In a regulator’s column published on 22 April 2020, the chief executive officer of the Singapore Exchange Regulation (SGX RegCo), Tan Boon Gin, made clear the SGX RegCo’s expectations on the disclosure requirements of issuers during the uncertain times, and provided certain guiding principles.
Explaining the background to this, while SGX RegCo had introduced various measures in support of issuers facing pressures, including difficulties in organising annual general meetings or the production of annual reports during the COVID-19 outbreak and the circuit-breaker measures implemented in response by the Singapore government, SGX RegCo was equally concerned that shareholders faced pressures in decision-making in the current uncertain and volatile market and business environment. Addressing such shareholder pressures, SGX RegCo stated its position as to the disclosures it expected of issuers during this time.
SGX RegCo emphasised that developments surrounding COVID-19 are likely to be considered material for investors to make informed decisions. SGX RegCo reminded issuers that reliance on broad-stroke explanations pinned on a decline in general economic activity to explain away their outlook would be deemed inadequate and of little utility to their shareholders. Impact of decisions taken such as shutting of stores, outlets, plants or offices and curtailed business activities, must be quantifiable and disclosed, or at the very least transparent on the decisions taken including providing data on operations suspended or curtailed.
While recognising that certain matters are of supposition or insufficiently definite to warrant disclosure in these times, SGX RegCo made clear that certain specific scenarios which SGX RegCo requires material information to be disclosed:
In this regard, a non-exhaustive list of guidelines in respect of developments surrounding COVID-19 were provided to assist issuers in determining if disclosure is required:
In light of the extension of time for the publication of annual reports, SGX RegCo also urged issuers to publish regular business updates to minimise information gaps, which can contain key operating metrics or topline financials.
In addition to the above, the SGX RegCo had earlier on 6 February 2020, made clear its expectations on disclosures by issuers on significant litigation and how materiality of significant litigation should be determined. Taken together, these expectations have certainly provided benchmarks for clarity to issuers seeking guidance on its disclosure obligations during these uncertain times, as well as providing confidence to investors seeking greater understanding of the challenges facing issuers in these volatile times.
The regulator’s column consultation can be accessed here.