Singapore A company initiates are the listing process by appointing a Singapore-based financial institution to be its sponsor and lead manager. The lead manager is usually a member company of Singapore Exchange (SGX), a merchant bank, or other similar institution acceptable to SGX. Process for going public The lead manager assumes an active role and prepares the company for listing. Besides managing the launch, the lead manager also submits the listing application on behalf of the company. In addition, the lead manager will coordinate with SGX on all matters arising from the application for listing. Apart from the lead manager, the company needs to appoint a lawyer to oversee legal aspects of listing. In addition, an appointed certified public accountant will provide the company with an initial evaluation of its readiness to go public, and report on the financial information of the company required in the listing application. Prior to and during the launch, the company will have to engage the service of an experienced public relations firm to further enhance its appeal and convey its corporate messages effectively to the investing public. Prior to submission of the listing application, the company is advised to consult SGX to resolve any specific issues. This will speed up the listing process and reduce any additional costs that may arise due to a delay. Once the listing application is completed, it is submitted to SGX for review. SGX reviews the application and issues an eligibility to list (ETL), with or without conditions, based on the information provided. Under the law, a company that intends to make an offer or invitation in respect of shares is also required to lodge a copy of the offer document relating to the offer or invitation to Monetary Authority of Singapore (MAS) for public comments. MAS will register a prospectus not earlier than 14 days and not later than 28 days after the lodgment of prospectus. This period allows regulatory review by both MAS and SGX, and for public scrutiny and comment. The lodged prospectus is published on the internet, to give investors the opportunity to comment and raise any issues of concern prior to its distribution. MAS and SGX do not vet prospectuses to determine if they contain inaccuracies in information or factual errors, but only to ensure that they comply with the laws and SGX listing rules on prospectus disclosure. Most companies that have decided to go public have progressed beyond the start-up phase and have become profitable, with prospectus of further significant growth. The public market readily accepts companies that have the following: A record of revenue growth. Capable leadership. An experienced and credible management team. Operations in a strong industry with potential for high performance. Both Singapore and foreign incorporated companies may be listed on either the Main Board or the SESDAQ. The Main Board caters to a wider spectrum of companies with a variety of business models. Companies such as fast growing high-technology companies that have a short but strong profit record, or which have yet to make profits, are also allowed to list on the Main Board under the Alternative 3 criteria. However, companies seeking a listing under such criteria will still have to appoint lead managers, who must satisfy themselves that the companies are suitable for listing. The SESDAQ is a market established to enable companies that do not yet meet the requirements for a Main Board listing to raise funds from the stock market. The SESDAQ was established to aid smaller companies, foreign or local, in raising funds from the stock market. These are no quantitative requirements for a listing on the SESDAQ. A summary of the listing requirements is provided in the table below. Main board Alternative 1 Alternative 2 Alternative 3 SESDAQ
Pre-Tax Profits Cumulative pre-tax profit of at least S$7.5 million over the last 3 consecutive years, with a pre-tax profit of at least S$1 million in each of those 3 years Cumulative pretax profit of at least S$10 million over the latest 1 or 2 years Business is expected to be viable and profitable, with good growth prospectus Market Capitalisation Market capitalization of at least S$80 million at the time of the initial public offering, based on the issue price Operating Track Record 3 years 1 Continuity of Management 3 years 3 years Accounting Standard Singapore Financial Reporting Standards, U.S.GAAP, or International Financial Reporting Standard. 1 A company with no track record has to demonstrate that it requires funds to financial a project or develop a product, which must be fully researched including cost estimates. Singapore is listing rules, in general, require a listed company to appoint to suitable auditors for the group and for significant foreign incorporated subsidiaries and associated companies to meet its audit obligations, Audit requirements Public offering requirements An company needs to satisfy the requirements set out in the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 (SFR) and other laws, rules or regulations that may be enacted from time to time and, where securities are to be listed, the SGX Listing Rules. The prevailing regulations require the company s annual consolidated /combined audited accounts (for the latest three completed years) to be prepared in accordance with Singapore Financial Reporting Standards (SFR), or International Financial Reporting Standards (IFRS), or U.S. General Accepted Accounting Principles (GAAP). For secondary listings, the financial statements need only be reconciled to SFRS, IFRS, or U.S. GAGP. The annual consolidated/ combined financial statements must be audited by certified public accountants in accordance with Singapore Standards on Auditing, International Standards on Auditing, or U.S. Generally Accepted Accounting Standards (GAAS). For interim financial statements included in a prospectus, a company is also required to engage its auditors to review the interim financial statements based on the applicable auditing standards. If pro forma group accounts are prepared for IPO purposes, the reporting auditors must express an opinion whether the pro forma group accounts are properly prepared and consistent with both the format and accounting policies adopted by the company in its financial statements, and whether the adjustments are appropriate for the purposes of preparing the pro forma financial statements. Continuing listing obligations A listed company is required to announce its financial results on a regular basis (either quarterly or half-yearly).
These results announced need not to be audited or reviewed by auditors. The Board of Directors is required to provide a negative assurance confirmation during the announcement of interim results stating that to the best of their knowledge, nothing has come to attention of the Board of Directors, that may render the financial results to be false or misleading. Singapore listing rules, in general, require a listed company to appoint suitable auditors for the group and for significant foreign-incorporated subsidiaries and associated companies to meet its audit obligations, such as preparing audited financial statements to be included in its annual reports. A company should consider the adequacy of the resources and experience of the accounting firm and the persons assigned to the audit, the firm s audit engagements, the size and complexity of the listed group being audited, and the number and experience of supervisory and professional staff assigned to the particular audit. In particular, a listed company must engage the same accounting firm based in Singapore to audit its own accounts, and that of its Singapore incorporated subsidiaries and significant associated companies. For significant foreign-incorporate companies, the listed company must engage auditors that are considered suitable by the exchange. Timetable for going public Prior to submission of the listing application, the company is advised to consult SGX to resolve any specific issues. This will speed up the listing process and reduce any additional costs that may arise due to a delay. The timeframe for a listing varies for different companies. On average, the whole process should last about four to nine months. Given that time is of the essence, a company should budget a reasonable amount of management time and appoint the appropriate professionals to assist in the listing process. This period is the most time-consuming step in the process of going public since each professional will be working with the company to prepare the various sections of the prospectus and other listing documents and to establish a timetable for completion. When completed, the prospectus is submitted to SGX for review. The timing required for listing varies and depends on the complexity of the operations of the companies and the restructuring process undertaken prior to listing. A summary of a typical listing timetable and a detailed timetable are provided below. Summary Singapore IPO timetable 4 to 9 months pre-listing 21 days before lodgment 14 days public comment 14 days registration preparation work Appoint professionals and advisers Due diligence work Pre-listing restructuring of group Preparation and submission of listing documents Submission of IPO application and relevant documents Review of documents by SGX Receipt of eligibility to list from SGX period Lodgment of prospectus on MAS website for public comments Public can submit comments on lodged prospectus to MAS Registration of prospectus (from 7 days to 14 days, if extended, after public comments period Company can launch offer and distribute registered prospectus after registration Detailed Singapore IPO timetable Activity Estimated time Responsibility required Initial organization meeting: 1 week All Review IPO timetable Discuss group restructuring for IPO purpose Identify accounting and other issues Management due diligence presentations Prepare list of parties involved referred to as the working group list Commence legal due diligence and restructuring and drafting 15-20 weeks1 ABC/CC/UC/U
meetings Review of any litigation, confirmation of patents, trademarks & titles, and other matters Preparation of legal documents Drafting of prospectus Discussion of management s discussion and analysis of financial position and results of operations Commence audit and review, if applicable 8-10 weeks 1 ABC/A Verification meetings to review and approve prospectus by 1 week All company Submission to SGX 8 weeks All Submission of application, prospectus and other documents to SGX for review. SGX reviews listing application for compliance with listing requirements and indicates eligibility of listing Submission to MAS 2-4 weeks All Lodges prospectus with MAS simultaneous public exposure of prospectus on MAS website Public can submit comments on lodged prospectus to MAS Regulatory review by MAS Sponsor can conduct road show presentations to institutional and sophisticated investors and commence book-building exercise if the lodged prospectus is a preliminary prospectus Registration of prospectus by MAS and company can launch 2 weeks ABC/U offer and distribute registered prospectus after registration Closing - All Estimated total time required 8 months (approximate 2) 1 These activities can be carried out concurrently. 2 Time required to complete may vary for different companies. In the above detailed IPO schedule the following abbreviations are used: ABC=Company CC=Company Counsel A=Independent registered public accounting firm U=Underwriters UC=Underwriters Counsel Costs of going public Underwriting/Lead manager The underwriters discount, or commission, is the largest single cost of going public. It is negotiated between the company and its underwriter. Factors that affect the discount are the size of the offering, the type of underwriting, the going rate for offerings of similar size and complexity, and the efforts perceived to be required to sell the stock. A company seeking a listing also needs to appoint a lead manager to handle or manage its listing process. Lead managers must be a member company of the SGX, a merchant bank, or a similar institution acceptable to the SGX to manage the launch and coordinate with the SGX on all matters arising from the listing application. Lead managers will charge a fee for their services provided during the whole IPO process. Legal Counsel Legal fees are incurred for the preparation of the prospectus, legal documents, and other matters that arise during the IPO process. The legal fees will be higher if extensive housekeeping is required to satisfy the legal aspects of listing. Accounting Accounting fees are incurred for the audit of financial statements as well as for the accountants participation in the preparation of the comfort letters for the underwriters. If interim financial statements are required,
accounting fees will be higher. (Even though these interim statements may not need to be audited, the auditors will have to review them) Printing In connection with the IPO, a company will need to have its prospectus printed. Printing cost vary, depending on the length of the prospectus, whether color printing is used, and the extent of the revisions required. Public relations A company will need to carry out public relation activities to create publicity for the company and to enable investors and fund managers to understand its business and operations. Listing fees An initial listing fee is payable when a company is admitted into the Exchange s Official List and when a new class of securities issued by a listed company is listed. In addition to the initial listing fee, a listed company is subject an annual listing fee and a perusal fee for documents reviewed by the Exchange. If the listed company issues additional new shares after it is listed (which are not arising from the exercise of warrants, options, or convertible securities), it will be charged additional listing fees based on the nominal value of the shares listed. Initial listing fee Main Board: S$50,000 (minimum) - S$200,000 (maximum), depending on market capitalisation SESDAQ: S$10,000 (minimum) - S$20,000 (maximum) Annual listing fee Main Board: S$25,000 - S$ 100,000 per annum SESDAQ: S$5,000 fixed per annum (for market capitalisation <S$ 50 million S$25,000 fixed per annum (for market capitalisation >S$ 50 million Are you interested in a listing at the Singapore stock exchange and you are looking for a qualified advisor, please contact [contact us] one of our professionals. info@battersea-park.com