ST Engineering Receives SGX Approval for Alternative Materiality Measure for Interested Person Transactions

Key Points from the Announcement

• Singapore Technologies Engineering Ltd (“ST Engineering”) has announced a significant change in how it will determine the materiality of Interested Person Transactions (IPTs) for regulatory compliance.
• The company applied to the Singapore Exchange Securities Trading Limited (SGX-ST) to use its average daily market capitalisation for the month of December of the preceding financial year as the basis for assessing the materiality of IPTs, instead of the previous net tangible assets (NTA) measure.
• SGX-ST approved this application on 20 November 2025, stating that the alternative measure may be used for the financial year ending 31 December 2026 (“FY2026”) and onwards, as long as the Group’s NTA remains negative [[1]].
• This change follows the Group’s NTA turning negative in 2022, after a series of acquisitions involving intangible assets, making NTA an unsuitable reference for materiality calculations [[1]].
• The approval for FY2026 onwards does not affect a prior approval received for FY2025, which allows ST Engineering to use the same alternative measure for the current year [[2]].
• The materiality of IPTs is relevant for compliance with Rules 905 and 906 of the SGX Listing Manual, which governs disclosure and shareholder approval requirements for transactions with related parties.

Important Information for Shareholders

• This regulatory change is potentially price-sensitive, as it directly impacts how ST Engineering assesses and discloses transactions with related parties, which are often subject to investor scrutiny.
• Shifting the basis from NTA (which is currently negative) to market capitalisation means the thresholds for what constitutes a “material” IPT are now tied to the company’s market performance, not its balance sheet value.
• This could affect the frequency, size, and types of transactions that require shareholder approval or market disclosure, potentially increasing transparency and reducing regulatory risk.
• Investors should note that the negative NTA is a result of strategic acquisitions involving substantial intangible assets, indicating a shift in the company’s asset structure and risk profile [[1]].
• Any significant IPTs may now be more likely to be disclosed or require shareholder approval, depending on movements in share price and market capitalisation, which could influence investor sentiment and share price volatility.
• The company has reaffirmed that IPTs falling within the annually renewed shareholder mandate are not affected by this change in measurement [[1]].

Detailed Overview

ST Engineering’s move to use market capitalisation as the reference for materiality thresholds marks a notable shift in its compliance and governance practices. The change is prompted by the Group’s NTA becoming negative in 2022 due to acquisitions focused on intangible assets. For investors, this means that ST Engineering’s financial reporting and disclosure for related party transactions will be more closely aligned with market perceptions of value, as opposed to accounting-based asset values.

The SGX’s approval of this alternative reference point signals regulatory flexibility for companies with atypical asset structures, but also places more importance on market data in compliance processes. Shareholders should closely monitor the company’s future disclosures related to IPTs, as any material transactions may have greater visibility and could impact shareholder voting requirements and market reactions.

The company has clarified that this alternative measure will be in effect for FY2026 onwards, without affecting current arrangements for FY2025. The calculation method uses the company’s issued shares (excluding treasury shares) multiplied by the volume weighted average price for each trading day in December of the previous year [[1],[2]].

The announcement was made by the company secretaries, Low Meng Wai and Tan Wan Hoon, on 21 November 2025 [[2]].

What This Means for Investors

• This could potentially impact ST Engineering’s share price, as increased transparency and regulatory compliance are typically viewed positively by institutional investors.
• However, the negative NTA and reliance on market capitalisation as a proxy may also raise questions about the company’s asset base and valuation metrics, especially for value-focused investors.
• Shareholders should consider the implications of future IPTs on the company’s operations and governance, as these transactions may now be subject to more frequent and detailed disclosures.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions.

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