On 15 May 2025, Singapore Exchange Regulation (SGX RegCo) issued a consultation paper proposing reforms to the Listing Rules (Mainboard) of Singapore Exchange Securities Trading Limited (SGX-ST). The proposed changes are designed to complement the initiatives announced on 21 February 2025 by the Monetary Authority of Singapore’s (MAS’s) Equities Market Review Group, which aim to enhance the competitiveness of Singapore’s equities market.
CA Lab explores the potential implications of these reforms in a two-part article. Part 1 was published in June, and in this Part 2, more professionals share their insights into how the proposals might impact Singapore’s capital markets and the broader business ecosystem.
1) Do you agree with a shift towards a more disclosure-based approach while retaining key qualitative admission criteria?
A shift towards a more disclosure-based approach, while retaining key qualitative admission criteria, is both timely and appropriate. This approach aligns Singapore’s regulatory framework with international best practices, particularly those in major common law jurisdictions including the United States and the United Kingdom. In these markets, regulators have increasingly focused on ensuring that investors receive clear, relevant, and material information to make informed decisions, rather than relying solely on prescriptive, quantitative thresholds.
The proposed amendments by MAS to streamline prospectus requirements – such as focusing on core, decision-useful disclosures and reducing unnecessary historical and technical details – are consistent with this global trend. This approach enhances market efficiency, reduces compliance costs, and supports a more dynamic capital market, while still safeguarding investor interests through qualitative gatekeeping.
2) Do you agree that the audited financial statements submitted with the listing applicant’s listing application must be unmodified, that is, not be subject to an adverse opinion, qualified opinion, or disclaimer of opinion by the auditors?
Requiring that audited financial statements submitted with a listing application be unmodified (that is, not subject to an adverse opinion, qualified opinion, or disclaimer of opinion) is a sound and prudent expectation. If the listing applicant’s audited financial statements are modified, it would mean that the listing applicant’s financial statements are materially misstated and do not fairly represent its financial position (for adverse opinion), or the listing applicant has not provided sufficient information or evidence to its auditors (for disclaimer of opinion). In both situations, it would be inferred that the listing applicant is not ready for listing under the more disclosure-based regime.
Although extending this expectation to existing listed entities may act as a deterrent against poor financial reporting and uphold market confidence, it may not be practical to expect that all existing listed entities are able to provide unmodified audited financial statements at all times. Instead, listed entities with modified entities should make the relevant prompt disclosures, subject to additional regulatory scrutiny.
3) Do you think that the S$30-million profit criterion is relevant as a quantitative financial criterion? If not, should it be removed, or the S$30-million figure reduced?
The S$30-million profit criterion as a quantitative financial threshold for listing has become less relevant in modern capital markets, particularly as markets evolve to accommodate a broader range of business models, including high-growth, pre-profit technology companies. If the goal of the SGX is to attract potential companies with large/scalable capitalisation potential, which at the time of listing is not profitable, the consideration of removing such profit criterion for mainboard listing must be made.
4) Do you agree with the removal of the Financial Watch-list? If so, do you agree that an issuer listed on the Mainboard should still be required to announce when it records pre-tax losses for the third consecutive financial year?
The implicit assumptions behind the proposed removal of the Financial Watch-list would presumably include the current existence of market transparency and that investors are able to make informed decisions on their stock portfolios investments.
This, however, may not be the case for retail investors who may not have the time, resources or financial capability to monitor and track their investment portfolios. Accordingly, consideration of the removal of such retail investor safeguards, including the Financial Watch-list, must be made properly and exhaustively.
1) Do you agree with a shift towards a more disclosure-based approach while retaining key qualitative admission criteria?
The move towards a more disclosure-based approach is a positive step towards making Singapore a more attractive listing venue and bringing the disclosure regime more in line with other developed markets like the United States, Hong Kong, and Japan.
However, in a disclosure-based environment, issue managers and professionals play a pivotal role as frontline gatekeepers. They are expected to exercise sound judgement, perform reasonable due diligence, and provide sound advice to companies in ensuring that all material facts are adequately disclosed in the prospectus. This enables investors to make informed decisions.
The challenge lies in ensuring accountability. Without effective oversight and timely enforcement, some gatekeepers may fall short of their obligations. To maintain the effectiveness of the regime, enforcement actions must be prompt and firm. When the market knows that lapses will be dealt with consequences, it creates a culture of market discipline of higher standards.
Regulatory and compliance surveillance must remain rigorous. Timely, full, and accurate disclosure is important for retail investors who depend heavily on the information presented. If disclosures are found lacking, responsibility should rest with both the company’s board and the professionals involved, to deter future lapses and uphold the integrity of the capital market. Without proper enforcement, there is a real risk of lower-quality listings in a disclosure-based regime environment, which could undermine market integrity and erode investor confidence.
2) Do you agree that the audited financial statements submitted with the listing applicant’s listing application must be unmodified, that is, not be subject to an adverse opinion, qualified opinion, or disclaimer of opinion by the auditors?
Agree with the proposal that the listing applicant’s audited financial statements should be unmodified at listing, as this should be the minimum baseline required for listing applicants.
3) Do you think that the S$30-million profit criterion is relevant as a quantitative financial criterion? If not, should it be removed, or the S$30-million figure reduced?
While I agree that historically, this criterion is rarely used for Mainboard admission, putting its relevance into question, I believe that such a criterion should be revised instead of removed, to retain the flexibility in the Mainboard admission requirements. However, it should be cautioned that the reduction of this criterion should not be too low such that it will significantly dilute the differences between the Mainboard and Catalist.
The intended purpose of the Mainboard is to provide a platform for established and large-cap companies to raise capital from a wider range of investors (in particular, institutional investors), and that such companies have demonstrated a sustainable business model and financials over a period. As an alternative, such reduction in the profit requirement could be considered together with having an accumulated profit requirement over a two-year period, which will ensure that companies are not meeting the criterion based on a one-off good year. This practice is in line with Hong Kong’s and Japan’s mainboard requirements, where the profit criterion is based on a total profit over the last two or three years.
4) Do you agree with the removal of the Financial Watch-list? If so, do you agree that an issuer listed on the Mainboard should still be required to announce when it records pre-tax losses for the third consecutive financial year?
Listed companies should still be required to make timely disclosures, including announcements if they incur losses for three consecutive years. These disclosures should remain available to all investors and continue to provide insights into the company’s financial performance.
The Watch-list was intended to be a tool to alert investors on the financial health of listed companies and serve to incentivise companies to work on its operational effectiveness and efficiency to achieve profitability. However, it is noted that the Watch-list has had negative effects on shares trading. Companies on the Watch-list often experience reduced trading interest as securities firms may restrict trading for such counters. As such, it results in a spiral of its trading liquidity, which further impairs a company’s ability to raise capital. This is understandable as investors tend to avoid investing in companies on the Watch-list, which could face the risk of delisting.
On balance, I agree with the removal of the financial Watch-list.
Also read Part 1 of this article, published in June. Hear from other professionals as they share insights into how the proposals might impact Singapore’s capital markets and the broader business ecosystem.
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