4. Combined readings for Banking & Fundraising

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Questions and Answers

What is one primary purpose of pre-IPO placements?

To establish a contract between the issuer and potential investors.

To restrict the number of investors participating in the IPO.

To increase the issuer's visibility only to retail investors.

To enhance the issuer's credibility and encourage other investors to subscribe. (correct)

Which of the following accurately describes cornerstone investors?

They are primarily retail investors who buy shares at a discount.

They are targeted for placements that occur concurrent with the IPO at the offer price. (correct)

They participate in the IPO processes only after the share prices are finalized.

They exclusively invest after the prospectus has been lodged with regulators.

What is a fundamental legal risk for brokers or dealers concerning research reports?

They can face financial penalties only if investors have direct contracts with them.

They may be liable under tort law if a duty of care is established and breached. (correct)

They are protected from claims regardless of the content of the reports they publish.

They can only be held liable for losses under the Companies Act.

What limitation exists regarding advertising a forthcoming IPO?

Advertisement before lodgement is prohibited, except under specific conditions like research reports. Signup and view all the answers

Which of the following statements about roadshows is accurate?

Roadshows are intended solely for accredited and institutional investors after prospectus filing. Signup and view all the answers

What is a syndicate in the context of bond issues?

A group of dealers managing a bond issue Signup and view all the answers

What is a significant disadvantage of establishing an EMTN programme?

Inefficiency if the issuer has fewer bonds to issue Signup and view all the answers

For which type of bond issue is a subscription agreement typically not required?

Single-dealer drawdowns Signup and view all the answers

What might require more extensive changes in an EMTN programme?

Introducing unusual or complex terms not covered by documents Signup and view all the answers

Which term is used to encompass various types of regulatory authorities in relation to bond issues?

Stock exchange and listing authority Signup and view all the answers

What is typically the first stage in the life of an EMTN programme?

Establishment of programme documents Signup and view all the answers

What happens when a dealer confirms an issue within a single-dealer drawdown?

A dealer confirmation is signed Signup and view all the answers

Why might a separate stand-alone issue be preferable to an EMTN programme?

The issuer plans to issue fewer bonds Signup and view all the answers

What is the lodgement date in the context of a public equity offering?

The date when the preliminary prospectus is lodged with the MAS Signup and view all the answers

Which of the following statements is true regarding the timeline for an IPO?

The public offer commences about 28 days after the lodgement date. Signup and view all the answers

How long does the MAS typically review a prospectus?

Two to four months Signup and view all the answers

What percentage of issuers on the Singapore Exchange Limited (SGX) are from jurisdictions outside of Singapore?

35% Signup and view all the answers

What is a key difference between the IPO process and that of secondary offerings?

There is no MAS review for secondary offerings. Signup and view all the answers

Which of the following is NOT a type of security that can be listed on the SGX-ST?

Treasury bonds Signup and view all the answers

Which option best describes the main board of the SGX-ST?

Caters to well-established issuers with higher entry criteria Signup and view all the answers

When is the outcome of a public offer typically announced?

At the end of the public offer period Signup and view all the answers

Which of the following actions does NOT occur during the IPO process?

Convene a shareholder meeting to discuss new share issuance Signup and view all the answers

How many initial public offerings (IPOs) occurred on the SGX-ST in 2021?

8 Signup and view all the answers

What typically occurs immediately after the registration date of the prospectus?

The public offer is opened for subscription Signup and view all the answers

What is required for a foreign issuer seeking a dual primary listing on the SGX-ST?

Full compliance with listing rules of both SGX-ST and their home exchange Signup and view all the answers

What was the total amount raised from IPOs on the SGX-ST in 2020?

SGD1.4 billion Signup and view all the answers

In terms of time, how long does a public offer usually last?

Three to five days Signup and view all the answers

What characterizes the Catalist of the SGX-ST?

No minimum quantitative entry criteria and sponsored approval for issuers Signup and view all the answers

What notable event occurred in October 2020 regarding the SGX-ST?

Nanofilm Technologies International Limited's IPO raised SGD470 million Signup and view all the answers

What is a requirement for an issuer seeking a listing under profitability test A or B?

The issuer must have engaged in the same business throughout the three-year period. Signup and view all the answers

Which of the following listings does not have minimum operating track record requirements?

Catalist listing Signup and view all the answers

What must be included in the prospectus for a public share offer in Singapore?

The annual audited financial statements for the last three years. Signup and view all the answers

What standard must financial statements comply with for primary listings?

Singapore Financial Reporting Standards or US GAAP. Signup and view all the answers

Which of the following is true regarding the auditors appointed by the issuer?

They must be approved under the Accountants Act 2004 of Singapore. Signup and view all the answers

What is required of debts owed to the group by substantial shareholders before listing?

They must be settled before listing. Signup and view all the answers

What key aspect must interim financial information address if it is submitted after six months of the financial year-end?

It must be prepared in line with accepted accounting standards. Signup and view all the answers

Which auditing standards must the annual financial statements be audited under?

Singapore Standards on Auditing or equivalent standards. Signup and view all the answers

Study Notes

EMTN Programme

An EMTN, or Euro Medium Term Notes, program provides issuers with a way to raise funds by continuously issuing debt securities.
Unlike standalone issues, an EMTN program allows for multiple bond issues over an extended period, with specific provisions regarding terms and conditions.
Programme documents are created first with the establishment of the programme.
The key advantage of using a program over stand alone issues is that the issuance costs per issue can spread out across multiple issues over the years.
EMTN programs must consider a tradeoff between cost-effectiveness and potential future flexibilities for issuing bonds.
Complex or unusual terms, for example, might not be considered within the pre-existing programme documents, requiring changes to the programme.

Singapore Exchange (SGX)

The SGX is Asia's most international exchange. Over 670 issuers are listed, with roughly 35% originating outside of Singapore.
The SGX-ST, a subsidiary of the SGX, is the only designated securities exchange in Singapore.
Issuers, both local and foreign, can choose to list on the mainboard or Catalist of the SGX-ST.
The main board caters to established issuers, requiring a higher entry level and listing requirements. A main board listing can be either a primary or secondary listing.
Catalist is suited for smaller or fast-growing companies, with a different model where approved sponsors asses the issuer's suitability for listing.
A listing on Catalist must be primary and does not require minimum quantitative criteria.

Initial Public Offerings (IPOs) in Singapore

In 2021, the SGX-ST witnessed 8 IPOs, 3 on the main board and 5 on Catalist, raising a total of SGD1.4 billion.
2020 saw 11 IPOs, with 5 main board and 6 Catalist listings, raising a total of SGD1.4 billion.

Listing Eligibility

To be listed on the SGX-ST, companies must meet several criteria, including profitability requirements.
Companies seeking listing based on profitability test A or B must have been engaged in substantially the same business, and have been under similar management, for at least three years.
Additionally, the issuer and its subsidiaries must have a healthy financial position reflected in positive cash flow from operating activities.
Catalist listings do not require minimum operating track records, profit, or share capital requirements, making it more accessible to smaller or faster-growing companies.

Pre-IPO Placements and Cornerstone Investors

Pre-IPO placements to early investors can enhance the issuer's credentials and incentivise investors to persuade other investors to subscribe for the issuer's securities.
Cornerstone investors serve a similar purpose to pre-IPO placements. These investors make placements concurrently with, but separately from, the IPO at the offer price.
Roadshows, advertising, and other publicity can be utilized for the purpose of marketing an IPO.
Any advertisement of the IPO before the lodgement of the prospectus with the MAS is prohibited.
Advertising for an IPO can be an effective way to generate additional demand.

Public Equity Offerings in Singapore: Price Stabilisation

Participating brokers/dealers in an IPO can become liable to investors in different ways.
Liability can be traced back to established contractual principles if a contract exists between the investor and the broker.
The investor can also claim tortious damages against the broker if they prove the broker owed them a duty of care and that they suffered loss as a result of a breach of that duty.
The Financial Advisers Act 2001 of Singapore also governs the liability of participating brokers/dealers.

IPO Timetable: Mainboard Listing

The indicative timetable for a main board listing consists of several stages.
The process starts with the appointment of an issue manager, legal advisers, auditors, and other experts to conduct due diligence and prepare the necessary documentation.
The listing application is prepared and submitted to the SGX-ST, along with the draft prospectus.
There's a review period of roughly two to four months, with the option of submitting the draft prospectus to the MAS (monetary authority of Singapore) for pre-lodgement review.
The preliminary prospectus is then lodged with the MAS and published, followed by roadshows.
The MAS registers the prospectus if no comments are raised, with the potential for amendment or pre-quotation disclosure.
The public offer commences, followed by trading of the issuer's shares/units.

IPO Timetable: Secondary Offerings

The timetable for secondary offerings, such as rights issues or placements, differs from IPOs as there's no MAS review process, a shorter and less comprehensive SGX-ST review process, and a need for shareholder/unitholder approval if there's no existing general mandate.

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Description

This quiz covers the fundamentals of Euro Medium Term Notes (EMTN) programs and the Singapore Exchange (SGX). Learn how EMTN programs facilitate continuous debt issuance and the benefits they provide compared to standalone issues. Explore the international nature of the SGX and its role in the market.