[MAIN LR] CHAPTER 12 - SHARE BUY-BACKS

[As at 27 January 2015]

PART A – GENERAL

12.01	Introduction

This Chapter sets out the requirements that must be complied with by a listed corporation or a listed issuer which is a business trust in respect of the purchase of its own securities.

PART B – DEFINITIONS

12.02	Definitions

For the purpose of this Chapter, unless the context otherwise requires -

(a)	"Direct Business Transaction" means a transaction in securities entered into outside the Automated Trading System of the Exchange ("ATS") in accordance with the Rules of the Exchange;

(b)	"odd lot" in relation to any securities quoted on the Official List, means any number of such securities which is less than the number of securities prescribed by the Exchange as a board lot;

(c)	"On-Market Married Transactions" has the meaning given under the Rules of the Exchange; and

(d)	"on the market" transaction means transaction made through the ATS and it excludes Direct Business Transactions, and On-Market Married Transactions.

PART C – GENERAL REQUIREMENTS

12.03	Authorisation

A listed corporation must not purchase its own shares unless its shareholders have given an authorisation to the directors of the listed corporation to make such purchase(s) by way of ordinary resolution which has been passed at a general meeting and subject to section 67A of the Companies Act 1965 and Part IIIA of the Companies Regulations 1966.

12.04	On the market transactions

Subject to paragraphs 12.25(1) and 12.26(2) below, a listed corporation must ensure that any purchase by a listed corporation of its own shares, or resale of its treasury shares is effected only on the market of the Exchange.

12.05	Announcement of intention to propose a share buy-back

A listed corporation must immediately announce to the Exchange any decision by the board of directors of the listed corporation to submit to shareholders a proposal for the listed corporation to be authorised to purchase its own shares.

12.06	Circular to shareholders for purchase of own shares

(1)	A listed corporation seeking authorisation from its shareholders to purchase its own shares other than by way of a renewal of an existing authorisation, must issue a circular to its shareholders that complies with the requirements of subparagraph (3) below.

(2)	A listed corporation that is renewing its existing authorisation must either issue - *^{FAQ 12.1, FAQ 12.2}*

	(a)	a statement accompanying its notice of general meeting (“Share Buy-back Statement”), in substitution of the circular; or ^{FAQ 12.3}

	(b)	a circular, as referred to in subparagraph (1) above.

	Where a listed corporation issues a Share Buy-back Statement, it must ensure that such Statement complies with the requirements of subparagraph (4) below.

(3)	The listed corporation must include in the circular referred to under subparagraph (1) above the information set out in Part A of Appendix 12A and all such information concerning the proposed purchase as shareholders and their advisers would reasonably require and would reasonably expect to find in the circular for the purposes of making an informed assessment as to the merits of approving the proposed purchase and the extent of the risks involved in doing so.

(4)	The listed corporation must include in the Share Buy-back Statement the information set out in Part B of Appendix 12A and all such information concerning the proposed purchase as shareholders and their advisers would reasonably require and would reasonably expect to find in the Share Buy-back Statement for the purposes of making an informed assessment as to the merits of approving the proposed purchase and the extent of the risks involved in doing so.

(5)	The listed corporation must submit the circular or Share Buy-back Statement, as the case may be, to the Exchange together with a checklist showing compliance with Part A or B of Appendix 12A respectively.

12.07	Contents of ordinary resolution for share buy-back

(1)	A listed corporation must include in the ordinary resolution required under paragraph 12.03 for a listed corporation to purchase its own shares the information set out in Appendix 12B.

(2)	The listed corporation must submit the resolution to the Exchange together with a checklist showing compliance with Appendix 12B.

(3)	Any authority conferred by such resolution may only continue to be in force until -

	(a)	the conclusion of the first annual general meeting of the listed corporation following the general meeting at which such resolution was passed at which time it will lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions;

	(b)	the expiration of the period within which the next annual general meeting after that date is required by law to be held; or

	(c)	revoked or varied by ordinary resolution passed by the shareholders in general meeting,

	whichever occurs first.

12.08	Announcement of outcome of general meeting

A listed corporation must immediately announce to the Exchange the outcome of the general meeting called to consider the proposed purchase of its own shares on the Exchange, immediately following such meeting.

12.09	Maximum limit

A listed corporation must not purchase its own shares or hold any of its own shares as treasury shares if this results in the aggregate of the shares purchased or held exceeding 10% of its issued and paid-up capital. *^{FAQ 12.4, FAQ 12.5, FAQ 12.6}*

PART D – SOURCE OF FUNDS AND CONSIDERATION

12.10	Source of funds

(1)	A listed issuer must ensure that the proposed purchase(s) of its own shares is made wholly out of retained profits or the share premium account of the listed corporation or both.

(2)	For the purpose of calculating the total amount of retained profits or share premium available for effecting a share buy-back, the listed corporation must not use the amount of retained profits and share premium available on a group basis.

12.11	Types of funds

For the purpose of paragraph 12.10, there are no restrictions on the types of funds which can be utilised so long as the share buy-back is backed by an equivalent amount of retained profits or share premium. The use of borrowings as a funding source is entirely within the ambit envisaged by this Chapter.

PART E – DECLARATION OF SOLVENCY

12.12	Declaration of solvency

A listed corporation must ensure that a solvency declaration is lodged with the Exchange by the directors of the listed corporation as follows:

(a)	where it is incorporated under the Companies Act 1965, in accordance with section 67A of the Companies Act 1965 and Part IIIA of the Companies Regulations 1966; or

(b)	where it is a foreign corporation, in the form and manner prescribed under Part IIIA of the Companies Regulations 1966 subject to the necessary modifications.

12.13	Execution of solvency declaration

(1)	The solvency declaration must be signed and dated by the majority of the directors.

(2)	If any director, whether or not that director signed the declaration, is of the opinion that it is likely that the listed corporation will not remain solvent at the time of the relevant purchase(s), the director must immediately notify the board of directors of the listed corporation in writing and lodge a copy of such notice with the Exchange and the giving of such notice will revoke the validity of the earlier solvency declaration.

PART F – ADDITIONAL REQUIREMENTS

12.14	Public shareholding

A listed corporation must not purchase its own shares on the Exchange if that purchase(s) will result in the listed corporation being in breach of paragraph 8.02(1).

12.15	Appointment of stockbroker

A listed corporation intending to purchase its own shares or resell treasury shares on the Exchange may appoint up to 2 Participating Organisations for that purpose. The listed corporation must ensure that all dealing(s) in its own shares or treasury shares are made through the said Participating Organisations only.

12.16	Notice of appointment of stockbroker

A listed corporation must lodge a notice of the appointment of the Participating Organisations concerned with the Exchange immediately and the listed corporation must open one securities account in its own name with such Participating Organisations designated as “Share Buy-Back Account” which must solely be used for the purchase of its own shares or resale of treasury shares.

12.17	Purchase price

A listed corporation may only purchase its own shares on the Exchange at a price which is not more than 15% above the weighted average market price for the shares for the 5 market days immediately before the purchase.

12.18	Resale price

A listed corporation may only resell treasury shares on the Exchange at -

(a)	a price which is not less than the weighted average market price for the shares for the 5 market days immediately before the resale; or

(b)	a discounted price of not more than 5% to the weighted average market price for the shares for the 5 market days immediately before the resale provided that - *^{FAQ 12.8, FAQ 12.9}*

	(i)	the resale takes place not earlier than 30 days from the date of purchase; and

	(ii)	the resale price is not less than the cost of purchase of the shares being resold. ^{FAQ 12.7}

12.19	Notification of purchase

A listed corporation must immediately announce to the Exchange any purchase(s) of its own shares not later than 6.30 p.m. on the day the purchase is made. The listed corporation must include in its announcement the information set out in Part A of Appendix 12C.

12.20	Notification of resale

A listed corporation must immediately announce to the Exchange any resale(s) of its treasury shares not later than 6.30 p.m. on the day the resale is made. The listed corporation must include in its announcement the information set out in Part B of Appendix 12C.

12.21	Notification of cancellation

A listed corporation must immediately announce to the Exchange any cancellation of its shares or treasury shares not later than 6.30 p.m. on the day the cancellation is made. The listed corporation must include in its announcement the information set out in Part C of Appendix 12C.

12.22	Exercise of powers

(1)	A listed corporation and its directors in exercising the power to purchase a listed corporation’s own shares or resell treasury shares, are subject, at all times, to all such obligations imposed on them under the law, including but not limited to the provisions of Part V of the CMSA.

(2)	In exercising its power to purchase its own shares or resell treasury shares, a listed corporation must not engage in speculative trading activities in relation to such purchase or resale.

12.23	Information to be included in annual reports

A listed corporation must include in its annual report, information with respect to purchase of its own shares as set out in Appendix 12D.

12.24	Status of purchased shares

All shares which are purchased by the listed corporation will be automatically de-listed upon their cancellation by the listed corporation.

PART G – SPECIFIC REQUIREMENTS FOR SHARE BUY-BACK BY A SPECIAL PURPOSE ACQUISITION COMPANY

12.25	Share buy-back by a SPAC

(1)	Notwithstanding paragraph 12.04, a SPAC may purchase its own shares through a Direct Business Transaction solely for the purpose of paying a pro rata portion of the amount held in the SPAC’s Trust Account to holders of the voting securities who voted against the qualifying acquisition proposed to be undertaken by the SPAC in accordance with section 67A of the Companies Act 1965 and Part IIIA of the Companies Regulations 1966.

(2)	The following provisions are not applicable to a SPAC which purchases its own shares in accordance with subparagraph (1) above:

	(a)	paragraph 12.03;

	(b)	paragraph 12.04;

	(c)	paragraph 12.06;

	(d)	paragraph 12.07;

	(e)	paragraph 12.08;

	(f)	paragraph 12.09;

	(g)	paragraph 12.14, provided that the SPAC undertakes reasonable steps to comply with the spread requirement set out in paragraph 8.02;

	(h)	paragraph 12.17;

	(i)	paragraph 12.18; and

	(j)	paragraph 12.20.

(3)	A SPAC must immediately cancel all the shares it purchased pursuant to subparagraph (1) above and make an announcement pursuant to paragraph 12.21.

(4)	Except as provided in this paragraph 12.25, a SPAC must not purchase its own shares until it has fully paid or satisfied the consideration of the qualifying acquisition and the ownership of the assets acquired by the SPAC is beneficially and legally vested in the SPAC. ^{FAQ 12.10}

PART H – REQUIREMENTS RELATING TO BUY-BACK OF ODD LOT SHARES

12.26	Buy-back of odd lot shares

(1)	A listed corporation which intends to purchase its own shares in odd lots (“odd lot shares”) must comply with the provisions in this Part, in addition to those set out in Parts B, C, D, E and F of this Chapter, where applicable and with the necessary modifications.

(2)	Notwithstanding paragraph 12.04, a listed corporation may purchase its odd lot shares:

	(a)	through a Direct Business Transaction; or

	(b)	in any other manner as may be approved by the Exchange,

	in accordance with such requirements as may be prescribed or imposed by the Exchange.

PART I – SPECIFIC REQUIREMENTS FOR UNIT BUY-BACK BY A BUSINESS TRUST

12.27	Unit buy-back by a business trust

(1)	A trustee-manager must comply with the following when undertaking a purchase of the business trust’s own units -

	(a)	the provisions in this Part, in addition to the relevant provisions in this Chapter, where applicable and with the necessary modifications; and

	(b)	the provisions in section 67A of the Companies Act 1965 and Part IIIA of the Companies Regulations 1966 as if the business trust were a company mentioned in section 67A of the Companies Act 1965 and Part IIIA of the Companies Regulations 1966, where applicable and with the necessary modifications.

(2)	A trustee-manager must ensure that any purchase of the business trust’s own units is made in good faith and in the interest of the unit holders.

(3)	The following provisions are not applicable to a unit buy-back of a business trust:

	(a)	paragraph 12.18;

	(b)	paragraph 12.20; and

	(c)	paragraph 12.23.

(4)	A trustee-manager must immediately cancel all the units it purchased pursuant to subparagraph (1) above.

[ End of Chapter ]

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Appendix 12A

Appendix 12B

Appendix 12C

Appendix 12D

[MAIN LR] CHAPTER 12 - SHARE BUY-BACKS // <![CDATA[ _spBodyOnLoadFunctionNames.push("setupPageDescriptionCallout"); // ]]>

[MAIN LR] CHAPTER 12 - SHARE BUY-BACKS