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IPO Process

* Please Note: Arka Projects Does Not Possess CMS Corporate Finance Licence To Lead Manage IPOs. As IPO Consultants / Transaction Treasury Manager, Arka Projects Will Value Add In The Pre-IPO Process And Help Clients Source For IPO Lead Management Houses.

IPOs in Singapore

Presented By:
Arka Projects
Bryan Koh Chong Ann
- Managing Partner

Topics Covered:

  1. Introduction
  2. The Listing Process
  3. Qualifications for Listing
  4. Preparing for Submission and Listing
  5. Continuing obligations of the listed company and its directors
  6. Regulations of IPO

Introduction – Methods of Offering

  • May distribute by way of public offer, placement, bookbuilding or a combination of any of the methods
  • May do so totally by placement
  • No necessity for the issue to be underwritten
  • If no underwriting, must inform the SGX-ST as early as possible

The Listing Process

New Regime
  • Securities and Futures Act - Sections 240, 243, 246, 251and the Securities Futures Regulations
  • Listing Manual
  • No necessity for the issue to be underwritten
  • If no underwriting, must inform the SGX-ST as early as possible

Overall Timetable

Timeline for Submission and Lodgment of Documents

Pre-submission to SGX-ST
  • SGX-ST has indicated that tricky issues should be clarified with them, i.e. IPTs, Conflicts of Interest, Negative Working Capital etc
  • Once sorted, then submit to the SGX-ST

Submit New Listing Application (“NLA”) and Prospectus to SGX-ST
  • Prospectus submitted must be in final form save for the issue price
  • SGX-ST will review prospectus for compliance with listing requirements
  • SGX-ST will review prospectus to ensure adequacy of information for secondary trading, not on prospectus drafting
  • Will inform issuer as to eligibility for listing within 21 days of application
  • If there are any material amendments (either by SGX-ST or the issuer), the 21 day timeline will run from the date that the SGX-ST receives such amendments

Letter of Eligibility by SGX-ST
  • After 21 days from the submission of the application to the SGX-ST, if there are no issues outstanding, SGX-ST will issue an eligibility letter to the Issuer
  • 21 day timeline may be extended
  • Upon receipt of such eligibility letter, the issuer can then proceed to lodge the prospectus with the MAS
  • The issuer will also set in motion the restructuring of the group prior to the lodgment of the prospectus with the MAS

Lodgment of Prospectus with MAS
  • No pre-vetting before lodgment
  • Minimum 14 day exposure period
  • Published on the MAS website (OPERA) for public comment (public comments to be seen by MAS only)
  • "Red-Herring" prospectus may be lodged instead of the final prospectus
  • Road shows and book building can commence
  • Lodgment date to be reset if there are amendments lodged

Registration of Prospectus with MAS
  • Registration within 14 - 21 days from lodgment date unless MAS extends time or issuer requests for extension of time
  • Prior to registration of the Prospectus, a copy of the final prospectus must be provided to the MAS - Section 240(9) if the initial lodgment was done by way of a "Red Herring”

Stop Orders
  • The MAS may issue a stop order anytime after registration and before trading commences if prospectus contains false or misleading statements, omits material information or does not comply with disclosure requirements
  • If stop order is issued, all application monies will be refunded

Documents to be submitted with the NLA – Rule 246
  • Resumes and particulars of directors, executive officers and controlling shareholder
  • Material contracts entered into within the preceding 24 months by the Company and its subsidiaries with any director, controlling shareholder or their associates
  • Detailed profit and cash flow projections for the current year and ensuing year of the applicant and each principal subsidiary and associate company if the SGX-ST requests for them
  • Auditors' report on the internal controls an accounting systems of the applicant and its principal subsidiaries

Documents to be submitted with the NLA – Rule 246
  • Particulars required under Appendix 2.1, e.g Corporate information, whether securities to be listed on Mainboard or Sesdaq
  • Prospectus with the accompanying compliance checklist
  • Draft M&A which is marked on the right hand margin to indicate compliance with Appendix 2.2
  • Declarations by each director, executive officer, controlling shareholder and officer in a managerial position and who are relatives of a director or controlling shareholder in the form set out in Appendix 2.4

Qualifications for Listing - General conditions
  • Issuer must be a going concern or successor of a going concern
  • Size may be important but emphasis on integrity of management and controlling shareholders, issuer's market position and relative stability, and the disclosure provided in the prospectus
  • Adequate trading record under substantially the same management
  • Must meet the shareholding spread and distribution requirements
  • Conflicts of Interest must be disclosed and resolved
  • Minimum of 2 independent directors
  • 1 Director must be resident in Singapore

Quantitative criteria for Mainboard Listings – Rule 210(2) and 210(3)
  • Issuer must satisfy any one of the 3 criteria:
  • Cumulative consolidated pre-tax profit of at least $7.5 million for the last 3 years with a minimum pre-tax profit of at least $1 million for each of the last 3 years;
  • Cumulative consolidated pre-tax profit of at least $10 million for the last 1 or 2 years; or
  • Market capitalisation of at least $80 million calculated based on the issue price and post-invitation issued share capital
  • Issuer must be engaged in substantially the same business and under substantially the same management throughout the 3 years
  • No quantitative criteria set on what this means
  • If the group made low profits or losses in the 2 years before the application due to specific factors of a temporary nature, application will still be considered if the adverse factors have ceased or will be rectified upon listing
  • In determining the profits, exceptional items or non­ recurrent income and extraordinary items are to be excluded
  • SGX-ST will not consider an application if the issuer has changed or proposes to change its financial year prior to listing for the purpose of taking advantage of exceptional or seasonal profits

Quantitative criteria for SGX Sesdaq Listings
  • No requirement of a track record
  • Needs to show that it requires funds to finance a project or develop a new product, which has been fully researched and costed
  • Must be engaged in a business which is viable and profitable, with prospects for future growth
  • Accounts must not be qualified in any way
  • Promoters' entire shareholding for at least 6 months after listing

Preparing for Submission and Listing

  • If the date of lodgment of the prospectus is later than 9 months after the end of the last financial year for which financial statements were prepared, interim financial statements are needed and must cover first 6 months of current year. Interim statements to be reviewed by auditors
  • Profit\Forecast estimates requires the opinion of the expert on whether assumptions are reasonable
  • Consent of auditors (if different from present auditors) for the past 3 years would have to be obtained
Prospectus Contents Requirements:
  • Must Comply with Chapter 6 of the Listing Manual which incorporates the IOSCO guidelines
  • Must comply with the SFR, which is similar to the IOSCO but with certain modifications
  • Overriding Principle: Disclosure based regime to ensure that all material information given that investors and their professional advisers would reasonably require to make an informed assessment

Responsibility for Prospectus
  • Generally, the Issue Manager is responsible for the drafting of the Prospectus, but Directors, Promoters and Officers of the company responsible for contents
  • Nowadays, lawyers may be requested by the issue managers to do the drafting of the Prospectus
  • Normally, the issue manager lodges the listing application and deals with the SGX-ST on all matters relating to the listing application

Liabilities for false and misleading statements.
  • Criminal liability

    Penal consequences - each director of the corporation and other person responsible for the prospectus liable on conviction to a fine note exceeding $150,000 or to imprisonment for a term not exceeding 2 years or to both.

  • Civil liability

    Civil consequences - persons liable to compensate any person who suffers loss/damage as a result of the false/misleading statement in or omission from the prospectus even if such persons were not involved in the making of the false/misleading statement or omission, but subject to a limitation period of 6 years.

  • proves that he has made all reasonable enquires
  • Proves that he place reasonable reliance on information given to him; by someone other than a director/employee/agent of the corporation
  • If a person named in the prospectus is able to show that he publicly withdrew his consent to being named in prospectus that way
  • If a person is able to prove that he is not aware of the new circumstance since prospectus was lodged

Continuing Obligations of Disclosure

  • To ensure that all shareholders are treated fairly and equitably
  • Keep shareholders and investors informed of factors that may affect the price or value of the shares

Disclosure Obligations
  • The Company must announce any information concerning itself, any of its subsidiaries or associated companies which:
  • (a) is necessary to avoid the establishment of a false market;
  • (b) would be likely to materially affect the price or value of the shares.
  • Appendix 7.1 sets out the Corporate Disclosure Policy that will assist the Company in deciding on relevant disclosure

Regulations of IPO

The 2 relevant authorities which regulates the Singapore securities market are:

  • Singapore Exchange Limited
  • Monetary Authority of Singapore

Companies seeking listing on the SGX-ST are regulated by:

  • Securities and Futures Act ("SFA")
  • Securities and Futures Regulations ("SFR")
  • SGX-ST Listing Manual
  • Common law and certain general statues
  • Practice notes and directions from MAS and SGX-ST


  • The SFA and SFR came into effect on 1st July 2002
  • The Singapore authorities have shifted from a merit-based regime of governing IPOs whereby the authorities review the track record of the company involved and decide whether it is of 'sufficient quality' to be listed on SGX-ST, to a disclosure-based one whereby the authorities will only ensure that sufficient relevant information are disclosed to the investing public. Investors will then form their own views on the merits of the proposed listing
  • In accordance with the SFA, Issuers are responsible in ensuring that all information provided are factual and accurate and that there is no omission of material information which will render the information provided misleading
  • Parties responsible include the Company, its Board of Directors, the Underwriter, and other professionals involved in the listing process (those who have opined on the listing documents and have yet withdrawn such consent)

Listing Criteria

  • Company must be a going concern or successor of a going concern
  • Company (other than investment companies) whose assets consists of wholly/substantially cash or short-dated securities will NOT normally qualify

Financial Position and Liquidity
  • Healthy financial position with positive cash flow from operating activities
  • Settlement of debts owed to the listing group by directors, substantial shareholders or companies controlled by them prior to listing

Accounting Standards
  • Financial reports must be prepared in accordance with the Singapore Financial Reporting Standards ("SFRS"), or International Accounting Standards ("IAS"), or US Generally Accepted Accounting Principles ("US GAAP")