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SGX RegCo suggests ways to quicken restructuring process for financially distressed companies

Nicole Lim
·2-min read

This may help already distressed companies lessen their financial burden, and attract “white knight” rescues with fresh funds.

The regulatory unit of the Singapore Exchange S68 (SGX), SGX RegCo, is proposing to smoothen and quicken the process of restructuring that companies dealing with bankruptcy, insolvency and excessive debt go through.

Currently, these rules sit under Singapore’s Insolvency, Restructuring and Dissolution Act (IRDA), which was launched in 2018. They were not taken into consideration by the SGX when it announced its listing rules, according to SGX RegCo’s CEO Tan Boon Gin.

The proposed changes in the rules will enable issuers to restructure more efficiently, and lessen the regulatory burden when trying to manage financial affairs as well as meet time-sensitive milestones, according to SGX RegCo.

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In turn, the regulatory unit believes this may increase the chances of “white knight rescues” — where a willing party injects fresh funds — and trading resumptions, which will be of more value to shareholders than the years of legal proceedings that may further drain the scarce finances of said companies.

Some of the recommended rule changes include — providing guidance to issuers on circumstances where a financially distressed issuer can apply to SGX RegCo to allow its listed securities to continue or resume trading; requiring an immediate announcement when a financially distressed issuer or any of its subsidiaries undergo a court-supervised moratorium; and providing quarterly instead of monthly updates on financial situation.

In addition, shareholders were previously required to give their approval on any significant disposal of assets by issuers and its subsidiaries. The proposed change would exclude this.

These changes will be put forth to the public for a public consultation until March 22. Tan says that these steps taken will support Singapore in its ambition to become a restructuring hub, a dream it has articulated since before 2016.

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