As stock markets around the world tumble, many issuers are looking at the silver lining – a golden opportunity to undertake share buybacks, which offer multiple benefits, including: presenting the market a confident outlook as the company takes the lead on signalling “buy”, bulking up the company’s treasury shares reserve for quick capitalisation on future upturns, and improved EPS numbers. 

Issuers interested in share buybacks must have a mandate from shareholders.

Some tips to stay on SGX’s right side when executing share buybacks:

1.      Maximum number of shares that can be repurchased: 10% of issued shares as at date buyback approval was obtained (often the share capital as at the last AGM)

2.      Do not pay more than 105% of average closing market price over the last 5 consecutive active trading days for on-market purchases

3.      Do not undertake share buybacks when there is unannounced material information – the issuer itself may get in hot water for insider trading

4.      Best practice, according to SGX, is not to undertake share buybacks 2 weeks before quarterly financials are released & 4 weeks before full year financials are released

5. Be aware that certain methods of repurchasing shares have been flagged by SGX as problematic and may be viewed as misconduct, including:

a. Purchasing a few shares near or at market close, resulting in the impression that the share price is on a rising trend

b. Purchasing shares despite increasingly higher prices, which may be viewed as being meant to influence closing prices

c. Purchasing “excessively” e.g. share buybacks constituting more than 30% of the daily on-market traded volume, which may be viewed as artificial inflation of trading volume and price

Dividend announcements

An issuer must not announce dividends for 1Q or 3Q without the quarterly financial statements unless:

1. the issuer has a committed dividend policy to announce dividends on a quarterly basis which has been communicated to shareholders;

2. the issuer confirms for a 1Q or 3Q dividend that it has sufficient financial resources to fulfill its liabilities as and when they fall due, after paying the dividend; and

3. an issuer which is a corporation confirms for a 1Q or 3Q dividend that it complies with Section 403 of the Companies Act (i.e. dividends may only be paid out of profits) or equivalent requirements in its place of incorporation.

Blackout periods for bonus issues, rights issues, records date (fka books closure date) & capital returns

Two categories of issuers & blackout periods:

1. Issuers announcing financials on half year and full year bases – blackout periods start from end of half year/ full year until financial statements announced

2. Issuers announcing financials on quarterly basis – blackout periods start from end of each quarter until financial statements announced

Reference materials:

SGX Practice Note 7.7 (Announcement of dividends and other corporation actions)
SGX Catalist Practice Note 7G (Announcement of dividends and other corporate actions)

AEI Legal is part of the inaugural Monetary Authority of Singapore (MAS) x Singapore Academy of Law (SAL) Payment Regulatory Evaluation Program (PREP), designed to help connect the payments industry with specialised legal service providers.

As a technology law-focused firm, we are delighted to be part of such a forward-thinking initiative. Singapore’s new Payment Services Act is the springboard to many opportunities.

If you are a payments service provider with questions, we’d love to talk to you.

AEI Legal is proud to be the contributing author for ICLG’s 2019 Singapore: Fintech guide.

The ICLG Guide to Fintech Laws and Regulations covers a broad overview of common issues in fintech laws and regulations in 51 jurisdictions.

The Guide can be accessed here.

On 17 January 2019, the Intellectual Property Office of Singapore (IPOS) released the Singapore Copyright Review Report.

The Report makes 16 proposals, including that creators be granted ownership of commissioned works by default, unless otherwise agreed in writing (Proposal 2) and that creators be attributed credit whenever their works are used, even if the copyright has been sold (Proposal 4).

Of special interest to technology companies will be the new exception to facilitate use of copyright work for text and data mining (Proposal 8) which would enable legal use of large-scale AI and big data analytics on text, data and other content to generate insights.

If you have questions about how the proposed amendments to the Copyright Act will affect your business, please feel free to get in touch.