24 April 2018
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Disciplinary actions require a due process: SGX RegCo

Business Times
13 Apr 2018
Angela Tan

There is no lack of will or ability on the part of Singapore Exchange Regulation (SGX RegCo) to carry out its task of policing the 745 listed firms with a combined market value of S$1 trillion while protecting investors.

In its latest Regulator's Column, the regulator assures the market that it has a range of regulatory tools at its disposal to enforce the Listing Rules and Trading Rules.

It also has a wide range of disciplinary sanctions to deal with relevant persons who have breached the rules. Relevant persons comprise the issuer, its directors, executive officers, and issue managers, and for a company listed on Catalist, its sponsors and registered professionals.

"Some of these are pre-emptive or imposed within a relatively short time-span to put the company on immediate notice to safeguard shareholders' interest, while signalling to investors that rule breaches might have occurred and to factor this into their decision-making.

"Other tools involve processes that may take more time such as a formal investigation and the convening of a hearing before the independent disciplinary and/or appeals committees,'' Tan Boon Gin, chief executive officer of SGX RegCo said.

Upon detecting material concerns in an issuer, SGX RegCo may use its tools to alert the market, contain the situation or ensure accountability of all relevant persons.

"Regardless of how and when each of these tools is deployed, they have the common objective of reminding relevant persons of their duties and obligations to the market and the investing public,'' Mr Tan said.

In alerting the market, SGX RegCo may pose disclosure queries - either privately or publicly on SGXNet - to seek clarification on inconsistencies or information gaps. However, a company must publish its response to a private query via SGXNet when the information is material to the price discovery process or would enable investors to make an informed decision. "Trade with Caution" (TWC) announcements may also be issued to warn the public of irregularities and concerns.

To contain certain risks and prevent them from escalating, the regulator may issue a Notice of Compliance. These must be made public for the establishment of "a fair, orderly and transparent market if necessary", or to enforce compliance by a stipulated deadline.

"We may call upon the authorities to intervene where a company blatantly disregards or persistently doesn't cooperate in complying with our Notices, and if the situation is urgent,'' Mr Tan said.

Nine Notices have been issued since they were introduced in October 2015. Seven of these - two to Datapulse Technology, two to YuuZoo Corporation, and one each to Noble Group, Midas Holdings and Emerging Towns & Cities - were public and two private.

In ensuring accountability, SGX RegCo may take disciplinary action against a breach of the Listing Rules or Trading Rules.

Mr Tan said: "Disciplinary actions require a due process; in keeping with the rule of law, we do not carry out summary justice."

He added that a formal investigation must be conducted and the relevant person given an opportunity to respond and to be heard.

"This will occur either in writing (known as a show cause process) or a full hearing before our independent disciplinary committees and/or appeals committees when we seek the imposition of heavier penalties such as bans or fines."

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.