Singapore to facilitate follow-on capital raisings

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The SGX announced on 9 December 2010 measures to shorten timetables for secondary fund raisings for companies listed on the Main board.  These measures will come into force from 1 January 2011 and similar rules will also apply to the Catalist (second) board.

Temporary measures on fund raising were initiated in early 2009 to enable companies to raise capital more efficiently during the global credit crunch.  A majority of the these measures are now being formalized and include:

– a shortening the notice of books closure date from 10 to 5 clear market days;

– allowing issuers to undertake a non-renounceable rights issue without specific shareholders’ approval, provided pricing is made at a discount not exceeding 10%;

– allowing issuers to issue scrip dividends without shareholders’ approval, provided shareholders are given a cash option; and

– introducing new guidance on sub-underwriting arrangements, in particular the need to seek specific shareholders’ approval where sub-underwriting fees are paid to controlling shareholders and substantial shareholders.

Other measures (including a higher threshold for renounceable pro-rata share issues and larger discount limits for placements) will, however, cease after 31 December 2010 given their potential dilution effects.