Subsidiary Legislation

Securities and Futures (Cancellation of Notification) Order 2002 (S233/2002)
With effect from 1 July 2002, the Notification made under the Companies Act (Cap 50) relating to exemptions under s 213(15) (N 3) is cancelled.

Companies (Cancellation) Notification 2002 (S234/2002)
Pursuant to the Companies (Cancellation) Notification 2002, the following subsidiary legislation is cancelled with effect from 1 July 2002:

• Approval of Trustee under s 110(1) - Consolidation Notification (N 2);
• Companies (Institutional, Professional and Business Investors) Notification
  (N 4);
• Companies (Recognised Stock Exchanges) Notification (N 5);
• Companies (Designated Interest) (Unit Trust) Notification (N 7);
• Declaration under s 44 (Decl 1);
• Declarations - Trustee Corporations - Consolidation (Decl 4);
• Declarations - Prescribed Corporations - Consolidation (Decl 5);
• Declarations - Prescribed Corporations - Consolidation (Decl 6);
• Declaration under s 110(1) (Decl 7);
• Companies (Exemption) Notification 2001 (S75/2001);
• Companies (Exemption) (No 3) Notification 2001 (S546/2001); and
• Companies (Exemption) Notification 2002 (S88/2002).

Securities and Futures Act (Commencement) Notification 2002 (S235/2002)
Pursuant to the Securities and Futures Act (Commencement) Notification 2002, the following provisions of the Securities and Futures Act 2001 (A42/2001) will come into operation from 1 July 2002:

Part XIII: Offers of Investments
Part XIV: Appeals
Fourth Schedule: Consequential Amendments to Other Written Laws
Only the following items in the Fourth Schedule are in force:

• Item 1(a) Amendment to Banking Act (Cap 19), s 4B(9)
• Item 3(a) Amendment to Commodity Trading Act (Cap 48A), s 2
• Item 4(a)(i) to (ix), except (ii) Amendment to Companies Act (Cap 50) ('CA'), s 4
• Item 4(b) Amendment to CA, s 7
• Item 4(c) Amendment to CA, s 59
• Item 4(f) Amendment to CA, s 100
• Item 4(g) Amendment to CA, s 130A
• Item 4(h) Amendment to CA, s 130M
• Item 4(i) Amendment to CA, s 130N(23)
• Item 4(l) Amendment to CA, s 164(13)
• Item 4(m) Amendment to CA, s 165(6)
• Item 4(t) Amendment to CA, s 411
• Item 4(u) Amendment to CA, Second Schedule
• Item 7(b) Amendment to Exchanges (Demutualisation and Merger)Act (Cap 99B), s 8(3)
• Item 12 Amendment to Singapore Broadcasting Authority Act (Cap 297), s 52
• Item 13 Amendment to Trustees Act (Cap 337), s 6(1) 

Securities and Futures (Repeal of Provisions) Notification 2002 (S236/2002)
Pursuant to the Securities and Futures (Repeal of Provisions) Notification 2002, the following provisions of the Companies Act (Cap 50) will be repealed with effect from 1 July 2002:

• sections 57, 58, 97, 98, 99, 101 to 106 and 400;
• Divisions 1, 5A and 6 of Part IV; and
• Fifth and Seventh Schedules.

Companies (Preliminary Prospectus) (Exemption) (Revocation) Order 2002 (S238/2002)
Pursuant to the Companies (Preliminary Prospectus) (Exemption) (Revocation) Order 2002, the Companies (Preliminary Prospectus) (Exemption) Order 2001
(S32/2001) is revoked with effect from 1 July 2002.

Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2002 (S240/2002)
The Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2002 (S240/2002) ('Shares and Debentures Offers Regulations') supplement the provisions of the Securities and Futures Act (A42/2001) ('SFA') on offers of shares and will come into force on 1 July 2002.

The key features of the Shares and Debentures Offers Regulations are described below.

Forms
The First Schedule to the Shares and Debentures Offers Regulations sets out the prescribed forms to be used for the purposes of Division 1 of Part XIII of the SFA and these Regulations.

Statutory disclosure requirements
Section 243 of the SFA provides for the general disclosure requirements for a prospectus. It requires a prospectus to contain all information that investors and their professional advisors would reasonably require to make an informed assessment of whether to invest in the shares or debentures offered in the prospectus.

In addition to s 243 of the SFA, the Fifth, Sixth, Seventh and Eighth Schedules to the Shares and Debentures Offers Regulations set out prospectus checklists for offer of shares or debentures. These checklists serve as guidelines to the issuers on what information must be disclosed. In recognition of the different investment risks posed by shares and debentures, the Shares and Debentures Offers Regulations set out separate prospectus checklists for these two categories of investment. For example, the prospectus checklists for offer of debentures focuses more on the issuer's ability to meet its financial obligations than information relating to the issuer's financial history.

There are also separate checklists for shares or debentures that will be listed or traded on a securities exchange and unlisted shares or debentures. The standard of disclosure for a prospectus in relation to an offer of listed shares or debentures is higher.

Meetings of debenture holders
Part III of the Shares and Debentures Offers Regulations provides for matters in relation to meetings of debenture holders summoned under, inter alia, a covenant contained or deemed to be contained in the debentures or trust deed.
Matters dealt with include quorum of debenture holders, adjournment of meeting, passing of resolutions, the chairman's casting vote and the record of meetings.
Debenture issuance programme

Multiple offers may be made under the debenture issuance programme under
ss 240 and 243 of the SFA without registration of a prospectus for each offer. Instead, a base prospectus for the debenture issuance programme, that is applicable for the entire programme, will be registered with the Monetary Authority of Singapore. For each subsequent offer of debentures under the programme, the issuer will only have to register a pricing statement applicable to that particular offer, hence, saving time and costs.

The Ninth and Tenth Schedules to the Shares and Debentures Offers Regulations set out the prospectus' requirements which must be complied with in the context of such debenture issuance programmes.

Transitional and savings
The Shares and Debentures Offers Regulations also contain transitional and savings provisions. For example, it is provided that the Companies Act (Cap 50) shall continue to apply in relation to:

(a) any offer of shares, debentures or units of shares or debentures in respect of which:

(i) a prospectus has been registered by the Registrar of Companies before 1 July 2002; or
(ii) a preliminary prospectus within the meaning of the Companies (Preliminary Prospectus) (Exemption) Order 2001 (S32/2001) has been lodged with the Registrar of Companies before 1 July 2002; and

(b) any allotment, issue or sale of the shares or debentures, or any agreement for such allotment, arising or resulting from or made with a view to such an offer.

Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2002 (S241/2002)
The Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2002 ('CIS Offers Regulations') supplement the provisions of the Securities and Futures Act 2001 (A42/2001) ('SFA') on offers of units in a collective investment scheme, and will come into operation on 1 July 2002.
The key features of the CIS Offers Regulations are described below.

Prospectus requirements
Section 296 of the SFA provides that the offer of units in a collective investment scheme to the public for subscription or purchase, or an invitation to the public to subscribe for or purchase units in a collective investment scheme may only be made if such offer or invitation is made in or accompanied by a prospectus that:

(a) is prepared in accordance with such requirements as may be prescribed;
(b) is lodged with the Monetary Authority of Singapore ('MAS') together with a written application for the registration of the prospectus; and
(c) is registered by the MAS.

The Third Schedule to the CIS Offers Regulations sets out the requirements for the preparation of a prospectus for an offer to the public of units in a collective investment scheme. The provisions of the Third Schedule serve as guidelines to the issuers on what information must be disclosed.

The checklists impose new disclosure requirements such as the track record of the manager of a collective investment scheme and information on the past performance of a collective investment scheme, where applicable. The CIS Offers Regulations also make it a statutory requirement to disclose certain information including the investment objectives of the scheme, the investment risks, and the fees and charges which may be imposed.

Exemptions of prospectus requirements for offers of units in a CIS to sophisticated investors
Subdivision (4) of Division 1 of Part XIII of the SFA provides that an offer of units in a collective investment scheme made to certain categories of investors, including sophisticated investors, need not comply with the prospectus requirements applicable to offers of units in a collective investment scheme.

In the SFA, a collective investment scheme - the units of which are offered to sophisticated investors - is referred to as a 'restricted authorised scheme' if the scheme is constituted in Singapore, or 'restricted recognised scheme' if the scheme is constituted outside Singapore. The conditions for authorising a 'restricted authorised scheme' and 'restricted recognised scheme' are set out in the Fifth Schedule to the CIS Offers Regulations. They are less stringent than the conditions for authorising a collective investment scheme where units are offered to retail investors.

The manager and trustee for the 'restricted authorised scheme' and 'restricted recognised scheme' and the composition of the schemes need not comply with the investment guidelines and other requirements provided under the Code on Collective Investment Schemes.

The 'restricted authorised scheme' need only comply with two requirements in order to be authorised by the MAS. Firstly, the manager of the 'restricted authorised scheme' must hold a capital market services licence under the SFA, and secondly, the trustee of the scheme must be an approved trustee under the SFA. To be an approved trustee, the trustee must be a public company with a minimum paid up capital of S$1m. In addition, where required by the MAS, the trustee must be covered by professional indemnity insurance or furnish the MAS with a performance bond or guarantee. These are new steps in the SFA to protect investors and to make sure that the trustee will have funds to meet any possible claims by investors.
The only condition for the authorisation of a 'restricted recognised scheme' is that the manager of the 'restricted recognised scheme' must be a holder of a capital market services licence under the SFA.

Advertising regulations for collective investment scheme
Division 2 of Part III of the CIS Offers Regulations contains detailed advertising requirements to prevent false and misleading advertisements in relation to collective investment schemes. In particular, prediction, projection or forecast as to the future performance of a collective investment scheme is not allowed. Past performance of a collective investment scheme may be included in the advertisement provided that it is presented in the advertisement in the manner stipulated in regs 24 to 27 of the CIS Offers Regulations.

Advertisements of collective investment schemes must be clearly legible if it is in a visual form, and audible if it is shown or broadcast over the radio, television, cinema or other similar media. The CIS Offers Regulations also specify the criteria which must be satisfied to fulfil the requirements of legibility and audibility.

Transitional and savings
The CIS Offers Regulations also contain transitional and savings provisions. For example, it is provided that every application for approval of a deed under s 109 of the Companies Act (Cap 50) ('the Act') or of a trustee or representative for the purposes of a deed under s 110 of the Act shall, if it had not been determined by 1 July 2002, be determined in accordance with the Act.

Securities and Futures (Institutional, Professional and Business Investors) Order 2002 (S244/2002)
Pursuant to the Securities and Futures (Institutional, Professional and Business Investors) Order 2002, which will be operative from 1 July 2002, the Monetary Authority of Singapore ('MAS') has specified the following institutional, professional or business investors as persons and bodies who appear to the MAS to have sufficient expertise to understand any risk involved in buying or selling debentures, or units of debentures, for the purposes of s 278(1) of the Securities and Futures Act 2001 (A42/2001) ('SFA'):

• a bank licensed under the Banking Act (Cap 19);
• a company or society registered under the Insurance Act (Cap 142);
• a merchant bank approved as a financial institution under s 28 of the MAS Act (Cap 186);
• a company registered under the Trust Companies Act (Cap 336);
• the government or a public statutory corporation established under any Act in Singapore;
• the holder of a capital markets services licence to deal in securities or advise on corporate finance, or an exempt person in respect of dealing in securities (other than a licensed financial advisor under the Financial Advisers Act 2001
  (A43/2001);
• the holder of a capital markets services licence for fund management or an exempt person in respect of fund management;
• a pension fund or collective investment scheme;
• an investment company as defined in s 355(1) of the Companies Act (Cap 50);
• a person whose total net personal assets exceed S$2m in value or its equivalent in a foreign currency at the time of his acquisition of the debentures or units of debentures pursuant to the offer or invitation concerned or whose income in the 12 months preceding the time of his acquisition of the debentures or units of debentures is not less than S$300,000 or its equivalent in a foreign currency;
• a corporation whose total net assets exceed S$10m in value or its equivalent in a foreign currency as determined by the last audited balance-sheet of the corporation; and
• a person who is a non-resident in Singapore. For this purpose, 'non-resident':
  (a) in relation to an individual, means a person who in the 12 months preceding the time of debentures pursuant to the offer or invitation concerned has not resided in Singapore for more than 183 days; and
  (b) in relation his acquisition or units of the debentures to a corporation or body corporate, means a corporation or body corporate the control and management of whose business is not carried on in Singapore at the time of its acquisition of the debentures or units of debentures pursuant to the offer or invitation concerned.

Section 278 of the SFA relates to offers or invitations in respect of international debentures.

Securities and Futures (Recognised Securities Exchange) Order 2002 (S245/2002)
Pursuant to the Securities and Futures (Recognised Securities Exchange) Order 2002, the Monetary Authority of Singapore hereby declares the following corporations to be recognised securities exchanges for the purposes of Subdivision (4) of Division 1 of Part XIII of the Securities and Futures Act 2001 (A42/2001) (pertaining to exemptions from, inter alia, the prospectus requirements in relation to offers of shares and debentures):

• The American Stock Exchange LLC;
• Deutsche Börse AG;
• Hong Kong Exchanges and Clearing Ltd;
• Kuala Lumpur Stock Exchange;
• Euronext NV;
• London Stock Exchange plc;
• Luxembourg Stock Exchange;
• Australian Stock Exchange Ltd;
• Borsa Italiana SpA;
• National Association of Securities Dealers Inc;
• New York Stock Exchange Inc;
• New Zealand Stock Exchange;
• Tokyo Stock Exchange Inc;
• Toronto Stock Exchange; and
• SWX Swiss Exchange.

The Securities and Futures (Recognised Securities Exchange) Order 2002 will be effective from 1 July 2002.

Securities and Futures (Prescribed Corporation) Notification 2002 (S246/2002)
Pursuant to the Securities and Futures (Prescribed Corporation) Notification 2002, which will come into effect on 1 July 2002, the Monetary Authority of Singapore has declared the following entities to be prescribed corporations for the purposes of ss 239(4), 244(7) and 262(8) of the Securities and Futures Act 2001 (A42/2001) ('SFA'):

• the Singapura Building Society Ltd;
• a finance company licensed under the Finance Companies Act (Cap 108); and
• the European Investment Bank established under the Treaty of Rome.

The scope of ss 239(4), 244(7) and 262(8) of the SFA are as follows:

• section 239(4) - interpretation;
• section 244(7) - invitation to public to lend money to or to deposit money with corporation; and
• section 262(8) - qualifications of trustee for debenture holders.

Elizabeth Wong
Allen and Gledhill