SGX talking to Jardine firms over LSE listing status

The Singapore Exchange (SGX) is talking to the Jardine group over its plans to downgrade from a premium to a standard listing in Britain to sidestep tougher rules there.

Some commentators had said the move could be taken to mean the firms would have only a secondary listing in Britain. The five Jardine companies now have premium listings in London and secondary listings in Singapore and Bermuda.

But Mr Mohamed Nasser Ismail, SGX head of issuer regulation, said in response to queries from The Straits Times that a standard listing on the London Stock Exchange (LSE) should not be confused with a secondary listing.

He said SGX places foremost importance on good governance and shareholders' interests in all its dealings with listed companies and market participants.

He noted that premium and standard listings in London refer to different criteria to qualify for a primary listing. "A standard listing on the LSE is based on European Union standards as prescribed through the European Union directives," he said.

"Premium listings have requirements which differ from the EU standards."

On discussions with the Jardine group, he said: "We are unable to discuss our dealings with individual companies."

The five Jardine companies said last month that they want to downgrade their listing status on the LSE.

They are Jardine Matheson Holdings, Jardine Strategic Holdings, Dairy Farm International Holdings, Hongkong Land Holdings and Mandarin Oriental International.

The LSE rules will get tougher for premium-listed firms later this year. Changes include requiring all controlling shareholders to keep an "arm's length" distance from the company and not interfere with day-to-day control, The Financial Times reported.

The Jardine companies have decided against this, and want shareholders to approve their transfer to standard listings in London. The change is "in the light of anticipated changes to the regulation of premium-listed companies with a controlling shareholder", they said last month.

The companies will continue to maintain their secondary listings in Singapore and Bermuda. Three of the five seeking a downgrade are on Singapore's Straits Times Index: Jardine Matheson, Jardine Strategic and Hongkong Land.

However, corporate governance expert Mak Yuen Teen, an associate professor at the National University of Singapore Business School, wrote a letter to The Business Times this week raising concerns.

"Premium listings and standard listings were introduced in Britain in 2010 to replace the previous categories of primary and secondary listings respectively," he said.

"Therefore, with the proposed downgrade, these companies will have a secondary listing in Bermuda, a standard listing in Britain 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 complying with the listing rules of the home exchange."

Prof Mak also raised concerns over the listing requirements for Britain's standard listings, which he said are "clearly well below the SGX listing requirements for primary listings".

He said that a company with a secondary listing on SGX generally does not have to comply with SGX's continuing listing requirements as long as it complies with the requirements of the home exchange and a few other conditions imposed by SGX.

Thus, he raised questions over whether the Jardine group of companies would still satisfy the requirements for a secondary listing in Singapore, and whether the lower disclosure and governance standards would create additional risks for investors.

jonkwok@sph.com.sg

This article was published on April 5 in The Straits Times.

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