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

Correct: Under Section 255 of the Securities and Futures Act (SFA), a ‘due diligence’ defense is available. To rely on this, the defendant (such as an issue manager or director) must prove they conducted all inquiries that were reasonable in the circumstances and had reasonable grounds to believe, and did believe up to the time of the relevant offer, that the statement was true and not misleading or that there was no omission.

Incorrect: Obtaining an indemnity from the board is a common commercial practice but does not provide a statutory defense against claims from third-party investors under the SFA. Proving a lack of intent to defraud or lack of actual knowledge is insufficient because the SFA imposes a duty of care; liability can arise from negligence or failure to conduct reasonable inquiries. Finally, the fact that MAS or SGX reviewed the prospectus does not absolve the professionals of their liability, as the responsibility for the accuracy of the document rests solely with the issuer and its advisers.

Takeaway: To successfully invoke the due diligence defense under the SFA, professionals must demonstrate they performed reasonable inquiries and maintained a well-founded belief in the accuracy of the prospectus information.

Correct: According to Rule 14.1(b) of the Singapore Code on Take-overs and Mergers, a person (and their concert parties) who holds between 30% and 50% of the voting rights of a company is subject to the ‘creeper rule.’ This rule stipulates that a mandatory general offer is triggered if such a person acquires additional shares carrying more than 1% of the voting rights in any 6-month period.

Incorrect: The suggestion of a 3% annual limit with MAS disclosure is incorrect as the Take-over Code specifically mandates a 1% limit over 6 months, and the Securities Industry Council (SIC) oversees the Code rather than MAS directly for these specific offer triggers. The 2% over 12 months is a common misconception and does not align with the Singapore regulatory framework. The claim that the rule only triggers upon exceeding 50% is false, as the creeper rule specifically manages the gradual increase of control for those already holding between 30% and 50%.

Takeaway: Under the Singapore Code on Take-overs and Mergers, shareholders holding between 30% and 50% of voting rights trigger a mandatory offer if they acquire more than 1% of voting rights within any 6-month period.

Correct: FIDReC is an independent body in Singapore that provides a specialized dispute resolution framework for the financial industry. For claims between consumers and financial institutions, FIDReC’s jurisdiction limit is currently set at S$100,000 per claim. The process involves mediation first, and if that fails, adjudication. A critical feature of FIDReC’s adjudication is that the award is binding on the financial institution if, and only if, the consumer accepts it. If the consumer rejects the award, they are free to pursue other legal remedies, such as court litigation.

Incorrect: The suggestion that FIDReC only facilitates mediation is incorrect because it also provides adjudication services when mediation fails. The claim that MAS makes final rulings on individual compensation is false, as MAS is a regulator and does not adjudicate private commercial disputes. The idea that the award is binding on both parties is incorrect; it is only binding on the financial institution if the consumer accepts it, preserving the consumer’s right to seek court redress if they are unsatisfied. Finally, the jurisdiction limit is S$100,000, not S$50,000, making the S$85,000 claim eligible for FIDReC’s services.

Takeaway: FIDReC provides a two-stage dispute resolution process for retail claims up to S$100,000, where the adjudicator’s decision is binding on the financial institution only upon the consumer’s acceptance.

Correct: Under the MAS Guidelines on Continuing Professional Development, representatives conducting regulated activities under the Securities and Futures Act (SFA), such as corporate finance, are required to complete a minimum of 15 CPD hours each calendar year. This consists of 6 hours of Core CPD (covering ethics, rules, and regulations) and 9 hours of Supplementary CPD (relevant to the specific regulated activity). These requirements apply to the full calendar year and are not pro-rated if a representative changes employers within the same year; the representative is responsible for ensuring the full annual requirement is met.

Incorrect: Pro-rating CPD hours based on the duration of employment at a specific firm is not permitted for representatives who remain in the industry. Carrying over excess hours from a previous year is generally not allowed to satisfy the minimum annual mandatory requirements. There is no regulatory provision that waives the Supplementary CPD requirement for new hires or transfers; both Core and Supplementary components must be fulfilled annually to maintain professional competency standards.

Takeaway: Corporate finance representatives in Singapore must fulfill the full 15-hour annual CPD requirement regardless of mid-year employer changes, ensuring they meet both Core and Supplementary hour thresholds.

Correct: Under the SGX Listing Rules and the MAS Guidelines on Due Diligence, the Issue Manager (IM) serves as a gatekeeper for the Singapore capital markets. The IM must conduct its own due diligence and cannot satisfy its obligations by simply relying on the work of other professionals or the representations of the issuer. Independent verification, such as site visits and interviews with third parties, is essential to ensure the prospectus is not misleading and that the issuer meets the suitability requirements for the Mainboard.

Incorrect: The other approaches are incorrect because they underestimate the IM’s regulatory burden. Relying solely on third-party reports (Approach 1) is insufficient as the IM’s duty of due diligence is non-delegable. While the Board of Directors is indeed liable for the prospectus, the IM shares significant regulatory and legal responsibility for ensuring the integrity of the listing process. The requirement for robust due diligence applies regardless of the jurisdiction’s perceived regulatory strength or the cost-efficiency of the process.

Takeaway: In an SGX Mainboard IPO, the Issue Manager must perform independent and holistic due diligence that goes beyond mere reliance on third-party professional reports to ensure the issuer’s suitability and prospectus accuracy.

Correct: Under the Securities and Futures Act (SFA) in Singapore, the enforcement regime for market misconduct is ‘dual-track,’ meaning MAS can pursue either criminal prosecution or a civil penalty. However, to ensure fairness and prevent double jeopardy, the SFA provides that once a civil penalty action is initiated and resolved (either by court order or agreement), criminal proceedings for the same conduct are barred.

Incorrect: The assertion that criminal prosecution must be attempted first is incorrect as MAS has the discretion to choose the most appropriate enforcement track based on the severity and evidence. The claim that a civil penalty results in a criminal record is false; civil penalties are civil in nature and do not constitute a criminal conviction. Finally, the civil penalty regime applies to both individuals and corporations, not just corporate entities.

Takeaway: In Singapore’s dual-track enforcement system, the commencement of civil penalty proceedings under the SFA precludes subsequent criminal prosecution for the same market misconduct contravention.

Correct: According to the Monetary Authority of Singapore (MAS) Fintech Regulatory Sandbox guidelines, transparency is a core requirement. Entities must fully disclose to customers that the service is operating in a sandbox and clearly explain the specific regulatory requirements that have been relaxed. This ensures that clients can make an informed decision and understand that the usual level of regulatory protection may not be fully available during the experimentation period.

Incorrect: Increasing base capital immediately contradicts the purpose of the sandbox relaxation and does not address the underlying issue of client disclosure. Ceasing testing is an overreaction that ignores the sandbox’s goal of fostering innovation through controlled risk-taking. Relying on existing insurance without disclosure is a violation of MAS expectations, as the sandbox does not waive the duty of transparency; in fact, it heightens the need for clear communication regarding the experimental nature of the service.

Takeaway: Firms operating in the MAS Fintech Regulatory Sandbox must prioritize transparency by disclosing the sandbox status and specific relaxed regulations to clients to ensure informed consent and manage operational risk.

Correct: Under the Securities and Futures Act (SFA) and the Representative Notification Framework (RNF), an individual is only considered an appointed representative and authorized to conduct regulated activities (such as advising on corporate finance) once their name appears on the Public Register of Representatives. The principal firm is responsible for ensuring the individual is fit and proper before lodgment, but the legal authority to act begins only with the public listing.

Incorrect: The suggestion that activities can start immediately upon submission is incorrect because the public register listing is the legal trigger for authorization. There is no 14-day grace period for unlisted individuals to perform regulated activities under the SFA. While internal records of CMFAS qualifications are mandatory for the firm’s due diligence, they do not bypass the requirement for the individual to be officially registered on the MAS Public Register before commencing work.

Takeaway: An individual must be officially listed on the MAS Public Register of Representatives before they can legally perform any regulated activities in Singapore.

Correct: According to Rule 210(1)(b) of the SGX-ST Listing Manual, an issuer may list on the Mainboard if it has a market capitalization of at least S$300 million based on the issue price and the post-invitation issued share capital, and has generated operating revenue in the latest completed financial year. This specific test does not require the issuer to be profitable, making it suitable for high-valuation growth companies.

Incorrect: The Profit Test requires a minimum consolidated pre-tax profit of at least S$30 million for the latest financial year, not a cumulative total over three years. The S$150 million Market Capitalization Test still requires the issuer to have been profitable in the latest financial year. The assertion that all Mainboard applicants must be profitable is incorrect because the S$300 million market capitalization test provides an alternative for revenue-generating but non-profitable firms.

Takeaway: Under SGX Mainboard rules, an issuer can bypass the profitability requirement if they meet a higher market capitalization threshold of S$300 million and have generated operating revenue.

Correct: In Singapore, the regulatory boundary is defined by the nature of the activity. ‘Advising on corporate finance’ (such as advice on capital raising, restructuring, or compliance with SGX listing rules) is a regulated activity under the Securities and Futures Act (SFA). However, providing advice or issuing reports concerning investment products (like specific shares or bonds for a personal portfolio) constitutes a financial advisory service regulated under the Financial Advisers Act (FAA). A firm may need to comply with both acts if they perform both types of activities.

Incorrect: The claim that the SFA exclusively governs broker-dealers is incorrect because many broker-dealers are also ‘exempt financial advisers’ under the FAA when they provide investment advice. The status of an ‘Accredited Investor’ may exempt a firm from certain conduct requirements (like the need to have a reasonable basis for recommendations), but it does not change the underlying classification of corporate finance advice from the SFA to the FAA. Finally, the SFA and FAA both contain their own distinct licensing and conduct of business rules; it is not a split where one handles licensing and the other handles conduct.

Takeaway: Corporate finance advisory (M&A, capital raising) is regulated under the SFA, whereas investment product advice to clients is regulated under the FAA.

Correct: General Principle 1 of the Singapore Code on Take-overs and Mergers states that all shareholders of the same class of an offeree company must be treated similarly by an offeror. Furthermore, Rule 10 (Special Deals with Favorable Conditions) prohibits an offeror from making arrangements with selected shareholders that involve favorable conditions not extended to all shareholders, unless the Securities Industry Council (SIC) gives its consent and an independent financial adviser opines that the arrangement is fair and reasonable.

Incorrect: The Code does not provide a ‘de minimis’ percentage threshold (like 10%) that automatically allows for unequal treatment of shareholders. While disclosure is necessary, it is not sufficient on its own to validate a special deal; SIC consent and an independent financial adviser’s opinion are typically required. The principle of equal treatment is broad and covers ancillary commercial arrangements or side-agreements that effectively provide a premium or benefit to specific shareholders over others.

Takeaway: Under the Singapore Take-over Code, any arrangement providing benefits to specific shareholders not available to the whole class is considered a ‘special deal’ and requires SIC consent to ensure equitable treatment.

Correct: To address potential conflicts of interest between its commercial objectives and its regulatory obligations, SGX established SGX RegCo (Singapore Exchange Regulation) as a separate subsidiary. SGX RegCo has its own independent Board of Directors, which is distinct from the SGX Group Board. This structure ensures that front-line regulatory functions, including listing approvals, market surveillance, and member supervision, are performed independently of SGX’s profit-driven activities.

Incorrect: Reporting directly to the Group CEO would undermine the independence of the regulatory function by subjecting it to commercial leadership. While MAS is the statutory regulator and oversees SGX, SGX RegCo retains front-line surveillance and enforcement powers over its own listing rules and members; it has not transferred all these powers to MAS. Listing rule amendments are subject to MAS approval and public consultation, rather than a vote by listed companies, which would create a conflict of interest for the issuers themselves.

Takeaway: SGX RegCo operates as an independent subsidiary with a separate board to ensure that Singapore’s front-line market regulation remains impartial and free from commercial influence.

Correct: Under the licensing framework established by the Monetary Authority of Singapore (MAS) for the Securities and Futures Act (SFA), an applicant for a Capital Markets Services (CMS) license for advising on corporate finance must have at least two individuals who will be appointed as representatives for that specific regulated activity. These individuals must meet the competency requirements, including passing the relevant Capital Markets and Financial Advisory Services (CMFAS) examinations and possessing sufficient relevant experience.

Incorrect: The requirement for a base capital of S$5,000,000 is incorrect as the base capital requirement for a CMS license in corporate finance is generally S$250,000. Retail banking experience is not the specific competency required for corporate finance. Membership in the SGX or being a listed company is not a prerequisite for obtaining a CMS license. Furthermore, while MAS requires at least two directors (one of whom must be an executive director resident in Singapore), there is no mandate for five executive directors or a requirement that all must be Singapore Citizens.

Takeaway: To obtain a CMS license for corporate finance in Singapore, an entity must satisfy MAS regarding its fit and proper status, maintain a minimum base capital of S$250,000, and employ at least two qualified appointed representatives resident in Singapore.

Correct: Under the SGX Listing Manual Section B (Rules of Catalist), the Catalist board operates on a sponsor-supervised regime. Unlike the Mainboard, where the SGX-ST has a more direct role in the oversight of issuers, Catalist issuers must be sponsored by an authorized firm at all times. The Sponsor is responsible for advising the issuer on its listing obligations and ensuring the issuer complies with the continuous disclosure requirements. Failure to maintain a Sponsor will result in the company being delisted from the SGX.

Incorrect: Relying on SGX-ST direct vetting is incorrect because, for Catalist issuers, the Sponsor (not SGX-ST) is the primary party responsible for vetting announcements and ensuring compliance. Meeting a minimum profit requirement of S$30 million is a quantitative entry criterion for the Mainboard, but it is not a control for maintaining listing status or managing disclosure risks. The requirement for 500 public shareholders applies to the Mainboard; the Catalist board only requires a minimum of 200 public shareholders.

Takeaway: The primary regulatory distinction is that Catalist is a sponsor-supervised board requiring a continuous relationship with a Sponsor, whereas the Mainboard is subject to more direct oversight by the SGX-ST.

Correct: The Securities and Futures Act (SFA) aims to promote fair, efficient, and transparent markets. A fair and transparent market requires that all participants have equal access to material information and that the market is protected from manipulative conduct. Implementing robust disclosure protocols and surveillance mechanisms to detect prohibited conduct like wash trading or market rigging directly supports these statutory objectives.

Incorrect: Prioritizing execution speed at the expense of pre-trade transparency fails to meet the SFA’s objective of a transparent market. Providing material information to a select group of subscribers before the public creates information asymmetry, which violates the principle of a fair market. While capital adequacy is important under the SFA for reducing systemic risk and ensuring financial soundness, it is not the primary mechanism for ensuring market conduct transparency and fairness.

Takeaway: The SFA’s objectives for fair and transparent markets are achieved through equitable information disclosure and the prevention of market abuse and manipulative practices.

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 of persons acting in concert) acquires shares that carry 30% or more of the voting rights of a company. Once this 30% threshold is reached or exceeded, the acquirer must make an offer for all the remaining shares in the company that they do not already own or have agreed to acquire.

Incorrect: Notifying MAS for a moratorium is incorrect because the Securities Industry Council (SIC), not MAS directly, administers the Code, and the obligation is to make an offer rather than pause. Issuing a cautionary statement and losing voting rights is not the standard remedy for crossing the 30% threshold under the Code. A partial offer is a voluntary mechanism under Rule 16 and does not satisfy the mandatory obligation triggered by crossing the 30% threshold.

Takeaway: Under the Singapore Code on Take-overs and Mergers, crossing the 30% voting rights threshold triggers an immediate obligation to make a mandatory general offer for the remaining shares of the company.

Correct: According to the Securities and Futures (Financial and Margin Requirements) Regulations, a CMS licensee must maintain a minimum base capital (S$250,000 for those advising on corporate finance without holding client assets). If the base capital falls below this level, the licensee is required to immediately notify MAS. Furthermore, the licensee must not commence any new business and must cease all regulated activities unless MAS provides specific directions or permissions to continue for the purpose of an orderly wind-down.

Incorrect: Notifying the SGX is only applicable to members of the exchange and does not replace the primary obligation to MAS. ACRA is the national regulator of business entities but does not oversee the specific financial resource requirements of CMS licensees under the Securities and Futures Act. While maintaining a 120% buffer is a notification trigger for ‘weakened’ financial positions, falling below the absolute minimum requires immediate cessation of business, not just a restoration plan by the next reporting cycle.

Takeaway: A CMS licensee must immediately notify MAS and stop regulated activities if its base capital drops below the statutory minimum requirement to ensure market integrity and investor protection in Singapore’s financial sector.

Correct: The Securities Industry Council (SIC) is the body tasked with administering the Singapore Code on Take-overs and Mergers. It is empowered by the Securities and Futures Act (SFA) to issue rulings on the interpretation of the Code and its application to specific cases. These rulings are final and binding on the parties involved in the take-over process, ensuring that the principles of fair and equal treatment of shareholders are upheld.

Incorrect: The suggestion that the SIC is an advisory body to the SGX is incorrect as the SIC is a body established under the MAS and operates independently of the SGX’s listing functions. The claim that the SIC lacks the authority to mandate a general offer is false, as one of its core functions is to determine if a mandatory offer has been triggered under Rule 14 of the Code. Finally, the SIC is not a statutory tribunal under the Ministry of Law, nor is its primary focus the recovery of financial losses through civil penalty proceedings; rather, it focuses on the conduct of take-overs.

Takeaway: The Securities Industry Council (SIC) is the final authority on the interpretation and application of the Singapore Code on Take-overs and Mergers.

Correct: According to Sections 135, 136, and 137 of the Securities and Futures Act (SFA) of Singapore, a substantial shareholder (defined as holding at least 5% of voting shares) must notify the listed corporation and the SGX of any change in the percentage level of their interest. This notification must be made within 2 business days after the person becomes aware of the change.

Incorrect: The suggestion of 5 business days is incorrect as the SFA prescribes a tighter 2-business-day window for substantial shareholding disclosures to ensure market transparency. While listed companies must announce material information immediately under SGX Listing Rules, the specific statutory obligation for substantial shareholders under the SFA is 2 business days, making the ‘immediate’ requirement for the shareholder technically inaccurate in this regulatory context. Reporting by the end of the calendar week is not a recognized regulatory deadline under Singapore’s securities laws for shareholding changes.

Takeaway: In Singapore, substantial shareholders must notify both the listed company and the SGX of any change in their interest level within 2 business days of becoming aware of the change.

Correct: According to the SGX Mainboard Listing Rules, promoters are generally required to provide a contractual undertaking to the SGX to observe a moratorium on the disposal of their interests. The standard requirement is a 100% lock-up of their shareholding for the first six months post-listing, followed by a 50% lock-up for the subsequent six months. This ensures that those who control the company remain committed to its performance in the immediate period following the IPO.

Incorrect: The suggestion of a twelve-month 100% lock-up is more restrictive than the standard SGX Mainboard requirement, which allows for a reduction to 50% after six months. A three-month moratorium is insufficient and does not comply with the minimum six-month full lock-up period required by the exchange. Claiming that moratoriums are purely at the discretion of the lead manager or the board is incorrect, as the SGX Listing Rules mandate specific minimum moratorium periods for promoters to protect public investors.

Takeaway: Promoters of companies listing on the SGX Mainboard must adhere to a two-stage moratorium: a full lock-up for the first six months and a 50% lock-up for the next six months.

Correct: In accordance with the MAS Guidelines on Continuing Professional Development, representatives conducting regulated activities under the Securities and Futures Act (SFA) are required to complete 12.5 hours of CPD training annually. This requirement specifically mandates that at least 4 hours must be dedicated to Ethics and at least 4 hours to Rules and Regulations relevant to their regulated activity, ensuring they remain updated on the legal and ethical framework of the Singapore financial industry.

Incorrect: The approach focusing exclusively on technical skills is incorrect because MAS mandates specific minimum hours for Ethics and Rules to maintain professional integrity and regulatory awareness. The approach suggesting an exemption for experienced representatives is incorrect as the CPD requirements for Rules and Ethics apply regardless of seniority to ensure all practitioners stay current with evolving regulations. The approach requiring only 10 hours is incorrect because it fails to meet the minimum 12.5-hour threshold set by the MAS guidelines and improperly delegates the structured requirement to supervisory discretion.

Takeaway: Corporate Finance representatives in Singapore must complete 12.5 CPD hours annually, with mandatory minimums of 4 hours each for Ethics and Rules and Regulations.

Correct: MAS is an integrated regulator, which means it combines the functions of a central bank and a financial supervisor across all sectors, including banking, insurance, and capital markets. In the context of corporate finance, MAS administers the Securities and Futures Act (SFA) to ensure market integrity and investor protection, while also promoting the long-term growth and stability of Singapore’s financial ecosystem.

Incorrect: The suggestion that MAS delegates all statutory supervision of corporate finance advisers to the SGX is incorrect, as MAS remains the primary statutory regulator under the SFA. The claim that MAS’s role is restricted only to monetary policy ignores its extensive mandate in financial supervision and market conduct. Finally, MAS is a regulatory and supervisory body, not a judicial court, and does not replace the Singapore High Court in private civil litigation or professional negligence claims.

Takeaway: MAS’s integrated regulatory model allows for holistic oversight of the financial sector, balancing prudential stability with market conduct and the development of the capital markets.

Correct: Under the Securities and Futures Act (SFA) of Singapore, the MAS can pursue civil penalties for market misconduct. The standard of proof for such civil actions is the ‘balance of probabilities,’ which is the standard used in civil law. This is lower than the ‘beyond a reasonable doubt’ standard required for criminal prosecutions handled by the Attorney-General’s Chambers.

Incorrect: The claim that a civil penalty results in a criminal record is incorrect because the civil penalty regime is specifically designed as a non-criminal alternative to prosecution. The suggestion that MAS can pursue civil penalties after a criminal conviction is incorrect because the SFA contains ‘double jeopardy’ provisions that generally prohibit civil penalty actions once criminal proceedings have resulted in a conviction or acquittal. The statement that the burden of proof is identical for both is incorrect, as civil and criminal proceedings operate under different legal standards of proof.

Takeaway: In Singapore, MAS enforcement via civil penalties relies on the balance of probabilities standard, while criminal prosecution requires the higher standard of proof beyond a reasonable doubt.

Correct: In accordance with the Securities and Futures Act (SFA) and the Representative Notification Framework (RNF) in Singapore, an individual must be an ‘appointed representative’ before they can conduct any regulated activity. A person becomes an appointed representative only when their name is entered into the public register of representatives maintained by MAS. Therefore, the firm must submit the notification through the MASNET portal and wait for the name to appear on the public register before the individual starts regulated work.

Incorrect: The suggestion that there is a 14-day grace period after starting work is incorrect as the SFA requires the appointment to be effective on the register first. The idea that supervision allows for a 30-day pre-registration work period is a misconception; while supervision is a requirement for some, it does not replace the need for registration. The claim that registration is only for retail-facing roles is false, as the RNF applies to all individuals conducting regulated activities under the SFA, regardless of the client’s sophistication level.

Takeaway: An individual must be officially listed on the MAS public register of representatives before they can legally perform any regulated activities in Singapore.

Correct: According to SGX Listing Manual Rule 811(1), 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. If an issuer wishes to exceed this 10% discount limit, it cannot rely on the general mandate and must instead obtain specific shareholder approval for the placement.

Incorrect: The 20% limit refers to the maximum number of shares that can be issued on a non-pro rata basis under a general mandate, but it does not override the 10% price discount ceiling. Restructuring a private placement as a rights issue is not a valid regulatory workaround for pricing constraints and would change the nature of the offering. The SGX, not the MAS, is the primary body that sets and enforces the Listing Rules regarding the pricing of secondary share issuances for listed companies.

Takeaway: Under SGX Listing Rules, private placements conducted under a general mandate are strictly capped at a 10% discount to the weighted average price.

Correct: In Singapore, FIDReC serves as an independent alternative dispute resolution center for the financial industry. For disputes between retail consumers and financial institutions (including those licensed for corporate finance advisory), the process involves mediation and adjudication. A key feature of the FIDReC process is that the Adjudicator’s decision is final and binding on the financial institution if the complainant (the retail investor) accepts the award. This provides a cost-effective and efficient mechanism for consumers to resolve disputes without the need for expensive legal proceedings.

Incorrect: Approach 2 and its supporting options are incorrect because financial institutions that are members of FIDReC (which includes most MAS-licensed entities dealing with retail clients) do not have the right to reject a final adjudication award if the consumer accepts it. Option B is incorrect as there is no such exemption for corporate finance firms regarding retail disputes. Option C is incorrect because the jurisdictional limit for FIDReC claims is generally S$100,000, not S$10,000, and there is no mandatory referral to the Singapore International Arbitration Centre based on that threshold. Option D is incorrect because FIDReC is an independent body, not a mediation arm of MAS, and its adjudication awards are indeed binding on the institution if accepted by the consumer.

Takeaway: Under the FIDReC framework in Singapore, an adjudication award is final and binding on the financial institution once the retail complainant accepts the decision.

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 transaction that provides favorable conditions to some shareholders but not others is classified as a ‘special deal.’ Such deals are generally prohibited unless the Securities Industry Council (SIC) provides consent. This consent is typically contingent on an Independent Financial Adviser (IFA) certifying that the deal is fair and reasonable and the deal being approved by independent shareholders via a poll.

Incorrect: The requirement for equal treatment cannot be satisfied merely by disclosure or proportional increases in the offer price; the SIC must specifically approve special deals to prevent circumvention of the Code. Interested person transaction (IPT) approval by an Audit Committee under the SGX Listing Rules does not override the requirements of the Take-over Code regarding equal treatment. Timing the transaction 14 days prior to the offer does not exempt it, as the Code looks at the substance of arrangements made in connection with an offer regardless of the specific window.

Takeaway: Any arrangement that provides benefits to specific shareholders during a takeover must be treated as a special deal requiring SIC consent and independent verification to ensure the principle of equal treatment is upheld.

Correct: Under the Securities and Futures Act (SFA), a Capital Markets Services (CMS) license lapses automatically if the holder ceases to carry on the regulated activity for which it is licensed for a continuous period of 6 months. Since Alpha Advisory has been inactive for seven months, its license has lapsed. Furthermore, when a representative ceases to act for a principal, the principal must notify the Monetary Authority of Singapore (MAS) of the cessation of the representative’s status within 14 days of the occurrence.

Incorrect: The approach suggesting the license remains valid until year-end is incorrect because the 6-month inactivity rule for lapsing is a statutory requirement under the SFA. The approach suggesting a 30-day grace period for representative status is incorrect as the notification requirement to MAS is strictly 14 days, and the status ceases when the representative stops acting for the principal. The approach involving the Singapore Exchange (SGX) is incorrect because CMS licensing and representative status are regulated by MAS under the SFA, not by the exchange, and lapsing occurs by operation of law rather than just formal withdrawal approval.

Takeaway: A CMS license lapses after six months of inactivity in the regulated activity, and MAS must be notified within 14 days when a representative ceases to act for their principal.

Correct: Under the MAS FinTech Regulatory Sandbox guidelines, the primary objective is to allow for experimentation where some regulatory requirements are relaxed. However, the applicant is strictly required to identify the risks of the service and propose specific safeguards to contain the impact of any potential failure on the participants and the broader financial system. This ensures that while innovation is encouraged, the risks are managed within a controlled environment.

Incorrect: Requiring full compliance with the SFA and FAA before starting would defeat the purpose of the sandbox, which is specifically designed to provide relief from certain regulatory burdens during the testing phase. Mandating a 100% financial indemnity for all capital raised is not a standard requirement and would be commercially prohibitive for most innovators. Restricting participation to institutional investors might change the risk profile, but it does not exempt the applicant from the fundamental requirement to conduct a risk assessment and provide safeguards as part of the sandbox application process.

Takeaway: The MAS Regulatory Sandbox allows for the relaxation of specific regulations provided that the applicant implements adequate safeguards to contain the consequences of failure within a defined environment.

Correct: According to the Securities and Futures Act (SFA), if an issuer becomes aware of a new circumstance or a material update after the prospectus has been lodged but before it is registered, they must lodge a supplementary or replacement prospectus with MAS. This ensures that the prospectus remains accurate and contains all information that investors would reasonably require to make an informed assessment of the securities.

Incorrect: Waiting for MAS or public comments is incorrect because the onus of ensuring continuous and accurate disclosure lies with the issuer and its advisers. Notifying the SGX via a general announcement does not satisfy the statutory requirement to update the offer document itself under the SFA. Including the information only in the final printed version without formal re-lodgment with MAS violates the procedural requirements for registration and could lead to the prospectus being considered misleading or incomplete.

Takeaway: Under the Securities and Futures Act, any material change occurring between lodgment and registration must be addressed by lodging a supplementary or replacement prospectus with MAS.