Jardine UK listing change seems to be in response to a raising of standards

Published April 07, 2014

First Published in Business Times on April 8, 2014


I REFER to the letter, “Where SGX and LSE listings differ” (BT, April 4), from Mohammed Nasser Ismail, the head of Issuer Regulation at the Singapore Exchange (SGX), in response to my earlier letter, “Jardine group listing changes raise questions” (BT, April 1).


My earlier letter was in relation to the proposal by the Jardine group of companies to downgrade their listing on the London Stock Exchange (LSE) from a premium listing to a standard listing.


In his reply, the writer stated: “With respect to the issue of premium and standard listings on the LSE, they refer to different criteria to qualify for a primary listing on the LSE. They are distinct and should not be confused with a secondary listing.”


The LSE website states: “When admitting equity securities on the main market, companies have the choice of three routes to market: a Premium (formerly Primary) Listing, a Standard (formerly Secondary) Listing and an Admission via the High-Growth Segment.”


Contrary to the writer’s view, it would appear that the LSE itself does not consider a standard listing to be equivalent to a primary listing on the LSE. With the new listing regime in UK, a secondary listing has been replaced by a standard listing.


What is more important than wrestling over semantics about whether a standard listing is equivalent to a primary or secondary listing is the fact that the requirements for a standard listing are well below those for a premium listing in the UK, and also well below the requirements for a primary listing on the SGX in a number of important areas, which I have pointed out in my earlier letter.


The proposal by the Jardine group of companies to downgrade their listing appears to be in response to the raising of standards for a premium listing on the LSE, particularly in relation to the protection of minority investors. These changes are aimed at companies with controlling shareholders, and include the requirement for a written and legally binding agreement between the issuer and controlling shareholder to enhance the independence between the former and the latter, and giving non-controlling shareholders a separate vote on the independence of directors. Enhanced disclosures on the appointment of independent directors, including previous and existing relationships between independent directors and the controlling shareholder, have also been proposed.


As I mentioned in my earlier letter, the proposal by the Jardine group of companies to downgrade their listing in the UK raises a number of broader issues for secondary listings here, such as whether a standard listing in UK would qualify a company for a secondary listing. We need to be mindful that whether an issuer has a primary or secondary listing here, they have the same ability to harm the interests of shareholders if they are improperly admitted.


We also need to be mindful that secondary listings do not become the source of a lowering of standards for listing on the SGX. SGX should exempt secondary listings from the requirements for primary listings here only after careful evaluation that shows these secondary listings to be compliant with listing requirements in other reputable exchanges that are equivalent or higher than the standards for primary listings here.


Alternatively, at the very least, companies with a secondary listing here should have to explain the key differences between the governance standards they follow and those that are required or recommended for companies with a primary listing here.


I look forward to further clarification from SGX on its position in due course.


Mak Yuen Teen


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