Singapore, 21 Sep 2005... Monetary Authority of Singapore
MAS announced today that Part XIII of the Securities and Futures (Amendment) Act 2005 (SF(A)A) on offers of investments and the supporting Regulations will take effect on 15 October 2005.
2 MAS also issued today Regulations supporting the amendments under Part XIII of the Securities and Futures Act (Cap. 289) (SFA) dealing with offers of investments. The list of Regulations and a brief summary are set out in the Appendix.
3 The amendments to the offers of investments provisions in the SFA are designed to strengthen the foundations underpinning our disclosure-based regulatory regime and clarify existing rules to further enhance Singapore' position as an international financial centre. Small issuers will now be able to raise funds without incurring significant regulatory costs. MAS has also introduced tailored disclosure requirements to cater for offers of structured notes. In addition, existing rules governing disclosures in prospectuses have been augmented to further raise the quality of information included in prospectuses. These amendments to the offer of investments provisions continue MAS' efforts to establish a balanced legal and regulatory framework which facilitates capital fund-raising and offers of innovative financial products while ensuring satisfactory standards of investor protection.
4 MAS had consulted the industry on the Regulations. Our responses to the comments received are published on the MAS website. (Click here to view (208.5 KB))
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Appendix
Background
1 The SF(A)A was passed by Parliament on 25 January 2005. The amendments under the SF(A)A are being implemented in two stages. The first stage, which included amendments relating to the provision of markets and clearing facilities, and the conduct of intermediaries, came into operation on 1 July 2005. The second stage relating to the remaining amendments under the SF(A)A, including provisions on offers of shares, debentures, units in business trusts and collective investment schemes (CIS), will come into operation on 15 October 2005.
Commencement Notification
2 The remaining sections of the SF(A)A, including Part XIII of the SF(A)A on Offers of Investments, will take effect on 15 October 2005.
- Securities and Futures (Amendment) Act (Commencement) (No. 2) Notification 2005 (11.3 KB)
Regulations, Orders and Notification pertaining to Offers of Investments
3 The amendments to the offers of investments provisions in the SFA are designed to strengthen the foundations underpinning our disclosure-based regulatory regime and clarify existing rules to further enhance Singapore' position as an international financial centre. Small issuers will now be able to raise funds without incurring significant regulatory costs. MAS has also introduced tailored disclosure requirements to cater for offers of structured notes. In addition, existing rules governing disclosures in prospectuses have been augmented to further raise the quality of information included in prospectuses. These amendments to the offer of investments provisions continue MAS' efforts to establish a balanced legal and regulatory framework which facilitates capital fund-raising and offers of innovative financial products while ensuring satisfactory standards of investor protection.
Regulations
- Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005
(902.9 KB) - Securities and Futures (Offers of Investments) (Shares and Debentures) (Transitional and Savings Provisions) Regulations 2005 (12.1 KB)
- Securities and Futures (Offers of Investments) (Business Trusts) (No.2) Regulations 2005 (337.3 KB)
- Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005 (256.1 KB)
- Securities and Futures (Offers of Investments) (Collective Investment Schemes) (Transitional and Savings Provisions) Regulations 2005 (13.9 KB)
- Securities and Futures (Reference to Affairs of Business Trust and Affairs of Entity) Regulations 2005 (16.8 KB)
- Securities and Futures (Revocation) Regulations 2005 (6.36 KB)
Orders
- Securities and Futures (Institutional, Professional and Business Investors) Order 2005 (6.74 KB)
- Securities and Futures (Prescribed Entities) Order 2005 (6.46 KB)
- Securities and Futures (Recognised Securities Exchange) Order 2005 (7.25 KB)
Notification
4 The key changes introduced in the Regulations are summarised below:
Abolition of Public Offer
The SF(A)A abolishes the concept of offer to the public and introduces two new safe harbours which allow private placements and small offers to be made without a prospectus. These safe harbours provide legal certainty for capital raising by small and medium enterprises (SMEs) and help them raise funds more efficiently, without incurring unnecessary regulatory costs.
To prevent offerors from circumventing the $5-million limit under the small offers exemption or the 50-offerees limit under the private placement exemption, the SF(A)A requires closely related offers to be aggregated when determining whether the prescribed limit has been exceeded. The factors determining whether two offers are closely related are set out in the Regulations and supplemented by the Guidelines1.
Pre-Deal Research Reports
The SF(A)A will allow pre-deal research reports to be issued to institutional investors where the offer is made concurrently in Singapore and one or more overseas jurisdiction where pre-deal research reports are permitted. To reduce the risk of information in pre-deal research reports from leaking to the retail public, certain safeguards have been introduced in the Regulations. These include the requirement that the reports must not be circulated to persons who are not institutional investors and that a person issuing the reports must pre-number the reports and maintain a record of the recipients of the reports.
Tailored Prospectus Disclosure Checklists for Offers of Structured Notes
Given the complex nature of structured products, investors in such products are likely to have different information needs from those investing in normal debentures. The current prospectus disclosure checklist for debentures, which focuses on information regarding the issuer, therefore is not the most appropriate. The Regulations introduce new disclosure requirements to cater to offers of structured notes. These new streamlined disclosure requirements, which take into account the nature of structured notes as well as the unique investment characteristics of such products, ensure that proper risk and product disclosures will be made available to investors. The Regulations will also exempt a financial institution offering continuously issued structured notes (i.e. structured notes in respect of which the terms applicable to each offer are negotiated and agreed upon individually with the investor) under a programme from the requirement to lodge and register a pricing statement with MAS. This is subject to the financial institution giving to the investor a transaction note setting out the offer details prior to the purchase or subscription of the notes and a confirmation receipt thereafter.
New Advertising Requirements
The advertising provisions for offers of shares, debentures and units in business trusts have been augmented to prevent false and misleading advertisements. To ensure that important information is not hidden in fine print, advertisements will be required to display such information clearly and legibly. The advertising provisions for offers of units in CIS have also been amended so that only tombstone advertisements are allowed before a prospectus is registered. Such tombstone advertisements can state only the name and investment focus of the CIS, the name of the manager and how a copy of the prospectus may be obtained.
Financial Information
Currently, an issuer who undertakes a group restructuring exercise prior to its initial public offer is required to provide pro forma financial statements (which are not audited) in its prospectus to illustrate what the financial results of the listing group would be like if the group structure has been in place for the last three financial years. To raise the quality of financial information included in the prospectus, the Regulations will now require such an issuer to provide audited consolidated or combined financial statements of the listing group in the prospectus. To ensure the timeliness of financial information included in the prospectus, the requirement for interim financial statements has also been revised so that the latest financial statements will not be more than six months old from the date of lodgment of the prospectus.
Other Amendments to Improve Administrative Efficiency and Clarity
MAS has also made amendments to existing regulations to improve overall administrative efficiency. Some of the proposed amendments include the modification of existing lodgment provisions to take advantage of electronic medium and the migration of lodgment forms from the Regulations to the MAS website (see paragraph 5). In addition, existing provisions have been further streamlined and fine-tuned (such as clarifying definitions and language) to improve their overall clarity, consistency and operational efficiency.
5. Forms
Under the Regulations issued, the various forms relating to Part XIII of the SFA (which are currently part of the Subsidiary Legislation) will be made available on the MAS website. The forms are:
Offers of Shares and Debentures
Form 1: General Lodgment Form (111.4 KB)
Offers of Business Trusts
Form 1: General Lodgment Form (111.8 KB)
Offers of Collective Investment Schemes
Form 1: Application for Authorisation of a CIS (36.6 KB)
Form 2: Application for Recognition of a CIS (38.3 KB)
Form 3: Application for Approval to Act as a Trustee for CIS (39.2 KB)
Form 4: Application for Authorisation of a Restricted Scheme (22.1 KB)
Form 5: Application for Recognition of a Restricted Scheme (25.6 KB)
Form 6: General Lodgment Form (14.8 KB)
1 MAS will be issuing two sets of new Guidelines under Part XIII of the SF(A)A. These Guidelines will be published at a later date. The Guidelines will clarify MAS' policy intent and regulatory objectives in respect of the requirement to aggregate closely related offers. They also seek to provide guidance on how a market-maker can rely on an exemption introduced by the SF(A)(A) to conduct market-making activities for securities acquired under the small offers exemption.