The Singapore Exchange (SGX) has announced that listed companies will soon be able to use electronic communication (e-communication) to transmit annual reports and other documents to shareholders.
This follows feedback from 18 respondents to SGX’s public consultation on the relevant amendments to the Mainboard and Catalist Listing Rules where a majority supported the proposal. Among supporters of e-communication, responses were however mixed on whether to adopt a deemed, implied, or express consent regime.
SGX, in its response to feedback received, stated that it was giving companies the flexibility to decide on the most appropriate e-communication regime to adopt for their shareholder base, subject to certain conditions to balance the needs of different stakeholders.
According to SGX, when the constitution of the company specifies that the deemed consent regime is in use and the company has given the shareholder the opportunity to choose within a specified period whether to receive electronic or physical copies, a shareholder who fails to make an election would be deemed to have consented to receive electronic copies.
“Implied consent is obtained when the constitution provides for the use of e-communication and that the shareholder shall agree to such a mode of communication without the right to elect to receive physical copies,” it said.
SGX said that where the shareholder does elect to receive electronic copies, or where express consent is given when both the company and the shareholder agree in writing that e-communication would be used, the company may send all documents, including notices, circulars and annual reports via e-communication.
For other shareholders who have given either deemed and implied consent, SGX said that hard copies of documents which allow shareholders to preserve or exercise their voting rights such as notices of meetings, forms and acceptance letters, must still be sent out, noting that shareholders could also expect letters notifying them of documents uploaded onto the company’s website and procedures on how to request hard copies of documents.
SGX stressed that as required by the Companies Act, physical copies of notices and documents relating to take-overs and rights issues must also be provided.
In addition, SGX said that it also issued responses to feedback on proposals regarding insurance coverage and indemnities for directors, restraint on exercise of voting rights, and the treatment of shares held by a subsidiary in its holding company.
Tan Boon Gin, Chief Regulatory Officer of SGX, said, “These changes to the Listing Rules will enable companies to increase the use of e-communication to a level best suited to their shareholders. We recognise that shareholders at the early stage should still receive physical copies of certain key documents and this has been provided for. E-communication is timelier, more efficient and less costly so shareholders will benefit in the long run.”
Chng Lay Chew, Chief Financial Officer of SGX, said, “The use of e-communication with shareholders will help promote sustainability. SGX intends to do away with mailing out CDs for our FY2017 annual report and will write to shareholders to explain that the same information is available on our website. We will continue to make available physical copies of our annual report upon request and hope that over time, more shareholders will embrace e-communication as normal practice.”
SGX noted that it would amend the Listing Rules pertaining to e-communication of shareholder documents and other aspects from 31 March 2017.
The feedback received and responses from SGX can be found here.