Post by oldman on Oct 19, 2013 8:43:41 GMT 7
It is ironic that it may now be safer to buy shares in Catalist companies rather than to buy small to mid-sized mainboard listed companies. This is because of the watchlist rules that apply to mainboard companies.
Essentially, if a mainboard company shows 3 years of losses and a market capitalisation of below $40 mil, it is likely to be placed under the SGX Watchlist. If the mainboard listed company is not able to turn profitable within 2 years of the notification by SGX, then the company will be delisted. On the other hand, if a Catalist company has not been profitable for 3 or more years, it will still maintain its listed status as the watchlist rules do not apply to Catalist counters.
Personally, I feel that 2 years is too short a timeframe to turn around a mid-sized company that had initially fulfilled the criteria of a mainboard listing. This is especially true when the watchlist concept was first introduced as this coincided with the 2009 financial crisis.
Listed companies are like big ships. It takes time to turn them around and sort out the issues that resulted in the losses. Hopefully, these watchlist rules can be tweaked to allow more time for such companies to turn around. Maybe, these mainboard companies should also be given the option to convert their listing to a Catalist listing rather than to delist them.
At least then, minority shareholders need not be left to fend for themselves after the company has been delisted from the exchange.
In the meantime, I will just focus on Catalist companies as I already have the direct experience of investing in a mainboard listed company that delisted as a result of the SGX Watchlist rules.
Essentially, if a mainboard company shows 3 years of losses and a market capitalisation of below $40 mil, it is likely to be placed under the SGX Watchlist. If the mainboard listed company is not able to turn profitable within 2 years of the notification by SGX, then the company will be delisted. On the other hand, if a Catalist company has not been profitable for 3 or more years, it will still maintain its listed status as the watchlist rules do not apply to Catalist counters.
Personally, I feel that 2 years is too short a timeframe to turn around a mid-sized company that had initially fulfilled the criteria of a mainboard listing. This is especially true when the watchlist concept was first introduced as this coincided with the 2009 financial crisis.
Listed companies are like big ships. It takes time to turn them around and sort out the issues that resulted in the losses. Hopefully, these watchlist rules can be tweaked to allow more time for such companies to turn around. Maybe, these mainboard companies should also be given the option to convert their listing to a Catalist listing rather than to delist them.
At least then, minority shareholders need not be left to fend for themselves after the company has been delisted from the exchange.
In the meantime, I will just focus on Catalist companies as I already have the direct experience of investing in a mainboard listed company that delisted as a result of the SGX Watchlist rules.
