Summary of Key Points

• Singapore Technologies Engineering Ltd (“ST Engineering”) has secured approval from the Singapore Exchange Securities Trading Limited (SGX-ST) to revise how it determines materiality for Interested Person Transactions (IPTs) starting financial year ending 31 December 2026 (FY2026).
• This change is due to the Group’s negative net tangible assets (NTA), which resulted from a series of acquisitions involving significant intangible assets in 2022 and beyond.
• Instead of the previously used NTA, the company will now use its market capitalisation in December of the preceding financial year to set materiality thresholds for announcing and seeking shareholder approval for IPTs.
• The decision applies for as long as ST Engineering’s NTA remains negative.
• This adjustment had already been implemented for FY2025, with SGX-ST approval obtained in March 2025.

Detailed Analysis for Investors

ST Engineering’s Board announced on 21 November 2025 that, following an application to SGX-ST, the company will use its average daily market capitalisation during December of the prior year to determine the materiality of IPTs for FY2026 and subsequent years, replacing the previously-used net tangible assets metric. This strategic move stems from the fact that the Group’s NTA turned negative in 2022 due to acquisitions focused on intangible assets, a situation which has persisted since then [[1]].

The rationale provided by the Board is that market capitalisation – reflecting the company’s equity value as determined by actual trades between buyers and sellers – offers a more meaningful assessment of the Group’s financial standing for regulatory purposes. This method will be used for as long as the Group’s NTA remains negative, and the calculation will be based on the total issued shares (excluding treasury shares) multiplied by the volume weighted average price for each trading day in December [[1]].

The SGX-ST has officially confirmed its no-objection stance toward this proposal as of 20 November 2025. The company had previously received similar approval for FY2025 (in March 2025), using the December 2024 market capitalisation for IPT thresholds in that year [[2]].

Implications for Shareholders and Share Price Sensitivity

• This move may be price sensitive because the materiality of future IPTs will be assessed using market capitalisation, which can fluctuate based on market sentiment and trading activity, potentially affecting which transactions are deemed material and require public announcements or shareholder approval.
• The change in IPT threshold calculation means that large transactions with related parties, which might previously have triggered announcements or votes due to the low or negative NTA, may now be assessed relative to the company’s market value. This could reduce regulatory hurdles for certain deals, but also raises the importance of market performance in corporate governance.
• Shareholders should note that the company’s negative NTA is a direct result of recent acquisition strategy, focusing on intangible rather than tangible assets. While this does not directly jeopardize financial stability, it signals a shift in balance sheet composition that investors should continue to monitor.
• For completeness, the announcement also reiterates that IPTs falling within the company’s annually renewed shareholders’ mandate are not subject to these rules [[1]].

What Should Investors Do?

Investors should watch for future IPT announcements, as the materiality thresholds are now linked to market capitalisation rather than NTA. Volatility in share price could impact regulatory disclosures and shareholder voting requirements for related party transactions.

The Board’s proactive communication and SGX-ST’s approval suggest regulatory clarity and compliance, but the underlying reasons (negative NTA from acquisitions) highlight the importance of monitoring the company’s evolving financial structure.

Conclusion

This is a material, price-sensitive change in ST Engineering’s regulatory reporting, reflecting both the company’s acquisition-driven strategic direction and the importance of market value in corporate governance. Active investors and institutional shareholders should take note of this development as it could impact future transaction disclosures and shareholder approval processes.

Disclaimer: This article is for informational purposes only. It does not constitute investment advice or a recommendation to buy or sell securities. Investors should conduct their own research or consult their financial advisers before making investment decisions.

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