Singapore Exchange's Delisting Rules

Singapore Exchange (SGX) has specific rules governing the delisting of companies from its market. These rules are designed to protect investors and maintain the integrity of the market.

Key delisting scenarios include:

Mandatory Delisting:
- Takeover or Privatisation: If a company is acquired in a takeover or privatized through a scheme of arrangement, it may be delisted if it cannot or does not maintain a public float of at least 10%.
- Failure to Meet Listing Requirements: A company may be delisted if it fails to meet or continue to meet certain listing requirements, such as financial performance, corporate governance, or public float.
Voluntary Delisting:
- Exit Offer: A company may voluntarily delist if it offers to buy back all outstanding shares from public shareholders at a fair and reasonable price. This is often done in conjunction with a takeover or privatization.
- Shareholder Approval: For voluntary delisting, the company must obtain approval from a majority of its shareholders.

Important Considerations:

Exit Offer: If a company is delisted through a voluntary exit offer, the offer must be fair and reasonable to all shareholders. An independent financial adviser will typically provide an opinion on the fairness and reasonableness of the offer.
Minority Shareholder Protection: SGX has implemented measures to protect minority shareholders in delisting situations, such as requiring a fair exit offer and prohibiting insiders from voting on the delisting resolution.
Trading Suspension: If a company's public float falls below the minimum threshold, SGX may suspend trading in its shares until the company either restores its public float or is delisted.

Independent Financial Adviser

In Singapore, when a company is delisted through a voluntary exit offer, an independent financial adviser (IFA) is typically appointed to provide an opinion on the fairness and reasonableness of the offer price to shareholders.

The IFA's role is crucial in ensuring that minority shareholders are treated fairly and that the offer price reflects the true value of the company's shares. They conduct a thorough analysis of the company's financial performance, market conditions, and other relevant factors to determine if the offer price is appropriate.

Key considerations for the IFA's assessment include:

Fairness: The offer price should be at least equal to the fair value of the shares.
Reasonableness: The offer price should not be unreasonably low, considering factors such as the company's future prospects and market conditions.
Independence: The IFA must be independent from the company and the offeror to ensure an unbiased opinion.

The IFA's opinion is a significant factor that shareholders can consider when deciding whether to accept or reject the exit offer.

Additional Resources: