SGX RegCo Set to Expand Enforcement Powers

From 1 August, SGX RegCo will be able to issue public reprimands, require issuers to comply with specified conditions, and demand director resignations.

SGX RegCo (Singapore Exchange Regulation) has announced an expansion to its range of enforcement powers and the introduction of a formal requirement for issuers to have a whistleblowing policy, effective from 1 August.

SGX RegCo issued a public consultation on changes to the listing rules last August, seeking to enable greater and swifter accountability and clarity in the securities market.

Market participants broadly supported the listing rule changes, SGX RegCo said, adding that the changes will enable swifter enforcement outcomes, act as a greater deterrent against malfeasance, enhance investor protection, and reinforce confidence in Singapore’s capital markets.

“The market has spoken and is demanding more public accountability more quickly,” said Tan Boon Gin, CEO of SGX RegCo. “Particularly in uncertain times, we need to give investors faster answers and greater assurance. Speedy enforcement is also a stronger deterrent that will complement our other pre-emptive efforts such as our new whistleblowing framework.”

Under the changes, SGX RegCo gain new powers allowing it to issue a public reprimand and require an issuer to comply with specified conditions. These actions are non-appealable.

In addition, SGX RegCo gains new administrative powers, allowing it to prohibit issuers from accessing market facilities for a specified period or until fulfilment of specified conditions. It can also prohibit issuers from appointing or reappointing a director or an executive officer for up to 3 years, or require the resignation of a director or executive officer. These actions are appealable before the Listings Appeals Committee.

SGX RegCo will exercise its new powers against directors and executive officers when they are being investigated or are the subject of proceedings for contraventions of any relevant laws, regulations and rules relating to fraud, dishonesty, the securities or futures industry, corruption or breaches of fiduciary duties.

The changes will also hardcode in the listing rules a mandatory requirement for all issuers to establish and maintain a whistleblowing policy, where the identity of the whistleblower is kept confidential and the individual is protected from reprisal.

Issuers will be required to state in their annual reports that such a policy is in place for financial years commencing from 1 January 2021, along with an explanation of how they have complied with the policy and a commitment to protecting the identity of whistleblowers.

This requirement will take effect from 1 January 2022 and apply to annual reports published from this date.

Companies have already been required to publicly disclose and communicate the existence of a whistleblowing policy to its employees under the code of corporate governance, however this has to date operated on a ‘comply or explain’ basis, without the force of the law.

SGX RegCo has published its responses to the feedback received on the public consultation, as well as the details on the enhanced enforcement and whistleblowing frameworks, here.

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