SINGAPORE: Singapore Exchange Regulation (SGX RegCo) will enhance requirements on auditors and valuers in their dealings with listed companies, and standards governing valuation reports.

“Supporting market development is central to SGX RegCo’s role. These latest rule changes heighten the standards required of auditors and property valuers in their dealings with listed companies. We expect the quality of the market and investor protection to improve as a result. Our collaboration with the relevant authorities and bodies towards greater trust and confidence in our markets will continue,” said Tan Boon Gin, CEO of SGX RegCo.

The changes follow a public consultation that drew respondents including listed companies, academics, audit firms, the media, investors, lawyers, and industry associations.

The main changes to the Listing Rules are:

1. Regulatory regime for conduct of auditors:

All primary-listed issuers must appoint an auditor registered with the Accounting and Corporate Regulatory Authority (ACRA) to conduct their statutory audits. Following this new requirement, audits performed for all primary-listed issuers will effectively be subject to ACRA’s regulatory oversight.

Secondary-listed issuers from developed markets[1] may continue to use auditors from their own jurisdictions. For all other secondary listed issuers, SGX RegCo will assess if appointment of an auditor that is registered with ACRA is required on a case-by-case basis.

2. Circumstances to direct appointment of additional auditor:

SGX RegCo currently may exercise administrative powers to require issuers to appoint independent professionals as well as special auditors for specified purposes. SGX RegCo’s administrative powers will be expanded to include requiring the appointment of a second auditor. SGX RegCo will exercise such powers only in exceptional circumstances, for example where SGX RegCo believes that possible misstatements in the financial statements are pervasive and yet not evidenced by the incumbent auditor’s opinion, and such concerns cannot be addressed by a special auditor.

SGX RegCo will consider the appropriate tools to deal with the specific circumstances. Other existing regulatory tools that SGX RegCo may utilise include the issuance of public queries and Notices of Compliance to address concerns raised relating to the company’s financials. SGX RegCo may direct the appointment of a second auditor if the market still has not obtained sufficient assurance on the areas of concern after the use of these tools.

3. Qualifications of property valuer:

As consulted, SGX RegCo will require property valuers to have at least five years’ of relevant practical experience in valuing properties in a similar industry and area as the property to be valued. The valuer of Singapore properties must be a member of the Singapore Institute of Surveyors and Valuers (SISV) while the valuer of overseas properties must be a member of, or authorised by, a relevant professional body or authority. The valuer should be independent of the issuer, and cannot be a sole practitioner or have an adverse compliance track record.

4. Standards for property valuation reporting:

Valuations for Singapore properties should be prepared in accordance with SISV Standards. Overseas properties must have valuations prepared in accordance with domestic standards or the International Valuation Standards. Summary property valuation reports will be required for significant transactions such as at IPO for property investment firms or developers, business trusts or REITS, or in an interested person transaction involving the purchase or sale of property. SGX RegCo will prescribe the minimum content to be disclosed in such summary property valuation reports.

In addition to the above changes, SGX RegCo also clarified that all issuers must prepare their interim financial statements in accordance with the relevant accounting standards. The clarification arises from concerns that several issuers have not been doing so. The Institute of Singapore Chartered Accountants (ISCA) will be releasing guidance to help issuers to prepare their interim financial statements in accordance with the relevant accounting standards and the Listing Rules.

The Listing Rule changes are effective 12 February 2021. Existing issuers must appoint an auditor in accordance with the revised Listing Rules, for their financial year beginning on or after 1 January 2022. The Listing Rule amendments on accounting standards for interim financial statements will take effect for issuers’ financial statements for their interim financial periods ending on or after 30 June 2021.