SGX RegCo launches public consultation to streamline shareholder-requisitioned general meetings

The Singapore Exchange Regulation (SGX RegCo) is proposing a rule change mandating listed issuers to aid shareholders in requisitioning general meetings for prompt convening. Issuers must initiate facilitative efforts within 21 days of depositing the requisition notice. Simultaneously, those disputing the notice’s validity must seek a court ruling within the same timeline.

SGX RegCo suggests that issuers assist requisitionists by releasing announcements and documents, such as notices, circulars, and proxy forms, on SGXNet; sending these documents to shareholders; collecting proxy forms at the issuer’s office; ensuring the board’s presence at the meeting; enabling the scrutineer to perform their duties; and instructing agents, like the share registrar and company secretary, to provide necessary assistance, such as preparing mailing labels and attending the meeting.

Companies have two months to hold general meetings, including extraordinary general meetings from the day the board receives the requisition notice. This includes the 21-day notice from the date the circular is distributed to shareholders to the date of the EGM.

The current regulation stipulates that the requisition notice must meet the procedural requirements of the Companies Act 1967 of Singapore, including that requisitionists must hold at least 10% of the total number of paidup shares.

To facilitate the board’s assessment of the requisition notice’s validity, it should minimally encompass the requisitionists’ names and shareholdings and describe the resolutions proposed to be tabled at the shareholder-requisitioned meeting.

When the board receives a requisition notice, it should inform shareholders via SGXNet immediately. Any subsequent material developments, including any application filed to court, should be immediately announced.

Proposals to facilitate shareholders to requisition general meetings are part of SGX RegCo’s efforts to institute a “value focus” approach. “I wish to emphasise that it takes the entire market community to improve the situation. We can have simultaneous efforts to enhance shareholder value, investor interest, liquidity, and valuations, acting in mutually reinforcing ways to benefit our market and participants,” says Tan Boon Gin at a recent media briefing.

Other initiatives for the value focus approach include recently introduced governance rules. The RegCo has introduced a nine-year limit on independent directors’ tenure to promote board independence and encourage board renewal. “New directors will bring new ideas and be less wedded to legacy businesses,” Tan adds. “We have also sought to increase the transparency of the link between pay and long-term value creation by enhancing remuneration disclosures of the board and CEO.”

The Securities Investors Association (Singapore) (SIAS) has recently indicated that they are studying the possibility of posing additional questions to boards of undervalued companies regarding their plans to improve their valuations. “We support this initiative and encourage companies to respond meaningfully and comprehensively to such questions,” Tan says.

SGX RegCo aims to decrease market friction by reducing trading queries, particularly for small-cap stocks with unusual activity.

Tan adds: “We have launched a review of the queries posed to listed companies to explore how we can issue such queries to create less noise for the market while ensuring material information remains available to investors. This is in addition to the steps we have already taken to fine-tune our queries regarding unusual trading activity to make them more targeted. This has led to a fall in the number of such queries issued in the last half-year.” SGX RegCo is also considering initiatives like facilitating shareholder meetings, with more proposals expected in the coming months. —