SGX RegCo Unveils Major Reforms: Lower Profit Thresholds, Removal of Financial Watch-List, and Centralized Listing Reviews

Key Highlights

• SGX RegCo launches new measures to shift to a disclosure-based regime, aligning with leading global markets.
• Profit test threshold for Mainboard listings reduced from S\$30 million to S\$10 million, opening doors for a broader range of companies, including pre-revenue firms in emerging industries.
• Financial watch-list to be removed, aiming to improve business confidence and access to financing for listed companies.
• Listing review and prospectus approval functions to be consolidated under SGX RegCo, streamlining the process for issuers.
• Post-listing oversight measures refined to minimize unnecessary trading suspensions and foster market transparency.
• Consultation period for rule changes open until 29 November 2025.

Detailed Analysis of the Reforms

1. Shift Towards a Disclosure-Based Regulatory Regime

SGX RegCo, the regulatory arm of the Singapore Exchange, has announced a comprehensive set of reforms designed to enhance Singapore’s appeal as a global capital markets hub. These reforms are the result of recommendations from the Equities Market Review Group, which received strong backing from market participants during the May 2025 public consultation.

The central thrust is a pivot from prescriptive, rules-based regulation to a disclosure-based, market-driven regime. This approach seeks to empower investors with more useful information to make decisions, while retaining key safeguards to uphold market integrity and investor trust.

2. Streamlined and More Inclusive Listing Criteria

a. Qualitative Criteria:
– Key standards of governance and financial health remain for Mainboard listings.
– Unmodified audit opinions are still required, ensuring compliance with financial reporting standards.
– Issuers must confirm all material business approvals and compliance with relevant laws.
– Mandatory disclosure of any material internal control weaknesses, remedial actions, and conflicts of interest, and how these are addressed.
– For REITs and business trusts, the requirement to resolve or mitigate inherent sponsor conflicts before listing will be retained.

b. Quantitative Criteria:
– The profit test threshold for new Mainboard listings has been slashed from S\$30 million to S\$10 million.
– This move aligns SGX with other major exchanges and could significantly expand the pool of eligible companies, including fast-growing, pre-revenue firms in emerging sectors such as life sciences.
– Tailored admission requirements for pre-revenue life science companies to reflect their unique industry circumstances.

Investor Impact: Lowering the profit threshold and greater inclusion of pre-revenue companies could bring more dynamic listings to the SGX, potentially boosting liquidity, trading volumes, and market valuations. This is a highly price-sensitive development, as it broadens investor choice and could attract more attention to Singapore’s capital markets.

3. Post-Listing Regulatory Changes

– Trading suspensions will now only occur where there is clear evidence of going concern issues.
– Issuers whose shares are suspended due to going concern doubts may apply to resume trading if not under insolvency proceedings and their boards provide justified assurance of continued viability.
– Private engagement preferred for disclosure issues to avoid chilling market activity, but issuers must still disclose any materially price-sensitive or trade-sensitive information.
– If unusual trading suggests disorderly or unfair markets, immediate “trade-with-caution” alerts will be issued, valid for two weeks and renewable as needed.

Investor Impact: This move reduces the risk of unexpected trading suspensions and increases transparency, supporting more stable and orderly trading conditions.

4. Removal of the Financial Watch-List

– The financial watch-list—a mechanism that flagged companies with consecutive years of losses—will be scrapped due to its unintended negative effects on business confidence and financing.
– Issuers must now disclose when they record a third and subsequent consecutive financial year of losses.
– Strong encouragement for such issuers to communicate their future plans and measures to improve financial performance.

Investor Impact: The removal of the watch-list could be price-moving, as it reduces stigma and potential financing difficulties for affected companies. However, the requirement for continued disclosure of losses and future plans continues to provide transparency for investors.

5. Consolidation of Listing Review and Prospectus Functions

– The Monetary Authority of Singapore (MAS) and SGX RegCo are proposing to consolidate listing suitability and prospectus review under SGX RegCo.
– Prospective issuers will only need to deal with SGX RegCo, not both SGX RegCo and MAS.
– MAS will continue to oversee SGX RegCo and retain authority over breaches of prospectus disclosure requirements.
– The Listings Advisory Committee (LAC) process is proposed to be discontinued.

Investor Impact: This is a major process improvement that could speed up IPOs and reduce regulatory friction—potentially making SGX a more attractive venue for new listings and capital raising. This could positively affect market activity and valuations.

6. Consultation Period and Next Steps

– Public consultation on these reforms is open until 29 November 2025.
– Responses and further details are available through SGX RegCo’s official channels.

Summary for Shareholders and Investors

• The lowering of listing thresholds and removal of the financial watch-list could lead to an influx of new, potentially higher-growth companies—an important catalyst for trading volumes and valuations.
• Streamlined processes and less prescriptive regulation may attract more IPOs and foreign listings, benefiting existing shareholders through increased market profile and liquidity.
• Enhanced disclosure obligations and ongoing regulatory oversight help maintain trust and transparency, protecting minority investors.
• Market participants should monitor for new listing announcements and disclosures from loss-making companies, as these may affect share prices.

Disclaimer

This article is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisors before making investment decisions. The information herein is based on publicly available documents and is subject to changes in regulatory policy.

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