A bold shot in the arm for Singapore's Equities Markets

The Equities Market Review Group established by the Monetary Authority of Singapore (MAS) has on February 21, 2025 issued its first set of recommended measures to enhance the development of Singapore’s equities market. The full set of measures encompasses four main pillars: 

• Enhancing investor demand in the SGX equities market; 
• Enhancing supply of quality listings on SGX; 
• Streamlining regulatory framework towards a disclosure-based regime; and 
• Improving connectivity/trading by developing further cross-border partnerships and trading and settlement efficiency for investors. 

Enhancing demand

SGD5 Billion Equity Market Development Programme

The MAS will launch a SGD5 bn Equity Market Development Programme (EQDP). The EQDP will provide an initial investment into a range of funds managed by fund managers with strong investment track record and capabilities in Singapore. Fund managers that have been selected must grow their activities and employment in Singapore. Their fund strategies should include those that invest into Singapore equities or invest a substantial component into Singapore equities as part of a regional or thematic focus. The strategies should be actively managed, commercially viable and work towards attracting capital from other commercial investors including institutional funds, family offices and other private entities.

Tax incentives for Fund Managers investing substantially in Singapore-listed equities

The EQDP will be complemented by a tax exemption on qualifying income for Singapore fund managers. Singapore fund managers may apply for a tax exemption on fees earned from qualifying fund management and investment advisory activities. To qualify, the applicants must, among others, meet minimum requirements for professional headcount and assets under management (AUM) and have, in respect of new funds, at least 30% of AUM invested in Singapore-listed equities. More details will be provided by the MAS on enquiry and the scheme is open for award until December 31, 2028.

Adjustment to the Global Investor Programme (GIP) to support capital inflows to Singapore-listed equities

Under the Economic Development Board’s existing Global Investor Programme (GIP) to attract entrepreneurs, business owners and high net worth individuals who are interested in making significant investments in Singapore, an applicant may establish a Singapore Family Office (SFO) with an AUM of least SGD200 million of which SGD50m may be deployed in investments in listed equities / REITS / business trusts, qualifying debt securities, Singapore-distributed funds or non-listed Singapore-based operating companies. Moving forward, the requirements for an SFO will be adjusted whereby the SGD50m of the AUM must be deployed in equities listed on Singapore-approved exchanges. This is to support more capital inflows into Singapore’s equities market.

Enhancement to research ecosystem

The existing Grant for Equity Market Singapore (GEMS) scheme which was introduced in 2019 will be expanded to include research coverage on pre-IPO companies and to sharpen focus on mid- and small cap enterprises and the eligible dissemination channels under the GEMS scheme will be broadened to include, for example, social medial platforms (further details to be released by the MAS and SGX around mid-2025).

Enhancing supply

Corporate income tax rebate for new corporate listings in Singapore

Companies and registered business trusts that are tax resident in Singapore may apply for the following corporate income tax rebates (subject to rebate caps):

• If they achieve a new primary listing on the SGX and remain listed for five years, they will be entitled to a corporate income tax rebate of 20%; and
• If they achieve a new secondary listing (with share issuance) on the SGX and remain listed for five years, they will be entitled to a corporate income tax rebate of 10%.

In addition, they must commit to incremental local business spending / fixed asset investments and incremental skilled employment by the end of the award tenure. The tax rebate will apply for a period of five years per qualifying entity and is non-renewable. The scheme will be open for award until December 31, 2027.

Enhanced concessionary tax rate for new fund manager listings

In addition to the tax incentives for companies and business trusts, SGX has also implemented tax incentives for fund managers or its holding companies. Although SGX has a well-established market for REITs and Business Trusts, listing a fund manager or its holding company would be novel. Further, it is noted that these tax incentives seem to be applicable irrespective of whether the fund manager is a participant in the EQDP or has received the tax incentives in connection with investing substantially in Singapore listed equities.

A Singapore fund manager or its holding company that achieves a primary listing on SGX and remains listed for five years will be eligible for a concessionary tax rate of 5% on fees earned from fund management and investment advisory activities as set out under the Financial Sector Incentive – Fund Management.

The fund manager must also meet these additional criteria:

• Minimum requirements for professional headcount and AUM; and
• Distribute a portion of its profits as dividends.

The concessionary tax rate will apply for a period of five years per fund manager and is non-renewable. More details will be provided by the MAS on enquiry and the scheme is open for award until December 31, 2028.

Financing support to strengthen growth of companies

The Singapore Government will continue to review and enhance its efforts to support the development of local enterprises which can provide a pipeline of potential companies for listing. These efforts include new investment schemes, which are administered by the Ministry of Trade and Industry and Enterprise Singapore, as announced at Budget 2025.

Streamlining regulatory framework

The Equities Market Review Group saw the need to address the regulatory friction which prolonged the listing application process.  Accordingly it has recommended adopting a more pro-enterprise regulatory stance, alongside other measures to strengthen investor confidence. The measures will move Singapore decisively towards a more disclosure-based regime while upholding sound international standards and significantly streamlining Singapore’s listing process.

The first set of regulatory recommendations by the Equities Market Review Group to streamline the listing process are as follows:

• Single regulator re listing suitability and prospectus disclosures – consolidation of listing suitability and prospectus disclosures review with a single regulator (SGX RegCo). Currently, the process involves both the MAS and SGX Regco.
• More focused review process – reduction of scope for merit-based judgment when admitting new listings by streamlining SGX RegCo’s qualitative admission criteria. Focus will be on ensuring that the disclosure of material issues is sufficient for informed decision-making by investors.
• Streamline prospectus disclosure requirements for primary listings – changes will be made to be more selective about requiring historical information, focusing on materiality, and to make certain disclosure requirements more targeted.
• Reduced disclosure requirements for secondary listings – issuers that are currently keen on a secondary listing in Singapore will need to comply with the same disclosure requirements as a primary listing. However, MAS intends to simplify prospectus disclosure requirements for secondary listings and align them closely with the IOSCO standards, since most of such existing listed issuers would likely already have had to observe internationally-aligned prospectus disclosure requirements in their home exchange.
• Streamline the listing process to shorten time-to-market – listing review process will be completed within 6 to 8 weeks under ordinary circumstances and the current two-part Listing Admissions Pack will be consolidated into a single application pack.
• Earlier engagement of investors – in particular, providing more flexibility for issuers to engage accredited and institutional investors prior to the lodgement of the preliminary prospectus (presumably in addition to the current engagement with such investors through pre-deal research and the cornerstone process), and allowing issuers to engage retail investors upon lodgement of the preliminary prospectus with MAS.
• Reforms to post-listing obligations for listed companies – adjustments will be made to SGX Regco’s framework on disclosure queries, trading queries and suspensions. When exercising discretion to issue public queries to listed companies, SGX Regco will focus on the materiality of the matter to ensure targeted and meaningful public disclosure queries. For monitoring of unusual trading of a stock, SGX Regco will change its default approach from one of issuing public queries to highlighting the unusual trading privately and reminding issuers of ongoing disclosure obligations. SGX Regco will limit its trading suspension only to circumstances where a company has “going concern” issues. SGX Regco will also consult on a proposal to remove the financial “Watch-List”.

These proposals are a step in the right direction in reducing the regulatory friction imposed on the listing applicants. However, the effectiveness of these measures will depend on the actual proposed amendments to applicable regulations (in particular the SGX Listing Manual and the relevant Securities and Futures Regulations). The MAS and SGX RegCo will issue detailed consultations on the above proposals by mid-2025.

It is also unclear if there will be any changes to the due diligence requirements imposed on corporate finance advisers issued by MAS in February 2023, in particular, the requirement for listing applicants and the professional advisers to comply with the ABS Due Diligence Guidelines.

Next Phase of Work

In its next phase of work, to be completed by end-2025, the Equities Market Review Group will consider other proposals including:

• Review of the various trading boards of SGX including Catalist;
• Strengthening investor protection through enhancing investor recourse avenues;
• Introducing programmes to uplift listed companies’ shareholder engagement capabilities and sharpen their focus on shareholder value;
• Attracting retail liquidity through market structure changes such as reducing board lot sizes;
• Strengthening investor protection through enhancing investor recourse avenues;
• Improving post-trade custody efficiency; and
• Developing cross-border partnerships.

Conclusion

We are keeping an eye out for the consultations and other proposals to be released by the Equities Market Review Group and will issue updates in due course.