Frequently Asked Questions (FAQs) About Catalist

1. What is Catalist?
2. Who are Sponsors?
3. Why did SGX make these changes to SESDAQ?
4. How is a Sponsor-supervised market different from an Exchange-supervised market like the Mainboard?
5. What is the difference between SESDAQ and Catalist rules for companies?
6. How will SESDAQ companies be impacted, now that Catalist is introduced?
7. How are Mainboard and Catalist designed to cater to companies?
8. Are all investors allowed to trade in Catalist shares?
9. How are Catalist shares traded and cleared?
10. Should investors be more wary of Catalist companies?

1.	What is Catalist? Catalist is a market on Singapore Exchange Securities Trading Ltd. It is a vibrant and dynamic market in Asia for fast-growing companies.
2.	Who are Sponsors? Sponsors are qualified professional companies experienced in corporate finance and compliance advisory work. They are authorized and regulated by SGX through strict admission and continuing obligation rules. These Sponsors determine the eligibility of a company to list on Catalist and supervise listed companies' compliance with their continuing obligations in the Catalist rules.
3.	Why did SGX make these changes to SESDAQ? SGX's changes were aimed at improving the competitiveness of its securities market. By transforming SESDAQ into a Sponsor-supervised board, SGX aims to provide a conducive listing platform for growth companies. The transformation of SESDAQ into a Sponsor-supervised market will attract more quality companies and intermediaries. This will in turn foster the growth and development of the market.
4.	How is a Sponsor-supervised market different from an Exchange-supervised market like the Mainboard? The key differences are as follows. Sponsor-supervised market Exchange-supervised market At admission of a company, Sponsors decide on whether the company is suitable for listing. After IPO, SGX retains the power to discipline listed companies but does not directly supervise them. The supervisory role for companies is undertaken by Sponsors, who must be formally authorized and regulated by SGX. At admission of a company, SGX reviews the IPO documents and approves the listing of the company. After IPO, SGX directly supervises listed companies, with the power to discipline. Companies are brought to list by issue managers, but they are not formally "admitted" by SGX. Issue Managers do not assume any supervisory role. Sponsors and their Registered Professionals are subject to admission and continuing obligations in the SGX rules. They will be disciplined when they breach the rules. Issue managers are not subject to SGX rules.
5.	What is the difference between SESDAQ and Catalist rules for companies? The table here summarises the key differences between previous SESDAQ and new Catalist admission and continuing requirement rules for companies. A full set of the rules can be found here.   Admission Previous SESDAQ Requirements Catalist Requirements 1 IPO Document Must produce a Prospectus Disclosure requirements & liabilities as stated in SFA/R. SGX reviews the admission. Lodged on MAS' OPERA website Must produce an Offer Document Similar requirements. Sponsor will review admission and assess suitability to list. Lodged on SGX's Catalodge website. Includes statements from the directors and the Sponsor that the working capital available to the company will be sufficient for its present purposes and for at least 12 months from the date of listing. 2 Sponsor requirement Issuer will be admitted through an issue manager. Post-IPO, issue manager will be "badged" to the issuer for 2 years. Issuer will be admitted by a Sponsor. Post-IPO, issuer must retain a Sponsor at all times or else may face delisting. The Sponsor bringing the company to list must sponsor the issuer for at least 3 years post-listing. 3 Shareholding spread Greater of 15% of post-invitation share capital or 500K shares must be in public hands. Quantitative distribution rules At least 500 shareholders at IPO. Post-IPO, 10% of shares must be in public hands. Greater of 15% of post-invitation share capital must be in public hands. No quantitative requirements. At least 200 shareholders at IPO. No change. 4 Quantitative criteria Should normally have positive cash flow from operating activities. No minimum earnings or operational track record required. 5 Directors At least 2 independent directors. For foreign companies, at least 2 of these independent directors must be resident in Singapore. No change. For foreign companies, at least 1 of these independent directors must be resident in Singapore. 6 Restriction on Promoters' Sale of Shares No restriction. Promoters must not sell vendor shares if (i) they collectively own less than 50% of issued capital at IPO; or (ii) such sale will cause their collective shareholding to fall below 50% of issued capital at the time of listing. 7 Lock-up periods Promoters: 100% of shareholdings at IPO must be moratorised for at least 6 months after listing, and 50% of such shareholdings moratorised for the next 6 months. Pre-IPO investors with greater than or equal to 5% shareholdings: 100% of profit portion (based on a cash formula) at IPO and for at least 6 months after listing. No change. All pre-IPO investors: 100% of profit portion (based on a cash formula) at IPO and for at least 12 months after listing.   Continuing Previous SESDAQ Requirements Catalist Requirements 8 Disclosure & Reporting Immediate disclosure of material information. Half-yearly/quarterly reporting. Code of Corporate Governance guidelines (comply or explain). No change. No change. No change. 9 Changes in capital Issuer can obtain shareholder mandate to issue up to 50% of the company's share capital (of which shares issued on non pro-rata basis must not exceed 20%). Issuer can obtain shareholder mandate to issue up to 100% of the company's share capital (of which shares issued on non pro-rata basis must not exceed 50%). The 50% limit can be increased to 100% in the case where shareholders approve by special resolution on or after the first shareholders' meeting. 10 Interested Person Transactions Disclosure and/or shareholder approvals for certain transactions involving interested persons. No change. 11 Acquisitions and Realisations Acquisitions or disposals of assets of more than 20% but less than 100% of the "relevant bases" i.e. group net assets, profits, market capitalization or equity securities issued, as the case may be, will require shareholder approval. Acquisitions above 100% of the relevant bases, or resulting in a change of control of the issuer, will be considered a very substantial acquisition or reverse takeover. Acquisitions of assets of more than 75% but less than 100% of the relevant bases or where the acquisition will result in a fundamental change in the issuer's business, will require shareholder approval. Disposals of assets of more than 50% or where the acquisition will result in a fundamental change in the issuer's business, will require shareholder approval. No change. 12 Circulars & Announcements SGX reviews circulars. Sponsor reviews circulars and announcements.
6.	How will SESDAQ companies be impacted, now that Catalist is introduced? All SESDAQ companies will now be Catalist companies and stand to benefit from the re-branding and profiling of Catalist. They will be given at least 2 years, beginning from the announcement of the first batch of Sponsors, to comply with the Catalist rules. The first batch of Sponsors is expected to be announced in the first quarter of 2008. If they are unable to do so by the end of the transition period, they will face delisting.
7.	How are Mainboard and Catalist designed to cater to companies? Mainboard is designed to cater to established companies while Catalist caters to fast-growing companies. The regulatory approach is also distinct, where Mainboard is an Exchange-regulated and supervised market and Catalist is an Exchange-regulated but Sponsor-supervised market.   MAINBOARD CATALIST Target Companies Established Companies (Quantitative entry criteria) Fast-Growing Companies (No quantitative entry criteria) Regulatory Approach Exchange-regulated & supervised Exchange-regulated, Sponsor-supervised Review of IPOs & Post-IPO Supervision Exchange Sponsors Key Advantages to Companies Established Mainboard branding Access to a wider range of institutional investors Open to more product types Faster time to market Easier subsequent fundraising, acquisitions & disposals Ongoing Sponsor guidance
8.	Are all investors allowed to trade in Catalist shares? All investors are allowed to trade in Catalist shares.
9.	How are Catalist shares traded and cleared? The trading and clearing mechanisms for Catalist shares will be the same as that for Mainboard shares. All investors will be able to trade Catalist shares through their SGX-ST Members, using their existing trading accounts and CDP securities accounts. For a list of SGX-ST Members, click here.
10.	Should investors be more wary of Catalist companies? Investors should be aware of the different regulatory approach for Catalist companies and make their investment decisions accordingly. Investors should also be aware that there may be more companies in their earlier stages of development. Investors should be aware of the risk-reward balance when investing in growth companies with limited track record.