SINGAPORE (April 8): The Singapore Exchange Regulation (SGX RegCo) has announced two changes that will enable locally-listed companies to weather through the current deteriorating business environment.

For one, the entry of poor performing companies into the Financial Watch-List will be suspended this year.

This is because the novel coronavirus (Covid-19) pandemic has caused many companies to experience significant loss of revenue and profitability, SGX RegCo says. 

The stock market regulator warns that companies are likely to face liquidity crunch as this time as banks are tightening credit.

SGX RegCo typically conducts half-year reviews in June and December to identify companies to be included on the watch-list. 

The watch-list aims to compel companies to turn around their financial performance after three years of losses and when their market capitalisation falls below $40 million.

“[But] in light of current conditions, which are both unprecedented and unforeseen, placing listed issuers on the Financial Watch-List during this period might cause undue prejudice to companies navigating the business challenges in this climate,” SGX RegCo says in a statement today.

The stock market regulator adds that the suspension will enable companies to focus on meeting the current business and economic challenges, and dealing with any resultant liquidity crunch.

Companies that meet the exit criteria under the listing rules will continue to be able to exit the watch-list, it notes.

Secondly, given the likelihood of companies facing a liquidity crunch, SGX RegCo says it will raise the share issue limit for Mainboard-listed companies.

Such companies will now be able to seek a general mandate for an issue of pro-rata shares and convertible securities of up to 100% of their respective share capital (excluding treasury shares and subsidiary holdings in each class), compared to 50% previously.

The enhanced share issue limit is effective today until Dec 31, 2021.

However, the share issue limit on the aggregate number of non-pro-rata shares and convertible securities issued will remain at not more than 20%.

SGX RegCo says companies that intend to raise funds using the enhanced share issue limit must seek shareholder approval.

This could be obtained via an ordinary resolution or general mandate for the enhanced share issue limit at the annual general meeting.

Shareholder approval could also be obtained by convening an extraordinary general meeting.