There are a number of scenarios that may result in the delisting of a company from the official list of the Singapore Exchange Securities Trading Limited (SGX-ST). The typical delisting scenarios are: (i) delisting following a takeover (mandatory or voluntary) or privatisation by a scheme of arrangement with the company not being able or willing to reinstate the public float of 10% within the time frame permitted by the SGX-ST; (ii) voluntary delisting (coupled with an exit offer) propositioned by a company; and (iii) failure of the company to meet or continue to meet certain listing requirements resulting in an SGX-ST directed delisting.
When a company is delisted, its shares are no longer eligible for trading on the stock exchange. As a shareholder and if you continue to hold on to the shares post-delisting, you will continue to have legal and beneficial ownership and rights over the shares that you hold in the company. The rights and benefits that you enjoy as a shareholder of the company under law and as provided under the articles of association are preserved. Such rights include the right to attend and vote at the company’s general meetings and the right to receive audited accounts to be presented at annual general meetings. If you and your fellow shareholders are able to garner more than 10% of the total shareholding of the company, you may also requisite for a meeting of the shareholders of the company.
Unless there is any change to the articles of association, you are free to sell your shares in the company to any willing buyer at any time. Since a delisted company no longer trades on the stock exchange, liquidity is significantly reduced. You may therefore find yourself limited to selling your shares to the major shareholders of the company or investors who may be interested to hold unlisted shares in the company. You should determine if there is still room for you to require the company or, in the case of a takeover situation, the offeror, to buy your shares(1). The SGX-ST, unlike the New York Stock Exchange, does not provide over-the-counter (OTC) facilities to shareholders of delisted companies to sell their shares. Such companies are subject to lighter regulation but are required to report their financial results. Unlike the New York Stock Exchange, the SGX-ST also does not provide for the disposal of shares of a delisted company by way of a “Pink Sheet”(2).
Notes:
(1) For example, under Section 215(3) of the Companies Act, you have a right as shareholder to require the company to acquire your shares within a period of 3 months from the date of receipt of notification that 90% or more of the shares in issue have been acquired by a company or corporation pursuant to a takeover, scheme of arrangement or other contractual arrangements.
(2) A “Pink Sheet” is only a quotation system and subject to even less regulation than OTC facilities. Companies do not have to register with the stock exchange or report their financial results.
I am an expert in financial markets and securities regulation, with a demonstrated depth of knowledge in the intricacies of stock exchanges and corporate governance. My experience encompasses a comprehensive understanding of the regulatory frameworks that govern companies listed on stock exchanges, including the specific practices of the Singapore Exchange Securities Trading Limited (SGX-ST).
In the given article, the focus is on the delisting of companies from SGX-ST and the subsequent implications for shareholders. I will break down the concepts used in the article to provide a clearer understanding:
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Delisting Scenarios:
- The article outlines three typical scenarios leading to the delisting of a company from SGX-ST: (i) delisting following a takeover or privatisation, (ii) voluntary delisting with an exit offer, and (iii) failure to meet listing requirements resulting in an SGX-ST directed delisting.
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Consequences of Delisting:
- Once a company is delisted, its shares are no longer eligible for trading on the stock exchange.
- Shareholders who retain their shares post-delisting maintain legal and beneficial ownership rights, including the right to attend and vote at general meetings and to receive audited accounts.
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Rights and Benefits for Shareholders:
- Shareholders holding more than 10% of the total shareholding can requisition a meeting of the company's shareholders.
- The ability to sell shares is retained, but liquidity is significantly reduced, limiting options to major shareholders or investors interested in unlisted shares.
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Sale of Shares and Liquidity:
- Shareholders are free to sell their shares to any willing buyer unless there are changes to the articles of association.
- Due to reduced liquidity, selling shares may be limited to major shareholders or investors interested in unlisted shares.
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Regulatory Differences with Other Exchanges:
- The SGX-ST does not provide over-the-counter (OTC) facilities for shareholders of delisted companies to sell their shares.
- Unlike the New York Stock Exchange, there is no provision for the disposal of shares of a delisted company through a "Pink Sheet," a quotation system with even less regulation than OTC facilities.
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Legal Rights for Shareholders:
- Section 215(3) of the Companies Act is referenced, indicating shareholders' right to require the company to acquire their shares within three months if a significant portion of shares has been acquired by another entity through a takeover or scheme of arrangement.
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"Pink Sheet" Explanation:
- A "Pink Sheet" is described as a quotation system with fewer regulations than OTC facilities, where companies are not required to register with the stock exchange or report financial results.
In conclusion, the article provides a comprehensive overview of the delisting process on SGX-ST and the subsequent implications for shareholders, including legal rights and potential limitations on share sales. The distinctions between SGX-ST and other exchanges, such as the absence of OTC facilities and "Pink Sheets," add further depth to the understanding of the topic.
