CATALIST: A SPONSOR-SUPERVISED LISTING PLATFORM FOR FAST GROWING COMPANIES
On 26 November 2007, the Singapore Exchange Limited (“SGX”) announced the creation of a new listing platform, Catalist. The new board has replaced SESDAQ on 17 December 2007. The first group of sponsors is expected to be announced by January 2008, which is when Catalist is due for initial public offering (IPOs) under the new regime. SGX will establish a pool of quality sponsors and will continually seek to attract local and overseas sponsors to the Catalist market.
Catalist’s distinctive regulatory regime offers a faster and simpler way for small and growing companies to raise capital. The focus on quality listings continues with the retention of key safeguards for investors and stringent selection of sponsors. It is hoped that Catalist will enjoy the same success as the Alternative Investment Market in London.
The Companies: Catalist rules are designed to facilitate the growth of companies by enabling them to respond to business needs in a more efficient and timely manner.
The companies must list through a Sponsor. They need not meet any prescribed financial entry criteria. There is no restriction on the size of the companies seeking a listing on Catalist.
Instead of a prospectus, listing applicants must issue an Offer Document. The Offer Document must contain statements from the company’s directors and the sponsor that the company’s working capital will be sufficient for its present purposes, and for at least 12 months from the date of listing. The Offer Document will be lodged on the Catalist website for public comment.
Post-IPO, the companies must retain a Sponsor at all times; if not they face delisting.
The annual limit on the issue of additional shares, and thresholds for acquisitions and disposals of assets that do not require shareholders’ approval will be raised.
The Issuer: will admitted by a Sponsor.
Post-IPO, issuer must retain a Sponsor at all times or else may face delisting
The Sponsor bringing the company to list must sponsor the issuer for at least 3 years post-listing.
The Sponsors: a critical role to be played in this new regime. Quality sponsors will determine the integrity and growth of the marketplace.
- Sponsors must ensure suitability of an applicant to list
- Sponsors must advise and prepare the issuer to list (including having adequate systems/procedures for rule compliance, advising directors on responsibilities)
- Sponsors must ensure that the issuer complies with its obligations under the Catalist rules.
- Sponsors must review and endorse all announcements and circulars released by the issuer to shareholders
- Sponsors must monitor the trading of the issuer’s listed securities
- Sponsors are also required to “whistle blow” if they detect any non-compliance.
Admissions
Shareholding spread
At least 200 shareholders at IPO
Quantitative criteria
No minimum earnings or operational track record required
Directors
For foreign companies, at least 1 of independent directors must be resident in Singapore
Restriction on promoter’s sale of shares:
Promoters must not sell vendor shares at IPO if
i) they collectively own less than 50% of issued capital of IPO; or
ii) such sale will cause their collective shareholding to fall below 50% of issues capital at the time of listing
Post-IPO, they will be subject to moratorium on 100% of their shares during the first six months and 50% of their shares in the next six months.
Moratorium on Pre-IPO investors
All pre-IPO investors: 100% of profit portion (based on a cash formula) at IPO and for at least 12 months after listing.
Changes in capital
Issuer can obtain shareholder mandate to issue up to 100% of the company’s share capital (of which shares issued on non pro-rata basis must not exceed 50%). The 50% limit can be increased to 100% in the case where shareholders approve by special resolution on or after the first shareholders’ meeting.
Acquisitions and realizations
Acquisitions of assets of more than 75% but less than 100% of the relevant bases or where the acquisition will result in a fundamental change in the issuer’s business, will require shareholder approval. Disposals of assets of more than 50% or where the acquisition will result in a fundamental change in the issuer’s business will require shareholder approval.