SINGAPORE (Nikkei Markets) -- Singapore Exchange will no longer require companies to report earnings on a quarterly basis, a change that aligns its exchange with major markets like London and Hong Kong and is aimed at saving both time and money for listed entities.
Most companies will only need to report half-year and full-year results after Feb. 7. The change will cut compliance costs, which have grown substantially along with Singapore's rise as a major financial center.
Tan Boon Gin, CEO of Singapore Exchange Regulation, the bourse operator's regulatory arm, said at a media briefing that the business landscape is evolving rapidly, and that companies in general should be given more time to consider and implement longer-term strategies.
"Regulation needs to be more targeted, even surgical, so as to ensure compliant companies aren't overburdened while noncompliant companies receive more attention and are stopped as early as possible in their malfeasance," Tan said.
The regulatory arm is also introducing more robust disclosure requirements in areas such as interested-person transactions, secondary fundraising that could dilute the interest of existing investors, asset sales, and changes to near-term earnings prospects caused, for instance, by the loss of a major customer.
SGX RegCo described the changes as the biggest since 2011 to strengthen corporate governance practices and foster greater disclosure.
Although many countries have stopped requiring companies to report results every three months, the schedule has some proponents. Retail investor groups, for one, believe the more frequent releases help balance the advantage enjoyed by institutional investors who tend to have more contact with companies. Still, the regulatory landscape has evolved sufficiently to protect transparency, others say.
The U.K. and the European Union did away with quarterly reporting requirements in 2013. In Hong Kong, the listing venue for many of Asia's largest companies, quarterly reporting is required only of companies listed on the secondary GEM market.
While quarterly results are still mandatory in the U.S., the rule is under review.
SGX implemented quarterly reporting in 2003 for listed companies with market capitalization of above S$20 million ($14.8 million). The minimum was subsequently raised to S$75 million, covering more than 70% of companies. SGX began seeking feedback on changes to the results reporting framework in January 2018.
The latest relaxation will not apply to about 100 of the 800 or so listed companies whose financial health is under question due to regulatory issues or problems flagged by auditors.
In addition, companies that pay a quarterly dividend such as DBS Group Holdings and SGX will still have to produce quarterly reports if they wish to continue with the payment frequency.
Companies can also publish quarterly reports on a voluntary basis, SGX RegCo said, adding that it would encourage management to provide regular updates to shareholders.
Looking ahead, Tan said SGX RegCo will soon release new rules for issue managers that will result in increased oversight over banks and the due diligence they conduct ahead of new share and bond issues.
The regulatory arm recently set up a whistle-blowing office to better address tipoffs, feedback, complaints and short-seller reports. Tan said it hopes to "institutionalize" the whistle-blowing culture.
Other steps under consideration include the appointing of a second auditor for companies, if needed, and rules to ensure valuation reports meet international standards.
The enforcement process will also be strengthened to make it faster and more efficient.
"We are targeting to consult on these changes by the end of 2020," he said.
SGX has been criticized for lax corporate governance and poor management of listed companies, which critics say has contributed to falling investor interest in the local market. With the exception of real estate investment trusts, the city-state has struggled to attract quality listings in recent years.
Malaysian businessman John Soh, accused of being the mastermind behind the infamous Singapore penny stocks crash in 2013, was only brought before the court last year, while long-standing issues involving the collapse of commodities trader Noble Group and water company Hyflux are yet to be resolved.