SGX seeks comments on proposed rule changes on facilitating shareholder-requisitioned meetings

7 May 2024

On 23 April 2024, Singapore Exchange Regulation (“SGX RegCo”) launched a public consultation seeking comments on a proposed change to the Listing Rules (Mainboard) and Listing Rules (Catalist) (together, “Listing Rules”) to require listed issuers to assist shareholders who have requisitioned a general meeting so that the meeting can take place as soon as practicable. Under the proposed rules, issuers are to commence facilitative efforts, that is, the process of facilitating the convening and conduct of the meeting, within 21 days of deposit of the requisition notice, and an issuer who disputes the validity of the requisition notice must apply for a court ruling within the same timeline.

The proposed requirement would also apply to meetings requisitioned by unitholders in respect of real estate investment trusts and business trusts under the Singapore Code on Collective Investment Schemes and Business Trusts Act 2004 respectively.

The public consultation is open for comments till 23 May 2024.

Rationale for proposed rule change

A shareholder or a group of shareholders acting together (“Requisitionists”) may wish to requisition a general meeting (“Shareholder-Requisitioned Meeting”) to table resolutions before other shareholders. The mechanisms enabling this are typically found in the relevant laws and regulations governing the issuer in its place of incorporation (“Relevant Law”).

SGX RegCo is of the view that where the requisite procedural thresholds in the Relevant Law and a company’s Constitution to call a Shareholder-Requisitioned Meeting are met, the democratic process should, as a matter of principle, be allowed to proceed. This is because shareholders are entitled to have all facts made available to them, including the position put forth by the Requisitionists and the Board’s response. This will allow shareholders to gain a balanced perspective to make an informed decision on the merits of the resolutions tabled by the Requisitionists.

Sections 176 and 177 of the Singapore Companies Act 1967 (“Companies Act”) provide for two ways in which Requisitionists may requisition a Shareholder-Requisitioned Meeting. Under section 176, the obligation first falls on the Board while under section 177, the burden falls on Requisitionists, to convene the meeting. Under section 176, if the Board does not proceed to convene a Shareholder-Requisitioned Meeting within 21 days after the date of deposit of the requisition notice, the Requisitionists may themselves convene the Shareholder-Requisitioned Meeting in the same manner as nearly as possible as general meetings which are convened by the Board. Unlike section 176, there is no specific provision under section 177 that requires the costs of convening and conducting the Shareholder-Requisitioned Meeting to be borne by the issuer.

SGX RegCo observes that, whether Requisitionists elect to proceed under section 176 or section 177, they may be constrained in their ability to satisfy the procedural requirements necessary to convene and conduct the Shareholder-Requisitioned Meeting. In view of such impediments, SGX RegCo proposes to amend the Listing Rules to require issuers to provide facilitative measures in respect of a Shareholder-Requisitioned Meeting. SGX RegCo further remarked that the proposed amendments would also buttress the Regulator’s Column on Shareholder-Requisitioned Meetings.

Proposed rule change

SGX RegCo proposes that, unless it requires otherwise, issuers be required to facilitate the convening and conduct of a Shareholder-Requisitioned Meeting upon the receipt of a requisition notice from Requisitionists calling for the Shareholder-Requisitioned Meeting (“Requisition Notice”) that prima facie satisfies the procedural thresholds in the Relevant Law and the Constitution. SGX RegCo proposes that the requirement would apply to Shareholder-Requisitioned Meetings convened under sections 176 and 177 of the Companies Act.

Areas in which SGX RegCo envisages that issuers should provide assistance to Requisitionists include:

  • releasing announcements and documents, such as notices, circulars and proxy forms, on SGXNET;
  • sending documents, such as notices, circulars and proxy forms, to shareholders;
  • collating any proxy forms submitted by shareholders at the issuer’s registered office;
  • securing the Board’s attendance at the Shareholder-Requisitioned Meeting;
  • enabling the appointed scrutineer to discharge its duties under Rule 730A of the Listing Rules; and
  • instructing its agents, including its share registrar and company secretary, to provide any necessary assistance such as preparing the mailing labels for the purposes of sending documents to shareholders and attending at the Shareholder-Requisitioned Meeting.

Under section 176 of the Companies Act, the requisition for an extraordinary general meeting must be made by members holding not less than 10% of the issuer’s total number of paid-up shares (excluding treasury shares). Under section 177, two or more members holding not less than 10% of the issuer’s total number of issued shares (excluding treasury shares) may call a meeting of the issuer. SGX RegCo is of the view that the Requisition Notice should contain, at the minimum, the names and shareholdings of the Requisitionists, and a description of the resolutions proposed to be tabled at the Shareholder-Requisitioned Meeting. This will enable the Board to ascertain the validity of the Requisition Notice in accordance with the requirements in the Relevant Law and the Constitution. Upon receiving a Requisition Notice, the Board should immediately inform shareholders via SGXNET under Rule 703 of the Listing Rules. Any subsequent, material developments relating to the Shareholder-Requisitioned Meeting, including any application filed to court, should also be immediately announced on SGXNET.

SGX RegCo expects the Board, in the first instance, to engage with the Requisitionists to discuss their concerns, with a view to finding a common ground. If the Board and the Requisitionists are ultimately unable to resolve the matter, and the Board intends to dispute the validity of the Requisition Notice, it should apply to court for a ruling.

To avoid any undue delay, SGX RegCo proposes to require that issuers commence facilitative efforts, that is, the process of facilitating the convening, and conduct, of the Shareholder-Requisitioned Meeting, as soon as practicable, within 21 days of deposit of the Requisition Notice. Where an issuer disputes the validity of the Requisition Notice, it should apply for a court ruling on the issue within the same timeline. Thereafter, Requisitionists should conduct the Shareholder-Requisitioned Meeting as soon as possible.

Reference materials

The following materials available on the SGX website www.sgx.com: