FOREIGN COMPANIES LISTED ON SINGAPORE EXCHANGE (Safeguards or minimum listing requirement period)

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FOREIGN COMPANIES LISTED ON SINGAPORE EXCHANGE:

(Safeguards or minimum listing requirement period): 4.

Mr Steve Chia Kiah Hong asked the Senior Minister if his Ministry will institute

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safeguards or a minimum listing requirement period for foreign companies listed here so as to protect minority shareholders from company owners who seek to de-list their stocks from the Singapore Exchange (SGX) at depressed prices way below their initial listing price.

Mr Tharman Shanmugaratnam (for the Senior Minister): Mr Speaker, Sir, the SGX does not impose a minimum listing period requirement. This is similar to exchanges in other jurisdictions like the United Kingdom or Hong Kong . The issue of whether to voluntarily delist is a commercial decision best left to the company's shareholders. However, SGX has rules to safeguard the interests of minority shareholders in such an event.

SGX rules require a shareholders' meeting to be convened to vote on a delisting resolution. To be successful, the resolution has to be (i) approved by a majority of shareholders representing at least 75% in value held by shareholders present and voting; and (ii) not voted against by more than 10% in value held by shareholders present and voting.

SGX also requires that a reasonable exit offer, which should normally be in cash, be provided; and an independent financial adviser be appointed to advise shareholders on the exit offer.

Taken together, these rules provide sufficient safeguard against minority shareholders being oppressed or forced to exit at unreasonable prices.

Mr Steve Chia Kiah Hong: Sir, does the Minister know that some businessmen are treating Singapore as the ATM of the East where if they need money, they will come over to draw funds through the listing of the IPO which they will peg it at a very high price and that would subsequently flop over the months? Over time, they would probably acquire a majority of 90% and then demand for compulsory

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delisting. This has happened recently in the case of a company that was listed. So would the Minister explain this matter?

Mr Tharman Shanmugaratnam: The Takeover Code prevents minority shareholders from being abused, whether it is a local company or foreign company. And even if it is a foreign company that does not have takeover rules in its home country, by listing in Singapore, it has to amend its M&A to abide by Singapore's Takeover Code rules. The takeover offer has to be at a price that ensures minority shareholders are not disadvantaged. There are various rules, I think Mr Steve Chia must be familiar with them, ie, the price has to be higher than the last transacted price made by the offeror in the last three months, and so on and so forth.

The rules that I had just mentioned on voluntary delistings ensure that minority shareholders are not disadvantaged. The example he has given is where someone makes a takeover offer, the result of which is that less than 10% free float is available on the market and therefore a compulsory delisting is required. The takeover offer is subject to the Takeover Code and the subsequent compulsory delisting is subject to rules, both in the Takeover Code and SGX

listing rules, which ensure that minority shareholders are not disadvantaged. In any event, market discipline will operate. If the takeover offer was not attractive in the first place, minority shareholders would not have accepted it, and the free float would not have gone below 10%.