|Companies should facilitate the exercise of ownership rights by all shareholders. In particular, shareholders have the right to be sufficiently informed of changes in the company or its business which would be likely to materially affect the price or value of the company's shares.|
This Guideline sets out the duty of the company to facilitate the exercise of shareholder rights, in particular, where share price or value may be impacted.
Shareholders have certain legal rights as owners of the company. These rights include attending and voting at general meetings, dividend distribution, and receiving the company’s financial reports.
Generally, shareholders want to see returns on their investments by way of, amongst others, dividend distribution and capital appreciation in the value of their shareholdings. Capital appreciation or loss is the difference between the buying and selling prices of the shares. Where the share value and prices change, or are expected to change, shareholders may want to trade their shares (that is, buy more or sell what they have). This is their ownership right.
In order to make this decision, investors should have the latest information about the company, particularly information which can affect the price and, hence, the (perceived) value of the shares. As there is an asymmetry of knowledge between them and the directors, shareholders may not have any, or adequate, access to information unless these are dutifully disclosed by the company.
A major forum by which information of the company is formally communicated to shareholders is the annual general meeting (AGM), when the company provides an annual report of its annual performance, plans and outlook. Outside of AGMs, investors rely on companies to dutifully provide timely updates on key matters through SGXNet, investor briefings and other channels.
Specifically, SGX Mainboard Rule 703(1) requires an issuer to announce any information “concerning it or any of its subsidiaries or associated companies which:- (a) is necessary to avoid the establishment of a false market in the issuer’s securities; or (b) would be likely to materially affect the price or value of its securities”.
B. SGX Disclosure Guide
C. Related Rules and Regulations
- Section 64(1) of the Companies Act: Rights and powers attaching shares.
- SGX MR 703(1) and SGX CR 703(1): Disclosure of Material Information.
D. CG Guides
- Board Guide 7.2: Shareholders [Stakeholder Engagement].
- Board Guide Appendix 7B-3: Fighting an Imminent Downgrade [Stakeholder Engagement].
- Board Guide Appendix 7D: Shareholder Activism [Stakeholder Engagement].
- Board Guide Appendix 7F: General Meetings of Shareholders [Stakeholder Engagement].
E. Related Articles
- “Orderly share trading adds to confidence” by Marcus Chow. (447KB)
- “Preparing for the AGM” by Penelope Phoon-Cohen. (446KB)
- “AGMs: What investors want to know” by Terry Wee. (447KB)
- “CA amendments: Less regulatory burden, more flexibility” by Marcus Chow. (47KB)
- “Responding with confidence in a crisis” by Irving Low. (47KB)
- “Shareholder activism and how directors can respond” by Jerry Koh. (97KB)
- “Shareholder activism - Shareholder rights and its effectiveness” by Kala Anandarajah. (95KB)