Chapter 16 — Corporate Finance
16.1 Permissible Activities
Unless exempt under the Securities and Futures Act or the Securities and Futures Regulations, prior to engaging in corporate finance activities, a Trading Member and its corporate finance staff must obtain the appropriate licence and be appropriately registered.
The corporate finance department of a Trading Member must engage only in the following types of activities:—(1) Management, underwriting and placement of initial public offering of securities;(2) Management, underwriting and placement of rights issues of securities;(3) Advising on acquisition and disposal of securities and assets;(4) Advising on corporate or debt restructuring; and(5) Take-over offers under the Singapore Code on Take-overs and Mergers, if the Trading Member has relevant expertise and experience.
16.1A Application of Chapter
This Chapter shall not apply to a Trading Member who holds a licence specified in Rule 4.1.1(1)(b). Such a Trading Member shall comply with such requirements established by the Relevant Regulatory Authority, if any, and principles of good business practice in relation to the areas set out in Chapter 16 for its business activities on SGX-ST.
16.2 Notification Procedures
A Trading Member must inform SGX-ST in writing at least 14 days before it engages in corporate finance activities under Rule 16.1.
A Trading Member must supply SGX-ST with any information SGX-ST requires regarding the corporate finance activities.
SGX-ST may limit the scope of activity of the corporate finance department.
SGX-ST may require a Trading Member to end any of its corporate finance activities if:—(1) the Trading Member fails to comply with this Chapter; or(2) in SGX-ST's opinion, the corporate finance activity is detrimental to the financial integrity, reputation or interests of SGX-ST, the Trading Member concerned, or markets established or operated by SGX-ST.
The corporate finance department must have adequate staff with relevant expertise and experience.
A Trading Member must:—(1) supervise its corporate finance staff;(2) implement written supervisory procedures to ensure that its corporate finance staff comply with this Chapter; and(3) implement any procedure, Directive or recommendation by SGX-ST.
A Trading Member is responsible to SGX-ST for the acts and omissions of its corporate finance staff.
SGX-ST may limit the scope of activity of a corporate finance staff or direct a Trading Member to replace a corporate finance staff if the person:—(1) causes the Trading Member to breach the Rules or Directives;(2) engages in conduct detrimental to the financial integrity, reputation or interests of SGX-ST, or markets established or operated by SGX-ST;(3) breaches any provision involving fraud or dishonesty, whether in or out of Singapore; or(4) is the subject of an investigation involving fraud or dishonesty, whether in or out of Singapore.
16.4 Separation of Corporate Finance Activities
A Trading Member's corporate finance activities must be separate from its dealing, research and back office operations. Separation means at least having the following:—(1) separate reporting lines in place between the corporate finance activities and the other activities;(2) restriction of communication and information flow between the corporate finance activities and the other activities to avoid leakage of sensitive information;(3) adequate procedures to avoid any conflict of interest that may arise from the corporate finance activities and the other activities; and(4) access into the corporate finance department be restricted only to the corporate finance staff and any other authorised staff of the Trading Member.
A Trading Member may have a research analyst assist in a corporate finance project. If so, the Trading Member must have procedures to avoid any conflict of interest.
Other departments of the Trading member may provide accounting, personnel support and other support services to the corporate finance department but the Trading Member must ensure that confidentiality of corporate finance customers is preserved.
16.5 Setting of Limits
Underwriting commitment limits must be set by those members of the senior management of the Trading Member who are independent of the corporate finance and dealing departments.
16.6 Confidentiality of Information
A Trading Member must ensure that corporate finance staff do not divulge any confidential information to any person who is not entitled to receive the information.
A Trading Member must ensure that corporate finance staff exercise due care to prevent any leak of confidential information.
16.7 Trade Restrictions
A restricted list of securities on which the corporate finance department is working must be maintained.
A security must be moved onto the restricted list no later than the date the deal is mandated.
If circulated, the restricted list may be circulated to only the following persons:—(1) corporate finance staff and the person to whom the head of corporate finance reports; and(2) Trading Representatives who are authorised to deal for the Trading Member's accounts and the head to whom these Trading Representatives report.