OREANDA-NEWS. Singapore Exchange (SGX) is giving affected companies carrying out a share consolidation to comply with the Minimum Trading Price (MTP) requirement, a 6-month extension before they are reviewed for compliance with the MTP requirement.

The 6-month volume-weighted average price (VWAP) of the shares of these companies will thus be assessed only on 1 September 2016 instead of 1 March 2016. The extension will only apply to companies which have consolidated their shares before 1 March 2016. The extended period takes into account the impact of current global market developments on companies’ share price performance as well as feedback from investors and companies. The FTSE ST All-share Index has fallen 15.5% from March to November 2015 with a decline of 4.9% in the month of November alone.

Companies which have carried out corporate actions such as mergers and acquisitions or reverse takeovers before 1 March 2016 can engage with SGX for a similar consideration on a case-by-case basis. Companies seeking to transfer to Catalist should also consult the exchange. 

Other affected issuers will still have their shares’ 6-month VWAP reviewed for MTP compliance on 1 March 2016. Affected issuers which have not acted to comply with MTP will be placed on the watch-list if the VWAP of their shares for the 6-month period from 1 September 2015 is below S$0.20. Once on the watch-list, they have 3 years to meet the requirement or be delisted.

On 2 March 2015, SGX introduced an MTP for shares of Mainboard companies to improve the quality of our market and reduce the risk of excessive speculation following the extreme volatility of low-capitalisation stocks in October 2013. The requirement takes effect from 1 March 2016 after a 1-year transition period. As at the end of October 2015, 94 of the 167 companies likely to be affected by MTP have either acted or announced plans to comply. Among the 94 companies, 86 have decided on a share consolidation of which 65 have completed this corporate action.

The public has been consulted twice on the MTP requirement; the first in February to March 2014 and the second in September to October 2014. Since March 2014, SGX has also actively engaged with stakeholders on the requirement through large group briefings and one-on-one engagements with companies and a forum organised by the Securities Investors Association (Singapore) for retail investors.  Of the companies which might be affected, more than 80% had indicated to SGX they were prepared to undertake some form of corporate action, including a share consolidation, to comply with the MTP requirement.

“SGX is allowing companies undertaking a share consolidation an extension so as to meet the MTP requirement. This is to address market feedback that share prices post-share consolidation could be affected by challenging market conditions. Investors should continue to monitor their investee companies and prod them to take action to comply, and more importantly, improve the long-term business fundamentals. Companies should likewise announce their plans to comply with MTP and actively engage their shareholders. Share consolidation alone may not be the only option,” said June Sim, Head of Listing Compliance, SGX.