The Securities and Futures (Offers of Investments) (Securities and SecuritiesBased Derivatives Contracts) Regulations 2018 (SFR) came into effect on 8 October 2018. These new regulations combine the requirements under the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 in relation to companies, as well as the Securities and Futures (Offers of Investments) (Business Trusts) (No. 2) Regulations 2005 in relation to business trusts.

In connection with this, the Monetary Authority of Singapore (MAS) issued a consultation paper on 26 May 2017 (Consultation Paper) and their response on 1 October 2018 (MAS Response) to the feedback received from the Consultation Paper.

Some of the notable changes to the Fifth Schedule of the SFR (Fifth Schedule) are set out below. Please note that the new disclosure requirements apply to prospectuses lodged with the MAS on or after 8 December 2018.

  • Consultants of the IPO

    Issuers need to disclose the identity of the consultant engaged by the Issuer to assist in: (a) any group restructuring exercise in connection with the IPO, or (b) the issue of securities to investors during the period of 12 months prior to the date of lodgment of the prospectus, for the purposes of facilitating the IPO.1 It is thus conceivable that this would capture consultants to the Issuer in connection with pre-IPO fund raisings as well. While MAS has not defined the role of a consultant, to the extent that an individual plays a role more akin to an introducer, rather than a consultant, the identity of such an introducer has to be disclosed as well. Any material relationship (i.e. nature and terms) between an introducer, or a consultant, with the Issuer, would also have to be disclosed.2
  • Pricing as at Registration

    The Fifth Schedule now clarifies that the offer price or number of shares being offered may be stated as a range as at registration.3 While this is not a common practice, there are prior SGX deals with such pricing mechanics.4

  • Use of Proceeds

    In relation to the use of proceeds to acquire or refinance the acquisition of assets, businesses, or entities, there is no longer the carve-out for acquisitions made in the ordinary course of business.5 Arguably, this would not be unduly onerous as the Issuer would have to disclose such details in connection with its future plans. If funds have already been expended for an acquisition, disclosure has to be made as to the amount already paid as at the latest practicable date as well.
  • Business Overview
    The Fifth Schedule no longer includes marketing activities under the items which have to be disclosed. Notwithstanding this, to the extent that marketing activities remain material to the Issuer or its group, the MAS Response provides that details of the Issuer's marketing activities would still be disclosed in compliance with Section 2436 of the Securities and Futures Act (Chapter 289 of Singapore) ("SFA").
  • Information on Fixed Assets
    If any material property will be acquired or is beneficially owned by the Issuer, and the Issuer has not obtained legal title to the property as at the date of registration of the prospectus, a statement of that fact, the reasons why legal title has not been obtained, the potential impact of that fact on the Issuer's operations and, if applicable, the expected date by which the legal title will be transferred to the Issuer should be disclosed as well.7 Further, the fact that any lease may be unilaterally terminated by the lessor, and the potential impact of this, should be disclosed as well.
  • Working Capital and Trade Receivables
    The working capital confirmation to be made by the Directors is now as at the date of lodgment of the prospectus, and for at least the next 12 months.8 This effectively aligns the Mainboard Issuers with that of the Catalist9 Issuers who have had to comply with Rule 407(2) of Section B of the listing manual of the SGX-ST (the Catalist Rules).
    The Fifth Schedule now prescribes that any financing facilities which are not available as at the date of lodgment of the prospectus must not be included, but net proceeds from the offer may be taken into account if the offer is fully underwritten. If the offer is not fully underwritten, minimum net proceeds may be included only if it is an express condition of the offer that minimum net proceeds are to be raised and that the application monies will be returned to investors if the minimum net proceeds are not raised.10

    Whilst it has already been market practice to disclose the amount of trade receivables, the Issuer's credit policy and average collection period, these disclosure requirements have now been formalised in the Fifth Schedule. 11
  • Compensation for Services

    Compensation paid, or to be paid, pursuant to any bonus or profit-sharing plan or any other profit-linked agreement or arrangement, to persons who are not directors or controlling shareholders, need not be disclosed, if:

    1. the total amount paid or to be paid pursuant to any such plan, agreement or arrangement to such persons, on any individual basis, did not/will not account for more than 1% of the profit before tax of the group, and
    2. the aggregate amount that was paid, and the maximum aggregate that is to be paid, to all such persons under all such plans, agreements or arrangements in that financial year are disclosed.12

    It is noted that the MAS Response provides that the carve-out would not apply if the Issuer is loss-making for the year, and details of such a profitsharing or profit linked agreement or arrangement would have to be disclosed. Further, disclosure has to be made in relation to employees who are immediate family members of a director or chief executive officer whose remuneration exceeds S$50,000 during the relevant financial year, or an explanation as to why such information has not been disclosed. 13
  • Financial Standards

    The Singapore Financial Reporting Standards (International) ("SFRS(I)s") has replaced the Singapore Financial Reporting Standards for financial years beginning on or after 1 January 2018. This is line with the amendments made to the listing manual of the SGX-ST earlier this year. The Fifth Schedule allows for certain transitional relief from restating up to three years of historical annual financial statements from FRS to SFRS(I)s.14 Interim periods, to the extent that they relate to a period beginning on or after 1 January 2018, would also have to be prepared with SFRS(I)s.
  • Pro Forma Financial Information

    The Fifth Schedule now clarifies that pro forma requirements do not apply to any acquisition or disposal, or agreement to acquire or dispose that (a) was made in the ordinary course of business by the Issuer or the group, (b) was made in relation to a new production line, construction-in-progress, or any other machinery or equipment, and (c) has been disclosed elsewhere in the prospectus pursuant to the requirements on material capital expenditures, divestments and commitments.15

If you have any questions on this, please do not hesitate to contact us.


1 Part 2, paragraph 3(f) (Advisers) of the Fifth Schedule.
2 Part 8, paragraph 7 (Interests of Underwriters, Financial Advisers, Introducers, or Consultants) of the Fifth Schedule. 3 Part 3, paragraph 1 (Offer Statistics) of the Fifth Schedule. 4 See final prospectus in relation to Hutchinson Port Holdings Trust dated 7 March 2011.
5 Part 4, paragraph 12 (Use of Proceeds from Offer and Expenses Incurred) of the Fifth Schedule.
6 Section 243(1)(a) of the SFA provides for a catch-all that the prospectus shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of, among others, the shares of the Issuer.
7 Part 5, paragraph 6 (Fixed Assets) of the Fifth Schedule.
8 Part 6, paragraph 5 (Liquidity and Capital Resources) of the Fifth Schedule.
9 The secondary board of the SGX-ST.
10 Part 6, paragraph 6 (Liquidity and Capital Resources) of the Fifth Schedule.
11 Part 6, paragraph 9 (Liquidity and Capital Resources) of the Fifth Schedule.
12 Part 7, paragraph
13 (Compensation for Services) of the Fifth Schedule. 13 Part 7, paragraph 18 (Compensation for Services) of the Fifth Schedule.
14 Part 9, paragraph 9 (Audited Financial Information) of the Fifth Schedule.
15 Part 7, paragraph 25 (Pro Forma Financial Information) of the Fifth Schedule.
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