Remaining Provisions of the Securities and Futures (Amendment) Act 2012 Come Into Force

On 19 August 2016, all the remaining provisions of the Securities and Futures (Amendment) Act 2012 not yet in force came into force. Some of these provisions will require subsidiary legislation to be issued before they can be implemented.

Of the new provisions coming into force, the following are those that had a substantive effect as from 19 August as no additional regulations are needed to be issued for their implementation:

• There is a new exemption from advertising restrictions. It allows issuers to conduct training sessions for intermediaries and their representatives on a prospectus that has been lodged but not yet registered with the Monetary Authority of Singapore (MAS). The exemption applies to all capital markets products.

• The terms “capital/principal protected” and any other derivative or form of these terms are prohibited in all disclosure documents (including the Product Highlight Sheets), and advertising materials, in respect of an offer of any capital markets product.

• Issuers of a debenture offered with a prospectus, including unlisted debentures, must appoint a trustee for the entire tenure of the debenture. Previously, only issuers of listed debentures were required to do so.

The following additional amendments will be applicable to issuers of unlisted debentures with a tenure of 12 months or longer and will come into effect upon the relevant regulations being issued:

• They must immediately disclose to debenture holders in such form and manner as may be prescribed by the MAS any information which may materially affect the risk and returns or the price or value of the debentures. In its Response to Feedback on the Consultation Paper on Proposed Amendments to the Securities and Futures Act and the Financial Advisers Act issued on 15 October 2012 (Response), the MAS stated that it expects the borrowing entity to disclose the information on the website designated by the borrowing entity as the principal channel of communication with debenture holders, and also provide the information to the debenture holders in electronic or printed form.

• Issuers must also make available semi-annual reports as well as semi-annual and annual financial accounts to holders of the debentures and lodge them with the trustee. These reports and accounts must comply with such requirements as may be prescribed in subsidiary legislation to be issued.

• Where the terms of the unlisted debentures allow for redemption at the option of the holder of the unlisted debenture, issuers must make available, publicly and regularly, bid or redemption prices in such form and manner as will be prescribed by the MAS.

• The MAS intends to impose obligations on offerors of unlisted debentures to provide a cooling-off period for offers of unlisted debentures, similar to those imposed on distributors of unlisted debentures contained in the Notice on the Cancellation Period of Unlisted Debentures. To this end, the SFA was amended to empower the MAS to issue such directions as it thinks “necessary or expedient in the interests of the public or a section of the public or for the protection of investors” with respect to any offer of securities, debentures and business trusts.

In each of the above cases, the requirements have not been prescribed yet.

Other provisions in effect which will likewise require subsidiary legislation to be issued in order to be implemented are as follows:

• Advertisements or statements of offers of capital markets products must comply with regulations to be issued by the MAS. In the Response, the MAS stated that this requirement will apply to offers that are readily accessible by retail investors and that the regulations will prescribe the following:

  • Advertisements must present a fair and balanced view of the product; and

  • Advertisements must not describe a product as being comparable to a bank deposit.

• Before offering a capital markets product, issuers must classify the product as either “prescribed capital markets product” or “capital markets products other than prescribed capital markets products”. The list of prescribed capital market products will be the same as the list of Specified Investment Products in the Notice on the Sale of Investment Products. The MAS stated in the Response that it will not require issuers to classify products for offers made to non-retail investors. However, intermediaries will not be able to subsequently offer such a product to a retail investor without first obtaining a classification from the issuer of the capital markets product.