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Singapore Adopts Changes to Shareholder Reporting Rules
Washington, DC, June 6, 2003 - Singapore has adopted amendments to the Singapore Companies Act that make changes to the substantial shareholder reporting requirements. The amendments went into effect on May 15, 2003.
Many ICI members provide investment management services to investment companies and pension funds domiciled outside the United States. As discretionary investment managers of securities portfolios for investment companies, pension funds and other clients, members of the asset management industry have extensive experience in complying with securities ownership reporting rules in countries in which they invest.
Worldwide mutual fund assets have grown from $2 trillion in 1990 to more than $11 trillion at the end of 2002, and worldwide pension assets had grown to more than $12 trillion at the end of 2001. An increasing amount of fund assets are invested in equity securities subject to ownership reporting rules. Given the growth of assets under management and equity investing, it is not uncommon for institutional investment managers to make investments for their clients that cross securities ownership reporting thresholds.
Frequency of Reports
The Institute agrees with Singapore’s decision to include in the latest amendments to the Singapore Companies Act a requirement to report changes in ownership only when holdings in Singapore company listed on the Singapore Exchange Securities Trading Limited (SGX) exceed discrete one percent thresholds above the five percent threshold. The Institute also supports the decision to lengthen the time for filing reports from two calendar days to two market days.
The Institute last presented its views in an August 2002 comment letter submitted to Singapore’s Company Legislation and Regulatory Framework Committee, in which it also generally applauded the Committee’s decision to seek public comment before submitting its recommendations to the Singaporean government.
In general, the Institute and its members support the policies underlying the requirements to disclose significant ownership of issuers. Obligations to report ownership provide both issuers and the market with information about the accumulation of interest by investors in a particular issuer. Securities ownership reporting rules should be drafted to balance the need for the market to learn promptly of the accumulation of securities by those who may seek to influence control over an issuer with the goal of not imposing unnecessary burdens on institutional investors, such as mutual funds, pension funds and their managers, that have no such change-of-control purpose.
Detailed Transaction Reports
The SGX also has made corresponding changes to its rules on reporting substantial shareholder ownership. The new rules require that investors provide a history of transactions made after reaching the initial five percent threshold when filing subsequent reports. The SGX currently is drafting a new form on which investors would file their subsequent reports.
The Institute has questioned whether the requirement to disclose details of all transactions in the security between the current report and the last report is necessary to achieve the purposes of the rules—providing investors access to current movements in substantial shareholdings of listed companies.
For more information on global issues affecting fund industry shareholders and other related resources, visit the global and international developments section of the Institute's website.