Date: May 6, 2015
SIAS refers to the article published in Business Times on May 6 2015, Minimum trading price (MTP) seen working against share issuers, investors.
SIAS understands why SGX wishes to implement a MTP on the Mainboard as low-priced securities may be more susceptible to excessive speculation and potential market manipulation. This measure will also prevent companies from conducting rights issues that could potentially diminish the price of shares to the detriment of minority shareholders.
SIAS appreciates that companies that are trading below the MTP will need to take action ahead of 1 March 2016 to meet the MTP rule. However, SIAS is concerned that share consolidation is perceived as the only way to meet the MTP. Share consolidation may be a swift method, but it may not work in all instances to the interest of shareholders, specifically minority shareholders. Companies should therefore consider share consolidation together with other options. More importantly, companies should look at how they can strengthen their fundamentals and improve their business outlook so as to improve shareholder value. Minority shareholders’ interests should be given paramount importance by companies affected. These companies should communicate their plans effectively to all stakeholders. Companies that are not be able to meet the MTP rule should consider moving to Catalist and not delist.
Founder, President & CEO
Securities Investors Association (Singapore)