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This article was first published in The Business Times on 22 January 2018.
To quarter or to halve?
Monday, January 22, 2018
THIS WEEK’S TOPIC: Should Singapore retain quarterly reporting (QR)? Is market capitalisation a good basis on which to frame the QR rules? How should the Singapore Exchange (SGX) balance concerns about compliance costs and disclosure standards?
Tan Chong Huat
RHTLaw Taylor Wessing LLP
THE QR regime should be retained to keep the market, particularly minority shareholders, updated regularly on the financial condition of their investee companies.
Market capitalisation forms a good primary basis to frame the QR rules as size generally correlates with financial resources availability and investors’ trading volume, and particularly since small-cap companies should not be dissuaded in obtaining equity financing because of the potential costs involved in QR.
SGX’s proposed simplification of quarterly reports may not reduce compliance costs significantly, but would free up management’s time for more critical tasks such as company strategy. SGX’s proposal to empower minority shareholders to decide on the need for QR is also viewed positively as this would encourage investors’ engagement with management on the company’s affairs.