SGX seeks feedback on whether to retain quarterly reporting

SGX seeks feedback on whether to retain quarterly reporting

SINGAPORE: Singapore-listed companies may no longer have to release their financial results every quarter in the future, depending on the outcome of feedback the Singapore Exchange (SGX) receives through a public consultation launched on Thursday (Jan 11).

In a press release on Thursday, the SGX said it is seeking feedback on whether quarterly reporting should be retained.

CEO of the Singapore Exchange Regulation Tan Boon Gin said in a media briefing that while he recognised the role that quarterly reports play in disclosing information to minority shareholders, compliance costs are also a concern for companies.

“The consensus finding, even among investors, was that the compliance costs of quality reporting was a concern,” Mr Tan added.

If quarterly reporting is removed, all companies will still be required to report their financial results for the first half and full year, it added in the consultation paper.

If retained, SGX is proposing that several changes be made to make it less burdensome for companies.

One of the proposed changes is to increase the minimum market cap of companies that are required to release quarterly reports to S$150 million, from S$75 million now.

When quarterly reporting was first implemented in 2003, about 37 per cent of companies were required to do so. Today, that figure has climbed to 70 per cent.

Should the threshold be increased to S$150 million, fewer companies would be required to report their quarterly earnings, considering that only about 38 per cent of the companies listed as of end-October last year met that market cap. 

The proposed change to the market cap threshold will benefit smaller companies, who tend to bear a heavier burden of compliance costs compared to their larger counterparts, industry watchers said. 

But Professor Mak Yuen Teen from NUS Business School said that quarterly reporting may be all the more important for smaller firms.

“For the smaller companies, relative to the large companies, it is more costly," he said. "However, there tend to be less information on smaller companies in the market. The risk tends to be higher.”

There are also concerns as to whether the proposed change will mean minority shareholders of smaller companies will have less access to critical information.

Deputy managing partner of markets at Deloitte, Dr Ernest Kan, said that the interests of international and institutional investors are as important as those of minority shareholders.

“We have to look at regulations from a holistic perspective, rather than just to look at one category of stakeholders like retail investors or minority shareholders," he said. "I think it takes more than that to make the stock market successful.”

SGX said the removal of quarterly reporting does not mean that there will be no disclosures. Listed companies are still obliged to disclose company information, such as mergers and acquisitions, based on other regulations under the SGX listing rule book.

Dr Kan also said that there are other ways for minority shareholders to find out more information about a company they have invested in; for instance, they can look at the company’s website or write in as a shareholder.

Another change that SGX has proposed is to allow minority shareholders of companies with a market cap of at least S$150 million to vote on whether they would want the company to continue releasing quarterly reports.

Mr Tan said: “If quarterly reporting is retained, we are proposing that minority shareholders should be given the power to decide whether to allow their company to opt out of quarterly reporting. As minority shareholders are the main beneficiaries of quarterly reporting, they should be allowed to decide whether the benefits they get out of quarterly reporting outweigh the costs to the company."

SGX is also proposing that if quarterly reporting is retained, companies be required to include simpler contents to the balance sheet for the first and third quarters.

The public consultation will end on Feb 9. 

Source: CNA/aa