FTT Market Conduct Rules 2 — Questions and Answers
Question 1: What is a 'placement' of shares by a listed company?
- The issue of new shares directly to a select group of investors without a public offer, subject to SGX rules on maximum discount and number of shares (Correct answer)
- A free distribution of shares to all existing shareholders
- The listing of a new company on SGX through an IPO
- Secondary trading of shares between institutional investors
Correct answer: The issue of new shares directly to a select group of investors without a public offer, subject to SGX rules on maximum discount and number of shares
A placement is the issue of new shares directly and privately to selected investors without a prospectus. SGX rules limit placements to 50% of existing share capital within 12 months and cap the discount at 10% of the weighted average price.
Question 2: What is 'market rigging' under the SFA?
- Any conduct that creates or is likely to create a false or misleading appearance of trading in, or price of, securities, or artificially maintains or affects the price (Correct answer)
- Only applies to illegal transactions where both parties have agreed to manipulate prices
- Only applies to short selling activities in the securities market
- Only applies to transactions involving derivative instruments
Correct answer: Any conduct that creates or is likely to create a false or misleading appearance of trading in, or price of, securities, or artificially maintains or affects the price
Market rigging under the SFA encompasses any conduct that creates a false or misleading appearance of trading activity or price, or artificially maintains, inflates, or depresses the price of securities. It is broader than simple manipulation and includes various deceptive practices.
Question 3: What disclosure is required when a person acquires 30% or more of the voting shares of an SGX-listed company?
- A mandatory general offer (MGO) must be made to all remaining shareholders under the Singapore Code on Take-overs and Mergers (Correct answer)
- Only a disclosure to SGX without any further obligation
- The person must sell down below 30% within 30 days
- MAS must approve the acquisition before it can proceed
Correct answer: A mandatory general offer (MGO) must be made to all remaining shareholders under the Singapore Code on Take-overs and Mergers
Under the Singapore Code on Take-overs and Mergers, when a person (or concert party) acquires 30% or more of voting shares, they must make an MGO to buy ALL remaining shares at no less than the highest price paid in the preceding 6 months.
Question 4: What is a 'whitewash waiver' in the context of Singapore take-overs?
- A waiver granted by the Securities Industry Council allowing a person to acquire shares that would otherwise trigger a mandatory offer, subject to independent shareholder approval (Correct answer)
- A MAS approval for a company to delist from SGX
- A waiver of disclosure requirements for small transactions
- An exemption from stamp duty on share purchases
Correct answer: A waiver granted by the Securities Industry Council allowing a person to acquire shares that would otherwise trigger a mandatory offer, subject to independent shareholder approval
A whitewash waiver is granted by Singapore's Securities Industry Council to allow a person to acquire new shares — for example in a rights issue — that would take their holding above 30% without triggering a mandatory general offer obligation, provided independent shareholders approve the waiver at a general meeting.
Question 5: What is the 'fair and equitable treatment' principle in corporate actions by SGX-listed companies?
- All shareholders of the same class must be treated equally in corporate actions such as rights issues, dividends, and take-over offers (Correct answer)
- Only institutional shareholders must be treated fairly in corporate actions
- Fair treatment means offering the same products to all clients regardless of risk profile
- Directors must be compensated equally regardless of their contribution to the company
Correct answer: All shareholders of the same class must be treated equally in corporate actions such as rights issues, dividends, and take-over offers
The principle of fair and equitable treatment requires listed companies to treat all shareholders of the same class equally in corporate actions. All ordinary shareholders must receive the same offer price, same ratio of rights, and same terms in any corporate action.
Question 6: What is a 'substantial shareholder's' notification obligation when their shareholding changes?
- They must notify the company within 2 business days whenever their interest crosses or moves away from a 5% threshold, or changes by 1% or more above the 5% threshold (Correct answer)
- They must notify only when their holding reaches exactly 10%, 15%, 20%, etc.
- Notification is only required when selling, not buying, shares
- They must notify SGX directly, not the company
Correct answer: They must notify the company within 2 business days whenever their interest crosses or moves away from a 5% threshold, or changes by 1% or more above the 5% threshold
Substantial shareholders (holding 5% or more) must notify the company within 2 business days of any acquisition or disposal of shares that causes their holding to: cross the 5% threshold, move in increments of 1% or more above 5%, or fall below 5%. The company then announces the change to SGX.
FTT Market Conduct Rules 2
What is a 'placement' of shares by a listed company?