SGX will introduce MTP of S$0.20 a share on 2 March 2015. The MTP requirement will only be effective after a one-year transition period ending on 1 March 2016, which means there is no immediate impact on companies. The first batch of companies which do not comply with MTP then will enter the SGX watch-list. These companies will have a 36-month period up to 28 February 2019 to comply. To do so, companies can consolidate their shares thereby increasing their share prices. Other possible options are a transfer to Catalist which has no MTP requirement, or taking other corporate actions.
SGX has actively engaged with companies since March 2014 to help them prepare for compliance with the MTP requirement. Of the companies which may be affected, more than 80% have indicated that they were prepared to undertake some form of corporate action, including share consolidation, to comply with the MTP requirement. To support companies, SGX will waive fees for MTP-related share consolidation for two years effective 2 March 2015, and has developed a comprehensive checklist, a guide to MTP, as well as frequently-asked questions, all of which are available on
www.sgx.com/mtp
for companies and retail investors.
Note: There a lot of micro pennies currently in mainboard. As shareholders, please reject share consolidation related to MTP before 2 Mar 2015 as they don't enjoy fees waiver by SGX. Due to the fact that some micro pennies are loss making, it will be better for them to be shift to catalist than to share consolidate to protect shareholder value. Companies affected should allow 2 options for shareholders to vote for. (ie. shift to catalist or share consolidation)
There's a limit to number of share consolidation before stock becomes illiquid when there is less than 100 million shares. After the many times of shares consolidation, if share price has drop a lot, it is easier for major shareholders to take it private and speculation & manipulation as there is less resistance in buy and sell queues numbers to next price level.
SGX should address MTP in situation where mkt goes into recession and majority of stocks will trade under $0.20 for a period of time, it does not make sense to have all of them to consolidate in such event. SGX should set criteria for loss making companies not to MTP share consolidate but to shift to catalist instead so as to protect shareholders value.
Go to below SGX url to check if the stock is in catalist or mainboard. Do think twice before buying if the company is loss making and in mainboard as it may affect shareholder value with likehood of MTP.
I think it is positive move. Why 20cts? I think 50cts is better. Micro pennies only serve the interest of short term traders. I rather have higher absolute price and fewer number of shares in issue.
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