Jardine group listing changes raise questions

Published March 31, 2014

First Publised in Business Times,  April 1, 2014


ON March 6, five companies in the Jardine group announced that they are proposing to downgrade their UK listing from a premium listing to a standard listing. These five companies – Dairy Farm International Holdings, Hongkong Land Holdings, Jardine Matheson Holdings, Jardine Strategic Holdings and Mandarin Oriental International – are secondary listings on the Singapore Exchange.


Under SGX rules, a company with a secondary listing on SGX generally does not have to comply with SGX’s continuing listing requirements as long as the company complies with the requirements of the home exchange and with a few other conditions imposed by SGX. Premium listings and standard listings were introduced in the UK in 2010 to replace the previous categories of primary and secondary listings respectively. Standard listings only have to comply with minimum EU standards while premium listings have to comply with UK listing standards. Although primarily intended for companies which are not incorporated in the UK, UK-incorporated companies can apply for a standard listing.


The five Jardine companies are incorporated in Bermuda, where they have a secondary listing. Therefore, with the proposed downgrade, these companies will have a secondary listing in Bermuda, a standard listing in the UK which is equivalent to a secondary listing, and a secondary listing on the SGX. The SGX rules on secondary listings are clearly intended for issuers with a primary listing on another reputable exchange and complies with the listing rules of the home exchange.


Very importantly, the initial and continuing listing requirements for standard listings in the UK are significantly less stringent than for premium listings, for example in terms of track record, disclosure/shareholder approval of significant transactions and related party transactions, and other corporate governance disclosures and practices (as standard listings do not have to comply or explain against the UK Corporate Governance Code). The requirements for a standard listing in the UK are clearly well below the SGX listing requirements for primary listings.


With the proposed downgrade from a premium listing to a standard listing in the UK, would the Jardine group of companies still satisfy the requirements for a secondary listing on the SGX? As the standard listing in the UK is essentially equivalent to a secondary listing, does this not mean that these companies would actually now have multiple secondary listings, rather than a primary listing in the home exchange and a secondary listing here? Would the lower disclosure and governance standards not create additional risks for investors in these companies? As a matter of policy, would SGX going forward accept secondary listings here for companies which have standard listings only in the UK? And finally, since standard listings in the UK do not qualify for inclusion in the FTSE indices there, would the three companies – Jardine Matheson Holdings, Jardine Strategic Holdings and Hongkong Land Holdings – which are in the Straits Times Index (STI) qualify to remain in the STI here?


Mak Yuen Teen


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