RESP 10 – Rules, Ethics, Skills and Product Knowledge for REIT Management

Correct: Under the MAS Guidelines on Environmental Risk Management, the Board and Senior Management (BSM) are responsible for the governance of environmental risk. This includes approving the environmental risk management framework, setting the risk appetite, and ensuring that environmental risk is integrated into the institution’s overall business strategy and risk management process. The BSM must ensure that the bank has adequate resources and expertise to manage these risks effectively as part of its fiduciary and professional duties.

Incorrect: Delegating all responsibility to a single officer without Board oversight fails the governance requirement for collective BSM accountability. Prioritizing short-term gains over risk management ignores the long-term materiality of environmental risks emphasized by MAS. Waiting for external taxonomies or specific capital mandates is inappropriate as the guidelines expect institutions to proactively develop internal capabilities and integrate risks based on available information and the evolving landscape.

Takeaway: The Board and Senior Management must take active ownership of integrating environmental risk into the financial institution’s core risk appetite and strategic decision-making processes to ensure long-term resilience.

Correct: General Principle 1 of the Singapore Code on Take-overs and Mergers mandates that all shareholders of the same class of an offeree company must be treated similarly by an offeror. Furthermore, Rule 10 of the Code prohibits ‘special deals’ with favorable conditions for some shareholders but not others, unless the Securities Industry Council (SIC) provides consent and specific conditions (such as an independent financial adviser’s opinion and shareholder approval) are met.

Incorrect: Offering different prices to institutional versus retail shareholders directly violates the principle of equal treatment. Negotiating separate exit packages for shareholder-directors that act as an inducement to support the bid is generally considered a prohibited special deal under Rule 10 unless strict SIC requirements are met. Providing different forms of consideration (cash versus securities) to different groups of shareholders within the same class without SIC consultation undermines the requirement for similar treatment and transparency.

Takeaway: The Singapore Take-over Code requires that all shareholders of the same class receive equal treatment and prohibits any side arrangements or special deals that favor specific shareholders over others without SIC oversight.

Correct: According to the SGX Listing Manual Rule 210(1)(b), there are three alternative quantitative criteria for Mainboard admission. One of these alternatives allows an issuer to qualify if it has a market capitalization of at least S$300 million based on the issue price and post-invitation issued share capital, and has operating revenue in the latest completed financial year. Since LionCity Tech has a market cap of S$320 million and generated revenue in its latest year, it meets this specific test regardless of the lower profit figure.

Incorrect: The requirement for S$30 million pre-tax profit is only one of three alternative tests, not a mandatory baseline for all applicants. The S$150 million market capitalization test actually requires a three-year operating track record and profitability in the latest financial year, but it is a separate test from the S$300 million revenue-based test. There is no regulatory requirement that a firm must list on Catalist before the Mainboard if it already satisfies one of the three Mainboard quantitative criteria, and the S$15 million average profit mentioned is not a standard SGX Mainboard admission threshold.

Takeaway: Issuers can qualify for the SGX Mainboard by meeting any one of three alternative quantitative tests, including a market capitalization-based test of at least S$300 million coupled with operating revenue in the latest financial year.

Correct: Under Section 39(1) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) in Singapore, any person who knows or has reasonable grounds to suspect that any property may be connected to criminal conduct must report the matter to the STRO as soon as is reasonably practicable. Furthermore, Section 48 of the CDSA prohibits ‘tipping-off’, meaning the adviser must not disclose to the client or any other person that a report is being made, as this could prejudice an investigation.

Incorrect: Conducting a private investigation to seek concrete evidence is incorrect because the legal threshold for reporting is ‘reasonable grounds to suspect’, and delays could hinder law enforcement. Informing the target company’s Board of Directors constitutes a tipping-off offense under the CDSA, which carries heavy penalties. Waiting for a periodic audit or reporting only to MAS is insufficient, as STRs must be filed specifically with the STRO promptly once the suspicion arises.

Takeaway: In Singapore, suspicious transactions must be reported to the STRO as soon as reasonably practicable without alerting the involved parties to avoid committing a tipping-off offense under the CDSA.

Correct: Under Section 40 of the Financial Advisers Act (FAA) of Singapore, no person shall use the title ‘financial adviser’ or ‘corporate finance adviser’ or any of its derivatives unless that person is a licensed financial adviser or an exempt financial adviser. This restriction is in place to ensure that the public is not misled regarding the regulatory status and oversight of the entity providing such specialized financial advice.

Incorrect: Providing a disclaimer does not override the statutory prohibition under the FAA regarding the use of protected titles. The restriction on the title is not limited to firms advising on retail products; it applies to the title itself as it implies a specific regulatory standing. While some activities might be exempt from licensing if they are incidental, the use of the protected title ‘corporate finance adviser’ is strictly regulated and cannot be used by unlicensed or non-exempt entities regardless of the incidental nature of the work.

Takeaway: In Singapore, the titles ‘financial adviser’ and ‘corporate finance adviser’ are protected under the Financial Advisers Act and can only be used by licensed or exempt entities.

Correct: The Securities Industry Council (SIC) is the body responsible for administering and enforcing the Singapore Code on Take-overs and Mergers. It has the authority to issue rulings on the interpretation of the Code, grant exemptions or waivers (such as Whitewash waivers), and its rulings are considered final. It ensures that all shareholders are treated fairly and that the takeover process is conducted in an orderly manner.

Incorrect: The SIC does not have the power to award civil damages or financial compensation to shareholders; such matters are handled through civil litigation. It does not mandate the offer price based on commercial merits, as it does not judge the commercial advantages of a bid. While the SIC can impose non-statutory sanctions like public censure or cold-shouldering, it is not a criminal prosecutor; criminal matters under the Securities and Futures Act are handled by the MAS and the Attorney-General’s Chambers. Furthermore, the SIC is not merely an advisory body to the SGX but is a body established under the MAS.

Takeaway: The Securities Industry Council (SIC) provides definitive rulings and waivers regarding the Take-over Code to ensure equitable treatment of shareholders, but it does not exercise judicial powers like awarding damages or criminal sentencing.

Correct: According to Rule 14.1(b) of the Singapore Code on Take-overs and Mergers, any person who (together with parties acting in concert) holds between 30% and 50% of the voting rights of a company and acquires more than 1% of the voting rights in any six-month period triggers a mandatory general offer. This is known as the ‘creeper rule’ and is designed to ensure that minority shareholders are given a fair exit opportunity when a substantial shareholder significantly increases their stake and influence.

Incorrect: Seeking approval from SGX or MAS does not waive the mandatory offer requirement under the Code, as the Securities Industry Council (SIC) administers the Code. Freezing voting rights is not a standard remedy or requirement for exceeding the creeper threshold. Appointing an independent financial adviser to certify control is not a substitute for the mandatory offer obligation once the 1% threshold in a six-month period is breached.

Takeaway: Under the Singapore Code on Take-overs and Mergers, shareholders holding between 30% and 50% of voting rights trigger a mandatory general offer if they acquire more than 1% of the company’s shares within any six-month period.

Correct: The Securities and Futures Act (SFA) is designed to ensure that Singapore’s capital markets are fair, efficient, and transparent. A core objective is to facilitate an environment where all material information is disclosed in a timely manner. This allows the market to function effectively, ensuring that the price of securities is determined by the collective assessment of all participants based on the same set of public information, which is the essence of the price discovery process.

Incorrect: The suggestion that MAS provides merit-based assessments to guarantee against losses is incorrect, as Singapore operates on a disclosure-based regime rather than a merit-based one, and regulators do not guarantee investment returns. Restricting information to institutional investors contradicts the principle of a fair and level playing field for all market participants. Mandating minimum ESG ratings as a prerequisite for financial disclosure is not a core objective of the SFA’s market transparency framework, although ESG reporting is a separate listing requirement under SGX.

Takeaway: The SFA focuses on maintaining market integrity and investor confidence by ensuring that the price discovery mechanism is supported by timely and accurate public disclosures.

Correct: Under the Securities and Futures Act (SFA), an offer of securities must be accompanied by a prospectus that is lodged with and registered by the Monetary Authority of Singapore (MAS). The process begins with the lodgment of the prospectus on the OPERA system, which initiates a public exposure period (typically 7 to 21 days). This period allows MAS and the public to review the document for any material misstatements or omissions before MAS decides whether to register the prospectus, which is a prerequisite for making the offer.

Incorrect: The approach of skipping public exposure is incorrect because the SFA mandates a minimum exposure period for transparency and regulatory oversight. Accepting subscription monies or making an offer before the prospectus is registered is a breach of the SFA, as the lodged prospectus is only for exposure and not for making offers. Finally, while the SGX reviews listing applications for compliance with Listing Rules, this does not replace the statutory requirement to lodge and register the prospectus with MAS under the SFA.

Takeaway: A prospectus must undergo a mandatory public exposure period on OPERA after lodgment and must be formally registered by MAS before any offer of securities or collection of funds can take place.

Correct: Under the Securities and Futures Act (SFA), ‘advising on corporate finance’ is a regulated activity. This includes providing advice on the compliance of a person with the laws and rules of any stock exchange or the Singapore Code on Take-overs and Mergers, as well as advice on the restructuring, merger, or takeover of a corporation. While the Financial Advisers Act (FAA) governs advice on investment products, corporate finance activities are carved out and specifically regulated under the SFA framework.

Incorrect: The Financial Advisers Act (FAA) is incorrect because it primarily regulates financial advisory services related to investment products (like unit trusts or life insurance) for investors, rather than the structural and compliance advice provided in corporate finance transactions. The Companies Act is incorrect because while it governs company law, it is not the licensing framework for capital markets intermediaries. The SGX Listing Rules are incorrect because they are requirements for listed issuers and do not serve as the statutory licensing legislation for corporate finance advisors, which is the role of the SFA.

Takeaway: Advising on corporate finance, including takeovers and capital restructuring, is a regulated activity under the Securities and Futures Act (SFA) rather than the Financial Advisers Act (FAA).

Correct: According to Rule 14.1 of the Singapore Code on Take-overs and Mergers, a mandatory offer is triggered when any person (or group acting in concert) acquires shares which carry 30% or more of the voting rights of a company. Once this 30% threshold is reached or exceeded, the offeror must make an offer for all the remaining shares in cash or accompanied by a cash alternative at the highest price paid by the offeror or concert parties within the 6 months prior to the commencement of the offer.

Incorrect: The suggestion that a waiver can be obtained simply by capping voting power at 29.9% after crossing the threshold is incorrect, as the trigger is the acquisition itself. Off-market deals are not exempt from the Code; Rule 14 applies regardless of whether the acquisition is on-market or off-market to ensure all shareholders are treated equally. The 50% threshold refers to the point where an offer becomes unconditional as to acceptances, but the obligation to make the offer starts at 30%.

Takeaway: Crossing the 30% voting rights threshold in a Singapore-listed company triggers an immediate mandatory general offer obligation under the Singapore Code on Take-overs and Mergers.

Correct: Under the Securities and Futures Act (SFA) and relevant MAS guidelines, a CMS licensee is required to obtain prior written approval from the Monetary Authority of Singapore (MAS) before appointing a new Chief Executive Officer or director. Similarly, prior approval is required before any person becomes a substantial shareholder (typically holding 5% or more of the voting power). A pre-clearance protocol ensures that these regulatory requirements are met before the firm enters into legally binding commitments, thereby preventing a breach of licensing conditions.

Incorrect: Establishing a post-event reporting system within 30 days is incorrect because the appointment of a CEO requires prior approval, not just notification after the fact. Relying on quarterly summaries to the SGX is insufficient because the primary regulatory obligation for a CMS licensee is to MAS, and the timelines for notification (often 14 days for non-approval changes) are much tighter than quarterly. Delegating monitoring solely to a shareholder is ineffective as the licensee itself is responsible for regulatory compliance, and an annual audit is too infrequent to capture changes that require immediate or prior notification.

Takeaway: CMS licensees must obtain prior approval from MAS for changes in substantial shareholding and key executive appointments to ensure continuous adherence to fit and proper requirements under the SFA.

Correct: Under the SGX Catalist Rules, specifically Rule 228, a Continuing Sponsor has a fundamental duty to ensure that the issuer complies with its continuous disclosure obligations. If a Sponsor becomes aware that an issuer has breached the Listing Rules, such as failing to disclose material information, the Sponsor must advise the issuer to rectify the breach. If the issuer fails to do so, or if the breach is significant, the Sponsor has a mandatory obligation to notify the SGX-ST immediately. This ensures the integrity of the sponsor-supervised regime.

Incorrect: Delaying an announcement to protect a private placement valuation is a violation of the continuous disclosure principle and market transparency. Reporting only to MAS is incorrect because the primary regulatory relationship for Catalist listing compliance is between the Sponsor and the SGX-ST. Waiting until half-yearly results to disclose material information is a breach of the requirement for ‘immediate’ disclosure of information that may have a material effect on the price or value of the company’s securities.

Takeaway: Continuing Sponsors on the Catalist board are primary regulators of their assigned issuers and must report any unresolved or significant breaches of the SGX Listing Rules directly to the SGX-ST to maintain market integrity.

Correct: FIDReC is an independent institution in Singapore that provides a streamlined process for resolving disputes between consumers and financial institutions. The process typically involves mediation followed by adjudication if mediation fails. A critical feature of FIDReC is that while the adjudicator’s decision is final and binding on the financial institution, it is only binding if the complainant (the retail client) chooses to accept the award. If the client rejects the award, they remain free to pursue the matter through other legal channels, such as the courts.

Incorrect: The suggestion that decisions are immediately binding on both parties is incorrect because the consumer retains the right to reject the award and seek other remedies. The claim that FIDReC is a division of MAS is incorrect; it is an independent non-profit organization, and MAS does not use it to deduct capital reserves. The claim regarding a S$250,000 threshold is incorrect as FIDReC’s jurisdiction for most claims is currently capped at S$100,000 per claim, specifically designed to handle retail-level grievances rather than excluding them.

Takeaway: FIDReC offers a consumer-centric dispute resolution process where adjudication awards are binding on the financial institution only upon the complainant’s acceptance.

Correct: Under the Securities and Futures Act (SFA), MAS has the power to pursue civil penalties for market misconduct. Unlike criminal prosecutions which require proof beyond a reasonable doubt, civil penalty actions are determined on a balance of probabilities. Furthermore, the SFA provides protection for whistleblowers, ensuring that no person shall be liable to any action for any loss or damage suffered by another person by reason of the disclosure of information to MAS in good faith regarding a contravention of the Act.

Incorrect: The assertion that civil penalties require a prior decision by the Public Prosecutor is incorrect, as MAS can initiate civil penalty actions independently as an alternative to criminal prosecution. The claim that civil penalties use the ‘beyond reasonable doubt’ standard is false, as they use the civil standard of ‘balance of probabilities’. Statutory limits for civil penalties are generally the greater of three times the profit gained or loss avoided, or a fixed statutory minimum (e.g., SGD 50,000 for individuals or SGD 100,000 for corporations), but the whistleblower protection does not require a statutory declaration to SGX; it is triggered by good faith disclosure to MAS.

Takeaway: MAS can seek civil penalties for market misconduct based on a balance of probabilities, and whistleblowers are legally protected from liability when reporting such breaches to the authority in good faith under the SFA.

Correct: According to the MAS Regulatory Sandbox Guidelines, one of the primary eligibility criteria is that the financial service should include new or emerging technology, or use existing technology in an innovative way. Furthermore, the innovation should address a problem or provide benefits to consumers or the financial industry in Singapore. The sandbox is specifically designed to support such innovations where the regulatory requirements may not fully accommodate the service.

Incorrect: Requiring a zero-risk rating is unrealistic for any financial innovation and is not a sandbox requirement; instead, MAS focuses on defining boundary conditions to manage risks. A minimum paid-up capital of SGD 5 million and five years of history are not entry requirements for the sandbox, as it is often used by startups and firms that do not yet meet full licensing criteria. MAS does not require prior international adoption; in fact, the sandbox is intended for testing new, unproven innovations that may not yet exist elsewhere.

Takeaway: To qualify for the MAS Regulatory Sandbox, an applicant must prove the innovation is technologically unique and offers clear benefits to the Singapore financial market or its consumers.

Correct: According to SGX Listing Rule 806, for Mainboard issuers, the total number of shares issued on a non-pro-rata basis under a general mandate must not exceed 20% of the total number of issued shares (excluding treasury shares and subsidiary holdings). Additionally, SGX Listing Rule 811 stipulates that an issue of shares must not be priced at more than a 10% discount to the weighted average price for trades done on the SGX-ST for the full market day on which the placement agreement is signed. Since the 15% size and 8% discount are within these limits, the placement is permissible.

Incorrect: The suggestion that non-pro-rata issues are capped at 10% is incorrect, as the SGX Listing Rules allow up to 20% for Mainboard issuers under a general mandate. The claim that the maximum discount is 5% is also incorrect, as Rule 811 allows for a discount of up to 10%. Finally, while issuers must disclose the use of proceeds, there is no regulatory requirement that limits the use of placement proceeds strictly to working capital as a condition for the 20% mandate or the pricing rules.

Takeaway: Under SGX Listing Rules, Mainboard issuers may issue up to 20% of their shares on a non-pro-rata basis under a general mandate, provided the discount does not exceed 10%.

Correct: Under the Guidelines on Licence Applications, an applicant for a Capital Markets Services (CMS) license for advising on corporate finance must meet several criteria, including the ‘Fit and Proper’ guidelines. Specifically, the Monetary Authority of Singapore (MAS) typically requires the Chief Executive Officer and at least two executive directors to be resident in Singapore to ensure sufficient management presence and oversight. Furthermore, the minimum base capital requirement for a CMS license holder advising on corporate finance (without handling client assets) is S$250,000.

Incorrect: The suggestion that a three-year track record and ten years of experience for all representatives are mandatory is incorrect, as the standard track record requirement is generally five years for the applicant or its parent group, and representative experience is assessed qualitatively. The requirement for S$500,000 base capital is incorrect because the standard requirement for corporate finance advising is S$250,000. The claim that only one resident executive director is required is incorrect, as MAS generally requires at least two resident executive directors for a CMS license holder to ensure effective local management.

Takeaway: To obtain a CMS license for corporate finance in Singapore, an entity must meet specific base capital requirements of S$250,000 and ensure a minimum of two resident executive directors and a resident CEO.

Correct: According to the MAS Guidelines on Environmental Risk Management, financial institutions are expected to integrate environmental risk into their internal risk management frameworks. This includes performing due diligence on clients to assess their environmental risk profile and ensuring that the Board and senior management have oversight. Establishing clear escalation triggers for high-risk cases ensures that the institution’s risk appetite is maintained and that senior leadership is accountable for significant environmental risk exposures.

Incorrect: Relying solely on client self-declarations is insufficient as MAS expects financial institutions to perform their own independent assessment and monitoring of environmental risks. Implementing blanket exclusions for entire sectors is generally discouraged in favor of a managed transition approach where institutions engage with clients to improve their sustainability. Assigning risk monitoring solely to a corporate social responsibility department is ineffective because MAS guidelines require environmental risk to be integrated into the core risk management and business functions of the institution.

Takeaway: Effective environmental risk management requires the integration of risk assessment into core due diligence processes supported by robust senior management oversight and escalation procedures.

Correct: Under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) of Singapore, any person who knows or has reasonable grounds to suspect that property may be connected to criminal conduct is legally obligated to file an STR with the Suspicious Transaction Reporting Office (STRO). This must be done as soon as is reasonably practicable. Furthermore, it is a criminal offense to ‘tip off’ the party under suspicion, so the report must be kept confidential.

Incorrect: Waiting for a client’s declaration or a legal opinion is inappropriate because the legal threshold for reporting is ‘reasonable grounds to suspect,’ and delays could hinder law enforcement. Reporting to MAS instead of the STRO is incorrect because the STRO, which is part of the Commercial Affairs Department, is the designated central agency in Singapore for receiving and analyzing STRs under the CDSA.

Takeaway: In Singapore, suspicious transactions must be reported directly to the STRO as soon as practicable without alerting the client to avoid the offense of tipping-off.

Correct: Under the Securities and Futures Act (SFA), the Representative Notification Framework (RNF) requires that a principal (the firm) must not allow an individual to act as a representative until the individual’s name is entered in the Public Register of Representatives. The principal is responsible for conducting due diligence to ensure the individual meets the Fit and Proper Criteria set out by MAS before submitting the notification.

Incorrect: The approach suggesting immediate commencement after submission is incorrect because the law requires the name to actually appear on the Public Register first. The approach requiring a formal approval certificate is incorrect because the RNF is a notification-based regime, not a direct individual licensing system where MAS issues certificates to representatives. The approach suggesting a 14-day grace period is incorrect as there is no provision in the SFA that allows an individual to conduct regulated activities before their name is on the Public Register, even if they were previously registered with another firm.

Takeaway: An individual can only commence regulated activities under the SFA once their name is officially listed on the MAS Public Register of Representatives following a notification by their principal.

Correct: The Catalist board is a sponsor-supervised regime specifically designed for fast-growing companies that may not yet meet the quantitative requirements of the Mainboard. Unlike the Mainboard, which has specific entry criteria regarding profit, revenue, and market capitalization, Catalist has no such minimum quantitative requirements. Instead, the Sponsor is responsible for assessing the suitability of the applicant and ensuring compliance with SGX listing rules.

Incorrect: The Mainboard approach is incorrect because even the market capitalization test (S$80 million) requires a minimum of three years of operating track record and revenue in the latest financial year, which the firm does not have. The claim that Catalist requires a three-year track record with lower profit is incorrect, as Catalist has no mandatory minimum track record or profit requirements. The claim that Catalist only requires a Sponsor for three years is incorrect; a Catalist-listed company must retain a Sponsor at all times to remain on the board.

Takeaway: The SGX Mainboard is a merit-based regime with quantitative entry requirements, while Catalist is a sponsor-supervised regime with no minimum quantitative entry criteria, relying instead on the Sponsor’s assessment of suitability.

Correct: As a front-line regulator, SGX RegCo monitors the market for unusual trading activity. When a price or volume spike occurs without explanation, its primary tool is the ‘Query Regarding Unusual Price Movement’ (UMA). This requires the issuer to publicly state whether they are aware of any information that could explain the activity, thereby ensuring that the market remains informed and fair for all participants.

Incorrect: Freezing individual trading accounts is typically a legal action involving the Commercial Affairs Department or MAS under the CDSA or SFA, rather than a standard first-step surveillance action by SGX RegCo. Mandating a delay of board meetings or requiring a forensic audit by MAS as an immediate response to a price spike is not a standard function of SGX’s market surveillance. While SGX has circuit breakers, they are generally triggered by specific percentage drops in the Straits Times Index or specific price limits for individual stocks, rather than sector-wide halts triggered by a single company’s volume surge.

Takeaway: SGX RegCo exercises its front-line regulatory role by issuing public queries to issuers during unusual market activity to ensure timely disclosure of material information.

Correct: Under General Principle 1 and Rule 10 of the Singapore Code on Take-overs and Mergers, all shareholders of the same class of an offeree company must be treated similarly by an offeror. A ‘special deal’ involves an arrangement between an offeror and a shareholder that has favorable conditions not extended to all shareholders. Such deals are prohibited unless the SIC consents, and typically the SIC will require an independent financial adviser to state that the terms are fair and reasonable, and the deal must be approved by independent shareholders via a poll.

Incorrect: The option suggesting disclosure alone is sufficient is incorrect because the Code requires substantive equality and SIC oversight, not just transparency. The option suggesting an automatic price increase is incorrect because while the Code aims for equality, Rule 10 specifically regulates the prohibition of such side-deals rather than providing a formulaic price-matching mechanism as the primary remedy. The option regarding a moratorium period is incorrect as it does not address the fundamental breach of the equal treatment principle inherent in a special deal.

Takeaway: The Singapore Code on Take-overs and Mergers strictly regulates special deals to ensure that no shareholder receives favorable treatment that is not available to the general body of shareholders.

Correct: According to the Securities and Futures (Financial and Margin Requirements) Regulations, a holder of a Capital Markets Services (CMS) license must notify MAS immediately if its base capital falls below the minimum requirement or if it falls below 120% of the minimum base capital requirement. This 120% threshold acts as an early warning trigger, allowing MAS to monitor the firm’s financial health before an actual breach of the minimum capital occurs.

Incorrect: Notifying the SGX is incorrect because MAS is the primary regulator for CMS licensing and financial requirements. The 110% threshold is not the standard early warning trigger under the SFA regulations. Notifying only when capital falls below 100% is incorrect because the law mandates an early warning at the 120% level. The Securities Industry Council (SIC) oversees the Singapore Code on Take-overs and Mergers, not the financial resource requirements of CMS license holders.

Takeaway: CMS license holders must immediately notify MAS if their base capital drops below 120% of the required minimum to provide an early warning of potential financial instability.

Correct: Approach X is correct because the Securities and Futures Act (SFA) is designed to ensure that Singapore’s capital markets operate with integrity, fairness, and transparency. A fundamental pillar of this regime is that all investors—regardless of their size or sophistication—must have equal access to material, price-sensitive information. Selective disclosure to institutional investors (as suggested in Approach Y) would create an unlevel playing field, undermine public confidence, and potentially violate market misconduct provisions regarding the fair dissemination of information.

Incorrect: Approach Y (Options B and D) is incorrect because selective disclosure is fundamentally at odds with the SFA’s objective of market fairness. While ‘orderly’ markets are a goal, this is achieved through transparency and equal access, not by giving certain participants an information advantage. Option C is incorrect because the SFA and SGX Listing Rules do not prioritize issuer confidentiality over the public’s right to material information; rather, they mandate disclosure of material information unless specific, narrow criteria for temporary non-disclosure are met, and no general MAS exemption exists to favor confidentiality over transparency in this context.

Takeaway: The Securities and Futures Act (SFA) mandates a disclosure-based regime where market integrity is maintained through the equal and timely dissemination of material information to all market participants.

Correct: Under the Singapore Code on Take-overs and Mergers, specifically Rule 14, a mandatory offer is required when any person acquires shares which carry 30% or more of the voting rights of a company. Crucially, the Code applies to ‘parties acting in concert.’ There is a presumption that a company and its subsidiaries are acting in concert. Therefore, their holdings must be aggregated. If the combined total reaches or exceeds 30%, the obligation to make a mandatory offer is triggered for the entire group.

Incorrect: The suggestion that only single legal entities are counted is incorrect because the Code explicitly aggregates the holdings of all concert parties to prevent the circumvention of the 30% rule through multiple vehicles. Seeking a waiver from MAS is incorrect as the Securities Industry Council (SIC), not MAS, administers the Take-over Code, and such waivers are not granted simply based on independent investment committees for subsidiaries. The requirement for a mandatory offer is strictly based on the voting rights threshold (30%) and is not dependent on whether the board composition has changed yet.

Takeaway: In Singapore, the 30% mandatory offer threshold is calculated based on the aggregate voting rights held by an acquirer and all parties acting in concert with them, including subsidiaries.

Correct: Under Section 6 of the Financial Advisers Act (FAA), there are restrictions on the use of the title ‘financial adviser’ or its derivatives. However, persons who are exempt from holding a financial adviser’s license under Section 23(1) of the FAA—which includes holders of a Capital Markets Services (CMS) license for advising on corporate finance—are permitted to use the title ‘corporate finance adviser’ or ‘financial adviser’ in relation to the specific activities for which they are exempt.

Incorrect: Requiring a separate Financial Advisers license is incorrect because the FAA provides specific exemptions for CMS license holders to avoid dual-licensing for the same activity. Limiting the title use only to institutional investors is a misconception; while some exemptions depend on client type, the title restriction itself is linked to the licensing or exemption status under the FAA. Using the general title ‘Financial Adviser’ for all activities is misleading if the entity is only authorized or exempt for corporate finance advice; the title must accurately reflect the scope of the authorized activity.

Takeaway: Entities holding a CMS license for advising on corporate finance are exempt from the Financial Advisers Act for that activity and are legally permitted to use titles such as Corporate Finance Adviser.

Correct: The Securities Industry Council (SIC) is the body established under the Securities and Futures Act (SFA) to administer and interpret the Singapore Code on Take-overs and Mergers. When there is any doubt as to whether a proposed course of conduct is in accordance with the Code, or when the application of the Code is unclear, the adviser should consult the SIC. A formal ruling from the SIC provides the necessary regulatory certainty that internal or external legal opinions cannot provide.

Incorrect: Seeking a legal opinion is a common practice but it does not replace the authority of the SIC; the SIC is the final arbiter of the Code. The SGX regulates listing requirements and market conduct but does not administer the Take-over Code; that is the specific mandate of the SIC. Relying solely on internal compliance or waiting for a 50% threshold is incorrect because Rule 14 mandatory offer obligations are often triggered at the 30% threshold or through acquisitions by concert parties holding between 30% and 50%.

Takeaway: The Securities Industry Council (SIC) is the sole authority for interpreting the Singapore Code on Take-overs and Mergers, and formal consultation is required whenever the Code’s application is uncertain or in dispute.