FTT Market Conduct Rules — Questions and Answers
Question 1: What is the 'continuous disclosure' obligation for SGX-listed companies?
- The obligation to immediately disclose any material information that would be likely to materially affect the price or value of its securities (Correct answer)
- The obligation to publish quarterly financial results
- The obligation to provide daily trading volume updates to SGX
- The obligation to disclose all board decisions within 24 hours
Correct answer: The obligation to immediately disclose any material information that would be likely to materially affect the price or value of its securities
The continuous disclosure obligation requires SGX-listed companies to immediately announce to SGX any material information that would, or would likely, have a material effect on the price or value of their securities, ensuring all investors have equal and timely access to price-sensitive information.
Question 2: What constitutes 'misleading conduct' in a securities transaction under the SFA?
- Engaging in conduct that creates a false or misleading impression of the supply, demand, or price of a security (Correct answer)
- Publishing optimistic research reports about a company
- Recommending a security to multiple clients simultaneously
- Placing a large buy order that moves the market price
Correct answer: Engaging in conduct that creates a false or misleading impression of the supply, demand, or price of a security
Misleading conduct in securities transactions involves any act that creates a false or misleading impression of the market for a security — including its supply, demand, or price — even if the intent is not deceptive. It is a market misconduct offence under the SFA.
Question 3: Under SGX's listing rules, an 'interested person transaction' (IPT) requires:
- Disclosure to SGX and, above certain thresholds, shareholder approval, when a listed company transacts with a director, substantial shareholder, or their associates (Correct answer)
- Only internal board approval without external disclosure
- Automatic prohibition without MAS approval
- Disclosure only if the transaction exceeds S$10 million
Correct answer: Disclosure to SGX and, above certain thresholds, shareholder approval, when a listed company transacts with a director, substantial shareholder, or their associates
IPTs must be disclosed to SGX. Above specified thresholds (5% or more of net tangible assets), shareholder approval at a general meeting is also required. The interested person who is a party to the IPT must abstain from voting on the resolution.
Question 4: What is a 'substantial shareholder' under the Companies Act in Singapore?
- A person who has an interest in 5% or more of the voting shares of a company (Correct answer)
- A person who is a director of the company
- A person who owns shares worth more than S$1 million
- A person who is the single largest shareholder regardless of percentage
Correct answer: A person who has an interest in 5% or more of the voting shares of a company
Under the Companies Act and SFA, a substantial shareholder is defined as a person who has an interest in 5% or more of the total voting shares of a company. Substantial shareholders must disclose their interests and any changes in their shareholding to the company and SGX.
Question 5: What must a company director do before trading in the company's shares?
- Give prior written notification to the company and observe blackout periods around results announcements (Correct answer)
- Simply execute the trade without any special requirements
- Obtain MAS approval for each trade individually
- Notify all shareholders of the intended trade before executing it
Correct answer: Give prior written notification to the company and observe blackout periods around results announcements
Directors must notify the company before trading and must comply with blackout periods (typically 2 weeks before financial results announcements) when trading is prohibited. Notification must be made within 2 business days of any transaction under Singapore rules.
Question 6: What is a 'rights issue' and how does it benefit existing shareholders?
- An offer by a listed company to existing shareholders to subscribe for new shares at a discount, pro-rata to their existing shareholding (Correct answer)
- A mandatory buyback of shares from shareholders at a premium
- An offering of shares exclusively to institutional investors at market price
- A bonus issue of free shares to all existing shareholders
Correct answer: An offer by a listed company to existing shareholders to subscribe for new shares at a discount, pro-rata to their existing shareholding
A rights issue allows a listed company to raise new capital by offering existing shareholders the right to buy new shares at a discounted price, in proportion to their existing holdings. Shareholders can maintain their percentage ownership by taking up the rights.
FTT Market Conduct Rules
What is the 'continuous disclosure' obligation for SGX-listed companies?