To minority shareholders, delisting of a company from the Singapore Exchange (SGX) is anathema; since the shares, once no longer publicly traded, are practically worthless. This article discusses briefly, what delisting entails, and recent announcements made by SGX in relation to compulsory delisting.
There are two types of delisting – SGX may remove a listed company (Company) from its official list, without the Company’s consent (Compulsory Delisting), or a Company may apply to the SGX to be delisted (Voluntary Delisting).
Rule 1305 of the mainboard SGX-ST Listing Manual (LM) states that a Company will have to undergo a Compulsory Delisting if any of the following occurs:
Rule 1306 read with Rule 1309 of the LM provides that if the SGX compels a Company to undergo a Compulsory Delisting:
In addition, SGX introduced the minimum share price requirement for mainboard-listed companies in March 2015.
SGX has set a minimum trading price of 20 cents for mainboard-listed stocks. The minimum trading price will be calculated using the Company's volume-weighted average price over six months. The review period for compliance with the requirement will be carried out on the first market day of March, June, September and December.
Companies with a share price below the threshold will be placed on a watch-list. If the Company fails to exit the watch-list within the "cure period" of 36 months, the firm will be delisted.
Rule 1307 of the LM provides that a Company may do a Voluntary Delisting if:
If a Company is intending to voluntarily delist from the SGX:
It is also pertinent to note that an exit offer made for the purposes of a voluntarily delisting falls within the ambit of the Singapore’s Code on Takeovers and Mergers (the Code) and therefore needs to comply with the relevant rules of the Code unless otherwise waived by the Securities Industry Council.
The article was updated on 26 April 2016.
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