SGX Brings New Guidelines for Listed Companies to Carry Out ICOs
Singapore is one crypto-friendly nation which has remained open to the idea of fostering the FinTech revolution. Furthermore, Singapore is the preferred destination for FinTech firms to launch their digital tokens through ICOs. However, to bring further accountability and maturity in the ICO market, the Singapore Exchange (SGX) has recently issued new guidelines for its listed companies to conduct an ICO.
In a column published last week, SGX Regulation (SGX RegCO) chief executive Tan Boon Gin noted that even if an SGX-listed company issues digital tokens, the tokens won’t be listed on SGX. “Therefore, SGX’s rules would cover only the company and not the tokens nor the holder of the tokens,” said Mr. Boon Gin.
Furthermore, the SCX-listed companies conducting the ICO will need to make all the relevant disclosures to its existing shareholders and new token holder, to help them make informed investment decisions. The companies will also have to undergo necessary compliance procedures. Moreover, before the lunch of an ICO, companies are required to undergo a mandatory consulting from SGX RegCo for legal and auditors opinion on the ICOs accounting treatment.
Mr. Boon Gin said: “We retain the right to require additional opinions to be obtained so as to ensure that the relevant statutory requirements are complied with. We will also provide a checklist to the listed issuer on the compliance matters that should be addressed.”
Even after launching the ICO, companies are required to provide additional disclosures to its shareholders. It can include the information regarding the operational and cybersecurity risks, valuation and accounting of the ICO tokens, use of funds raised, the financial impact on the issuer of the ICO tokens, addressing issues of money laundering and terror financing, and much more.
The SGX RegCo chief executive says: "Shareholders are owners of the issuer and have the right to receive clear and accurate material information on a timely basis if an issuer conducts an ICO fundraising. Here our responsibility as the market regulator will be to ensure relevant disclosures are made and that the information is sufficiently clear and complete for a reasonable investor to make an informed decision.”
The SGX Regulatory subsidiary also notes that it might implement additional measures based on whether the digits tokens be treated as ‘securities or capital markets products’ under Singapore’s Securities and Futures Act (SFA).
“The main concern when it comes to ICOs and digital tokens that SGX Regco has is how the issuer safeguards its own interest and that of its shareholders when it conducts an ICO,” he explained. “The issuer’s board is ultimately responsible for maintaining a robust system of risk management and internal controls when doing so.”