In introducing Catalist, one of our main priorities is investor education. As an exchange, we cannot give investment advice on when, what and where to invest. However, we can assist in providing factual information, which can be useful when you make your investment decisions.
What You Should Know
The Catalist website has a wealth of information which you will find useful. To guide your journey, here are the key highlights:-
When investing in Catalist stocks, it is important for investors to know that:-
Different regulatory supervision regime - Unlike Mainboard companies, Catalist companies are supervised differently. SGX no longer undertakes direct supervision over the admission and continuing obligations of listed companies on Catalist. This role is undertaken by approved Sponsors. This means that SGX will not review IPO documents or shareholder circulars before they are issued. SGX does not monitor Catalist companies' compliance with listing rules closely and will rely on Sponsors to alert SGX on potential rule breaches.
Sponsorship at all times Catalist companies must engage a Sponsor at all times in order to remain listed. They may change Sponsors, due to various reasons. If they do not have a Sponsor at any point in time, they will face delisting.
New website for Offer Documents Catalist IPOs will not be accompanied by a prospectus, but an Offer Document. The Offer Document will be subject to the same disclosure requirements as a prospectus. To support this disclosure requirement, provisions relating to civil and criminal liability in the Securities & Futures Act will still apply to an Offer Document. The Offer Document is lodged only on SGX's Catalodge website, unlike prospectuses which are lodged on MAS' OPERA website. Similar to OPERA, the public will be able to submit feedback on the documents via the Catalodge website.
New rules to govern Sponsors - Sponsors are in turn regulated by SGX, who will supervise them closely. Sponsors are subject to strict admission and continuing obligations. They will be disciplined for rule breaches.
No change in management & director responsibilities - Although listed companies will have a Sponsor at hand to advise them on rule compliance, the management and directors of the company remain fully responsible to shareholders for all matters concerning the company. Their role and responsibilities remain the same as for any Mainboard-listed company.
No quantitative entry requirement - There is no quantitative entry requirement for listing on Catalist. Listing applicants need to engage a Sponsor who will assess the suitability of the company for listing and thereafter, prepare them for listing. Hence, companies that list may come from new sectors, be in earlier stages of development or have limited track record. Investors must be aware that the risk that comes from investing in such companies may be higher. Investors should commit effort in understanding the companies before investing.
Higher thresholds before requiring shareholder approval - After IPO, listed companies are able to raise additional funds and undertake acquisitions and disposals without obtaining shareholders' approval unless the transaction size is significant.
Specifically, companies can raise funds of up to 100% of their share capital such as by issuing rights and/or additional shares, etc if they get shareholders' mandate at their annual general meeting. This means that there may be significant dilution of your shareholdings in the company. In most cases, such fund raising exercises must come with expansion plans to use the money to grow the business.
Companies can acquire and dispose of assets without shareholder approval unless the amount is significant or if there is a fundamental change in the business. This means that shareholders may not be able to vote on certain transactions.
What You Should Know About SESDAQ
SESDAQ companies will have a minimum of 2 years from the time the first batch of Sponsors is announced ("transition period"), to comply with the new Catalist rules. This mainly involves SESDAQ companies engaging a Sponsor to continually sponsor them. If they are unable to do so by the end of the transition period, they will face delisting. Meanwhile, SGX will continue to regulate and supervise them. They will be called "Catalist Non-Sponsored" counters.
During the transition period, there will be 2 types of companies on Catalist:-
Catalist stocks under the new Sponsor-supervised regulation; and
Catalist Non-Sponsored stocks under the existing Exchange-supervised regulation.
The live prices pages on the SGX website will have indicators denoting the counters that are Catalist and Catalist Non-Sponsored. Catalist web pages will also list the Catalist counters and their respective Sponsors. Please see the next section for more information on identifying Catalist information here.
