The Monetary Authority of Singapore (MAS) issued the Securities and Futures (Offers of Investments) (Shares and Debentures) (Amendment) Regulations 2012 (Amendment Regulations) on 19 September 2012. The Amendment Regulations came into effect on 1 October 2012.
The Amendment Regulations are made in conjunction with amendments to the Securities and Futures Act (Chapter 289 of Singapore) (SFA) relating to the current exception from advertisement restrictions under section 251(9) of the SFA for a report about the securities published and delivered to an institutional investor (“pre-deal research report”) in respect of offers made concurrently in Singapore and one or more other jurisdictions. The pre-deal research report exception has been replaced with a general carve out for any disclosure, notice, report or publication falling within a prescribed description, so as to give the MAS the flexibility to make exceptions to keep up with developments in the securities market.
Pursuant to the Amendment Regulations, pre-deal research reports can now be made for pure domestic offerings. All pre-deal research reports must be published and delivered to the institutional investors not later than 14 days prior to the date of lodgement of the prospectus. Further, the person issuing the report (Report Issuer) must also assign a specific number to each copy of the pre-deal research report (assigned number) and keep a record of each person to whom he has distributed a copy of the report and the respective assigned number.
The front cover of each copy of the pre-deal research report shall include (a) its assigned number; (b) a prominent statement that the report is distributed to institutional investors only; (c) a prominent statement that the information contained in the report should not be disclosed by the recipient of the report to any other person; (d) a prominent disclosure on the nature of any material interest in, or any material interest in the issue or sale of, the securities that are the subject of the pre-deal research report that the Report Issuer has as at the date of the report; and (e) a prominent disclosure on any relationship between the Report Issuer and the person making the offer of the securities which is material in the context of the offer.
With regards to what constitutes a “prominent statement”, the MAS has indicated that as a general guide, the statements should be sufficiently prominent to draw the reader’s attention to them. For example, this could be done by presenting the statements in a bigger size, in bold, in a different colour, or using formatting such as borders. The placing of the statements within the front cover, such as if it is at or near the header, may also help to increase its prominence.
The Report Issuer must also take all other reasonable steps as are necessary to prevent the leakage of information contained in the report to any person who is not an institutional investor, including any person who, in the ordinary course of business, publishes a newspaper, periodical, magazine, or broadcasts by radio, television or other means of broadcasting or communication. The MAS has clarified that what constitutes “reasonable steps” is a matter which the Report Issuer entity would be best placed to determine, taking into account its set-up, scope, complexity of operations and industry best practices. Generally, such steps should include the establishment of proper internal controls within the entity, processes to ensure that the institutional investors to whom the pre-deal research report is to be distributed are adequately informed of the requirements, compliance checks, and appropriate training of the research analysts and other relevant personnel.
In addition to the above, the Amendment Regulations also provide for the deletion of the requirement for an issuer to provide an undertaking not to make an exempt offer prior to the lodgement of the prospectus with the MAS.
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