) above] (b) Operating profit [4(j) above] as a percentage of issued capital and reserves at end of the period 4(ca) Earnings per ordinary share for the current and comparative financial periods based on 4(j) above after deducting any provision for preference dividends:(i) Based on the weighted average number of ordinary shares in issue (ii) On a fully diluted basis (To Ddisclose the basis used in arriving at the weighted average number of shares for the purposes of (ca)(i) above and to provide details of any adjustments made to the earnings for the purpose of (ca)(ii) above). (e) To provide an analysis of expenses based on their function /nature* within the group As at end of current period to dd/mm/yy Co/Group (d) 5. Net tangible asset backing (for issuer and group) per ordinary share based on existing issued share capital as at the end of the period reported on Latest Period to _/_/_ $'000 Co Group Item 6 is not applicable to interim results 6(a) Sales reported for first half year (b)Operating profit/loss* [4(i)(a) above] after tax before deducting minority interests reported for first half year (c)Sales reported for second half year (d)Operating profit/loss* [4(i)(a) above] after tax before deducting minority interests reported for second half year 7.To disclose the following or give a negative Previous % increase / Corresponding (decrease) $'000 Co Group Co Group

As at end of immediately preceding financial year dd/mm/yy Co/Group

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statement if not applicable: (a)the amount of any adjustment for under or overprovision of tax in respect of prior years; (b)the amount of any pre-acquisition profits; and (c)the amount of profits on any sale of investments and/or properties. 8. Segmental information must include at a minimum, a breakdown of the Group's turnover and profit before interest and tax for its business segments and geographical segments for the financial period reported on and the corresponding period, whichever is the Group's primary and secondary basis of segment reporting, as included in its most recent audited annual financial statements.

7(a). Segment revenue and results for business and geographical segments (of the group),

whichever is the issuer's primary basis of segment reporting, must be included for the first half year announcement, with comparative statements for the corresponding period of the preceding year.

7(b). Issuers reporting their full year results must present segmental information (of the group) for the full year, in a form as included in its most recently audited financial statements. 9. 8(a). Review of the performance of the group company and its principal subsidiaries, to the extent necessary for a reasonable understanding of the group's business. The review must set out and discuss any significant material factors affecting that had affected the earnings [as stated in 4(e) above] (i) turnover [as stated in 3(a) above] and (ii) costs and (iii) earnings [as stated in 3(b) and 5(e) above] of the company and group for the financial period reported on, including explanatory comments about the seasonality or cyclicality of the group's operations (where applicable). The review must also discuss the factors leading to any material changes in contributions to turnover and earnings by the geographical and/or business segments based on information disclosed in accordance with paragraph 6 above. 9 8(b)Where a forecast, or a prospect statement, has been previously disclosed to shareholders, the issuer must explain any variance between the forecast or prospect statement and the actual results. 9. Set out and discuss any material factors that had affected the cash flows, working capital, assets and liabilities of the Group during the current period reported on. 10. A commentary at the date of this announcement of the competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. 11. Dividend: To be completed if a decision regarding dividend has been made.

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Singapore Exchange Limited

(a) An interim/final* ordinary dividend has been/has not been* declared/recommended*. (b)(i) (ii) Amount per share ............ cents. Previous corresponding period .....cents.

(For 11(b), to state whether amount is before tax, net of tax or tax exempt. If before tax or net of tax, state the tax rate and the country where the dividend is derived. Where the dividend is not taxable in the hands of shareholders, this must be stated). (c) Dividend rate ..........%. Previous corresponding period ..........%. (d) Date payable ................ (e) Interim Dividend was ..............cents. (State whether net of tax or tax exempt) Latest year ($) Co Previous Year ($) Co

(f) Total annual dividend ordinary preference Total:

(g) Registrable Transfers received by the company up to 5.00 pm on ....................20... will be registered before entitlements to the dividend are determined. If no dividend has been declared/recommended* by the directors, this should be disclosed. 12. Details of any changes in the company's share capital arising from rights issue, bonus issue, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose, as well as share buy-backs since the end of the previous period. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the period reported on and as at the end of the previous corresponding period. 13. The following details as at the end of the financial period reported on with comparative figures as at the end of the immediately preceding financial year previous period as regards the aggregate amount of the group's borrowings and debt securities:(a) Amount repayable in one year or less, or on demand; and (b) Amount repayable after one year. State also whether the amounts are secured or unsecured, and give details of any collaterals. 14. Any events or transactions that are material to an understanding of the current financial period reported on, including the following must be disclosed: (a) The nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior

41

Singapore Exchange Limited

financial years, if those changes have a material effect in the current interim period; (b) The effect of changes in the composition of the group during the current period reported on, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructurings, and discontinuing operations; and (c) Changes in contingent liabilities or contingent assets since the last annual balance sheet date. The amendments are proposed pursuant to DASC recommendations 2, 12, 13 and 14.

Purpose of amendment:

42

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