On 9 January 2020, the SGX RegCo announced that quarterly reporting (QR) is no longer required for listed companies unless they are associated with higher risks. TSMP Law Corporation Joint Managing Partner Stefanie Yuen Thio was interviewed by the Business Times, Lianhe Zaobao, the Straits Times and The Edge for her thoughts on this development.
For the Business Times, in the article “SGX drops quarterly reporting, strengthens continuous disclosures” published on 10 January 2020, she said that it is good that the change was not limited to doing away with mandatory QR, but also involved beefing up ongoing disclosure requirements in situations of higher risk. Under the existing rules, larger companies are subjected to QR. But it is often the smaller companies, which do not have as much financial buffer or the resources to hire good financial and compliance professionals, where the risks of financial shortcomings are higher, she said. “The new rules right that balance,” she added.
For Lianhe Zaobao, in the article “新政策下 约100家挂牌公司须发布季度财报” (Under the new policy, about 100 listed companies must release quarterly financial reports) published on 10 January 2020, she said: “除了撤除季度财报要求，新交所也加强必须披露 的领域，并且将有权力能够把某些人列为‘有利益关系的人’。全美 世界（Best World）的个案在新条例下将如何，值得我们关注。” (In addition to taking away the QR requirement, it has also beefed up areas of mandatory disclosure and imposed new rules such as the right to deem someone an “interested person”. It would be interesting to consider how the Best World case would have played out under these new rules.
For the Straits Times, in the article “Many Reits weighing option of semi-annual reporting” published on 11 January 2020, she said that short-termism is a concern in the case of quarterly reporting. “While all management teams try to grow the business over a longer-term horizon, there is always pressure to ensure that the quarterly numbers are healthy, and this may lead to certain transactions being timed to fit into the reporting schedule,” she noted. She added that the rule change also signals to the market that the SGX has heard the feedback that compliance costs can be prohibitive for smaller companies seeking a listing and is prepared to address this without loosening the reins on corporate governance.
For The Edge, in the article “No more quarterly reporting for companies not associated with ‘higher risks’: SGX RegCo” published on 13 January 2020, she felt the move was positive, but added that such a move would only address a troubled company on an “ex post factor” basis. This could be “too late” if the company was already in trouble before these factors were triggered or came to the attention of the auditors, she added.