Corporate & Capital Markets. Acts Amending The Securities And Futures Act And Financial Advisers Act Passed

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1 January 2005 Acts Amending The Securities And Futures Act And Financial Advisers Act Passed Please feel free also to contact the Knowledge & Risk Management Group at The Securities and Futures (Amendment No 2) Act ( Amendment Act ) was passed by Parliament on 25 January The Amendment Act puts in place various significant and far-reaching amendments to the Securities and Futures Act ( SFA ). The Amendment Act is not yet in force. The Financial Advisers (Amendment) Act was also passed by Parliament on the same date. It amends the Financial Advisers Act ( FAA ) and it too is not yet in force. Among the far-reaching changes introduced by the Amendment Act will be the implementation of the new regime for the raising of capital for corporations and collective investment schemes. Under the new regime, all offers of shares, debentures and units of collective investment schemes will require the issue of a prospectus or other document unless the offer falls into one of the stipulated safe harbour exemptions. In view of this seachange, we set out below two tables summarising and providing an overview of the principal amendments made to each section of the relevant Divisions of the SFA. For shares and debentures, it is Part 13, Division 1 of the SFA. For collective investment schemes, it is Part 13, Division 2 of the SFA. Please note that we only highlight the principal changes made to each section. Further, where we indicate in the table that there are no significant changes, this does not mean that the section has not been amended. In addition, where amendments to a section are set out and described, this does not mean that this is the only change to the section, but that the change described is the principal significant change. All references to sections and subsections in the two tables refer to sections and subsections in the SFA unless otherwise indicated. It should also be noted that the Monetary Authority of Singapore ( MAS ) had, on 26 January 2005, released the following draft regulations for consultation: Regulations and Guidelines Pursuant to the SFA and Financial Advisers Act; Securities and Futures (Markets) Regulations; Securities and Futures (Clearing Facilities) Regulations; Securities and Futures (Approved Holding Companies) Regulations; Securities and Futures (Corporate Governance of Approved Exchanges, Designated Clearing Houses and Approved Holding Companies) Regulations; Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations; Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations; Securities and Futures (Reference to Affairs of a Business Trust and Affairs of an Entity) Regulations; Proposed Transitional Provisions Relating to the Amendments to Part XIII of the SFA and Related Regulations; Securities and Futures (Licensing and Conduct of Business) (Amendment) Regulations; Page 1

2 January 2005 Securities and Futures (Prescribed Futures Contracts) Regulations; Securities and Futures (Prescribed Specific Classes of Investors) Regulations; and Financial Advisers (Amendment) Regulations. The MAS also released draft Guidelines on the Regulation of Markets and draft Guidelines on the Regulation of Clearing Facilities on 26 January 2005 for public consultation. The consultation period on all the above documents closes on 25 February Rajah & Tann will be pleased to provide assistance if you wish to submit feedback to the MAS on any of the above matters. We will issue an update on the various regulations and guidelines on a later date. In view of this consultation, it is likely that the amendments to the SFA and FAA will only come into forc e after the first quarter of We will keep you informed when they do come into force. More information on the amendments effected by the SFA may be obtained from the following Client Updates which we have previously issued and which are available on eoasis (eoasis: Client Update of September 2003, MAS Releases Consultation Paper On Amendments To The SFA And FAA ; Client Update of May 2004, MAS Releases Consultation Paper On Proposed Amendments To The Securities And Futures Act / Financial Advisers Act ; and Client Update of October 2004, Bills Amending SFA And FAA Read In Parliament On 19 October For more information, please contact: Goh Kian Hwee (Tel: , kian.hwee.goh@rajahtann.com); Wong Kok Hoe (Tel: , kok.hoe.wong@rajahtann.com); David Yeow (Tel: , david.yeow@rajahtann.com); or Serene Yeo (Tel: , serene.yeo@rajahtann.com). Rajah & Tann is one of the largest law firms in Singapore, with a representative office in Shanghai. It is a full service firm and given its alliances, is able to tap into resources in a number of countries. Rajah & Tann is firmly committed to the provision of high quality legal services. It places strong emphasis on promptness, accessibility and reliability in dealings with clients. At the same time, the firm strives towards a practical yet creative approach in dealing with business and commercial problems. The information contained in this Update is correct to the best of our knowledge and belief at the time of writing. The contents of the above are intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice for any particular course of action as the information above may not necessarily suit your specific business and operational requirements. It is to your advantage to seek legal advice for your specific situation. In this regard, you may call the lawyer you normally deal with in Rajah & Tann or the Knowledge & Risk Management Group at eoasis@rajahtann.com. Page 2

3 OFFERS OF SHARES AND DEBENTURES Subdivision (1) Interpretation 239 Defines various terms and phrases as used in Part 13, Division 1 of the SFA. Defined term underlying entity not in current SFA. Not in current SFA. Defined term auditor deleted. (a) Defined term borrowing corporation replaced with borrowing entity. (b) Defined term guarantor corporation replaced with guarantor entity. (c) Added defined term underlying entity. Added the following defined terms: (a) chief executive officer ; (b) control ; (c) immediate family ; and (d) related party. No change as auditor defined in section 2 of SFA. Drafting changes for clarity. References to corporation in the SFA have generally been replaced with references to entity. Drafting changes for clarity. Term (a) to (c) are used in the definition of related party which is used in various sections in Part 13 of the SFA. Not in current SFA. Added defined term debenture issuance programme. Defined term added to take into account the inclusion of new section 240A which allows issuers of debentures to issue debentures under a debenture issuance programme by issuing a base prospectus and pricing statement. See section 240A below. Not in current SFA. Added new defined term issuer. Drafting change for clarity. Not in current SFA. Securities not defined in current Division 1 of Part 13 of the SFA. Added new defined term recognised securities exchange. Added new defined term securities. Defined term added to take into account amendments to section 300 dealing with when a publication will not be considered an advertisement for the purposes of this section. See section 300 below. Drafting change for clarity. Securities is defined as debentures or units of debentures of an entity, or shares or units of shares of a corporation. All previous references to shares, debentures, or units of shares or Page 3

4 debentures have been replaced with the defined term securities. Replaced subsections (3) to (5) with new subsections (3), (3A) to (5). Subsections (3) to (5) dealt with invitations to the public to deposit money with a corporation and contained a carve-out for prescribed corporations. Drafting changes for clarity. 239A Empowers the MAS to disapply this Division to certain offers and invitations. Subdivision (2) Prospectus Requirements 240 An offer of securities to the public requires the issue of a prospectus or profile statement. Deletes the reference to offer to the public and replaces it with a reference to an offer of securities. The new regime for raising of capital requires that all offers of securities must be accompanied with a prospectus unless falling into one of the safe harbour exemptions set out. Section 240 is amended to reflect this new regime. Sections 272 to 282 set out the safe harbour exemptions. See sections 272 to 282 below. Note that the circumstances where the MAS need not give an opportunity to be heard has been expanded to include bankruptcy to the existing list of liquidation and appointment of receiver and manager. 240A Not in current SFA. New section 240A added. Allows issuers of debentures to issue debentures under a debenture issuance programme by issuing a base prospectus and pricing statement. 241 Lodging of supplementary or replacement documents. Subsections (1A) to (1C) not in current SFA. New subsections (1A) to (1C) added. Subsection (8) replaced with a new subsection (8). The subsection deals with how the offeror is to deal with applicants when it issues a replacement or supplementary document. Under the current system, an offeror must either send the replacement or supplementary document to The new sub-sections deal with the lodgement of supplementary or replacement documents for debt issuance programmes. See section 240A above. Gives offerors the additional option of notifying applicants within 2 days of lodgement of the supplementary or replacement document as to how they can receive or obtain a copy of it. Page 4

5 the applicants within 7 days of its lodgement or return their monies to them within this same period. 242 Empowers the MAS to issue stop orders and set out consequences following thereon. 243 Sets out the requirements as to the contents of a prospectus. 244 Deleted in Deals with over-subscription in debenture issues. 246 Sets out the requirements as to the contents of a profile statement. 247 Provides for when MAS may exempt a person from the requirements as to form or content requirements for a prospectus or profile statement. 248 Provides exemptions for certain governmental and international corporations as regards signing of copy of prospectus or profile statement by all directors. 249 Sets out the requirement that an expert s consent to the issue of a prospectus or profile statement containing statement by him must be obtained before its issue. Subsections (1A) and (1B) not in current SFA. Subsection (1)(a) replaced with a new subsection (1)(a). The subsection enumerates the various matters to be set out in a profile statement. New sub-sections (1A) and (1B) added. Includes two new matters to be included in the contents of a profile statement: (a) identity of the persons signing the profile statement; and (b) the nature of the securities to be issued under the profile statement. Stipulates a new requirement that the expert s consent must be deposited and made available for inspection at a specified office in Singapore. 249A Not in current SFA. New section 249A added. Sets out a new requirement that where a prospectus or profile statement names a particular person as the underwriter or issue manager, the written consent of that person to being so named must be obtained. The written consent must be deposited and made available for inspection at a specified office in Singapore. Page 5

6 250 Stipulates that the duration of validity of a prospectus or profile statement is 6 months. 251 Restricts advertisements and publications about an offer of securities both before and after registration of the prospectus or profile statement. 252 Requires persons liable on a prospectus or profile statement to inform the person making offer or invitation about any deficiencies in the prospectus or profile statement that come to his attention. 253 Sets out the scope of criminal liability for false or misleading statements in a prospectus or profile statement. Section 250 replaced with a new section 250. Subsection (8) replaced with a new subsection (8). This subsection deals with the requirements for an advertisement or publication issued after registration of the prospectus or profile statement. Briefly, it mandates the inclusion of statements as to where the prospectus or profile statement can be collected and applications must be made in the manner set out in the prospectus or profile statement. Subsection (9) replaced with a new subsection (9). This subsection enumerates various carve-outs of publications that do not amount to advertisements or publications restricted by section 251. Subsection (4) amended by replacing the list of persons liable on a prospectus or profile statement enumerated therein. No significant changes to existing regime for securities. With respect to the new regime allowing for debentures to be issued under a debt issuance programme, provides that the validity of a base prospectus for such a programme is 24 months. Adds an additional requirement: that any advertisement or publication cannot contain any information not already contained in the prospectus or profile statement. Adds additional carve-outs to the existing ones already contained there. The most significant ones are: (a) a statement a prospectus or profile statement has been lodged; (b) a research report to institutional investors complying with specified requirements; and (c) a response to the media clarifying or correcting errors or misinformation about the offer. The amendment essentially adds the issue manager to the list of persons liable on a prospectus or profile statement. In addition, the amendment provides that the following persons will only be liable if they have acted intentionally or Page 6

7 recklessly: (a) the issue manager; (b) the underwriter; (c) a person named in the prospectus as having made a statement therein; and (d) any other person who makes a false or misleading statement or omits material information. Subsection (5) replaced with a new subsection (5). The new sub-section clarifies what amounts to acting intentionally or recklessly for the purposes of section 253. The previous sub-section (5) dealt with the criminal penalties for this section. This has been deleted presumably as otiose. Criminal penalties are already spelt out in section 253(1). 254 Sets out the scope of civil liability for false or misleading statements in a prospectus or profile statement. 255 Sets out the defences to criminal and civil liability contained in sections 253 and Deals with offer information statements for renounceable rights issues. Subsection (3) amended by replacing the list of persons liable on a prospectus or profile statement enumerated therein. Deleted. The amendment essentially adds the issue manager to the list of persons liable on a prospectus or profile statement. Note that for civil liability, the mens rea of acting intentionally or recklessly contained in section 253 on criminal liability does not apply. Accordingly, the following persons can still be civilly liable even if they are not criminally liable: (a) the issue manager; (b) the underwriter; (c) a person named in the prospectus as having made a statement therein; and (d) any other person who makes a false or misleading statement or omits material information. No change to existing regime. See new section 277 read with new section 257. See also the exemptions for nonrenounceable offers in section 273(1)(cg) and (ch). Page 7

8 257 Deals with an allotment or offer to allot securities to any person and sets out the documentary requirements for the same. 258 Sets out obligation to keep application and other moneys in trust in a separate bank account until allotment. 259 Sets out the obligations that arise where a prospectus or profile statement indicates that an application has been made to list on a securities exchange. 260 Prohibits allotment unless a minimum subscription is received. Subdivision (3) - Debentures 261 Sets out the offers of debentures to which Subdivision (3) applies. Subsection (1D) not in current SFA. 262 Deleted in 2003 Not in current SFA. Subsection (6) deleted. This subsection deals with requirements for the signing of the document for allotment or offer to allot. New subsection (1D) added. New section 262 added. Requirements for signing will therefore be that for prospectuses as set out in section 240. Note that the language of the section has been amended to reflect the removal of the concept of par value of shares. Sets out criminal penalties for entities that breach any conditions or restrictions imposed by the MAS under this section. Provides for offers of assetbacked securities and sets out the requirements for such offers. 263 Deleted in Deleted in Sets out the power of the court in relation to certain irredeemable debentures 266 Sets out the duties of trustees. 267 Sets out the powers of a trustee to apply to court for directions. 267A Sets out the right of the MAS, a securities exchange and holders of debentures to apply to court for certain orders. 268 Sets out the obligations of a borrowing corporation. 269 Sets out the obligations of a guarantor corporation to furnish information. 270 Stipulates that loans and deposits are to be immediately repayable on the occurrence of Page 8

9 certain events. 271 Sets out the liability of trustees for debenture holders. Subdivison (4) Exemptions 272 Defines various terms and phrases as used in Part 13, Division 1, Subdivision (4) of the SFA. Section 272 replaced with a new section 272. Section 272 was previously the interpretation section for Subdivision (4). The entire section was deleted as Subdivision (4) has been entirely revamped as a result of the move towards a regime where all offers of securities will require the issue or a prospectus or profile statement unless falling within one of the safe harbour exemptions set out in Subdivision (4). Section 272 deals with the safe harbour exemption of issues or transfers of securities for no consideration. 272A Not in current SFA. New section 272A added. Deals with the safe harbour exemption of small offers. A small offer is essentially one where the total amount raised in a 12-month period is below S$5 million. 272B Not in current SFA. New section 272B added. Deals with the safe harbour exemption of private placements. A private placement is essentially one where the total number of investors approached is not more than 50 in a 12- month period. 273 Sets out exemptions for certain types of offers as enumerated in the section. Subsection (1)(b) replaced by a new subsection (1)(b). This subsection provides an exemption for takeovers. Subsection (1)(c) amended. Subsection (1)(c) currently deals with compromises and arrangements. The exemption for takeovers in subsection (1)(b) will be limited to unlisted corporations. See however the new subsection (1)(ca) for listed corporations. The exemption for compromises and arrangements in subsection (1)(c) will be limited to unlisted corporations. See however the new subsection (1)(cb) for listed corporations. Not in current SFA. New subsection (1)(ca) added. Sets out an exemption for takeovers of listed corporations and requires compliance with the Singapore Take-over Code. Not in current SFA. New subsection (1)(cb) added. Sets out an exemption for Page 9

10 January 2005 compromises and arrangements of listed corporations and requires compliance with the Singapore Take-over Code. Not in current SFA. New subsection (1)(cc) added. Sets out an exemption for underwriting agreements. Not in current SFA. New subsection (1)(cd) added. Sets out an exemption for rights offers to existing members Not in current SFA. New subsection (1)(ce) added. Sets out an exemption for rights offers to any existing member. Not in current SFA. New subsection (1)(cf) added. Sets out an exemption for issues to any existing debenture holder. Not in current SFA. New subsection (1)(ch) added. Sets out an exemption for rights issues to any existing member that are non-renounceable. Not in current SFA. New subsection (1)(ci) added. Sets out an exemption for debenture issues to any existing debenture holder that are nonrenounceable. Not in current SFA. New subsection (1)(cj) added. Sets out an exemption for an offer of securities under section 306 of the Companies Act. This empowers a liquidator to accept shares as consideration for the sale of property of the company being liquidated. No significant changes to subsection (1)(d) which sets out the exemption on previously issued and listed shares and debentures. No significant changes to subsection (1)(e) which sets out the exemption on previously issued and listed units of shares and debentures. No significant changes to subsection (1)(e) which sets out the exemption on share option schemes. Not in current SFA. New subsection (1A) added. Sets out an exemption for securities lending and borrowing. No significant change to subsection (2) which sets out the requirement for no promotional expenses in order to qualify for the share option scheme safe harbour exemption. Page 10

11 Subsection (3) deleted. This subsection clarifies that the inclusion of share option schemes as a safe harbour exemption does not mean that all share option schemes amount to an offer to the public. No longer required as the concept of an offer to the public has been removed. No significant changes to subsection (4) which sets out who is a qualifying person for the purposes of the share option scheme safe harbour exemption. No significant changes to subsection (5) which empowers the MAS to exempt certain offers for a period of 6 months from the prospectus requirements. No significant changes to subsection (6) which empowers the MAS to impose restrictions or conditions on exemptions under subsection (5). No amendments to subsection (7) which provides that a subsection (5) declaration is final. No amendments to subsection (8) which set out criminal penalties. Subsection (9) replaced with a new subsection (9). Defines what is an unlisted corporation. Not in current SFA. New subsection (10) added. Defines what is a corporation for the purposes of the safe harbour exemptions set out in subsections (1)(ca) and (1)(cb). 274 Sets out exemption for offers to institutional investors. 275 Sets out exemption for offers to sophisticated investors. Note that the defined term institutional investor is shifted to section 4A. Note that the term sophisticated investor is replaced with the term accredited investor which defined in section 4A. With respect to accredited investors, the exemption contains a look-through provision for trusts and corporations where the beneficiaries and shareholders are all accredited investors. The current exemption in respect of offers in respect of which the consideration is at least Page 11

12 January Deals with subsequent sales of securities acquired under the institutional and sophisticated / accredited investors exemption. 277 Deals with offer of listed securities with the issue of an offer information statement. 278 Deals with offers of international debentures. 279 Deals with offers of debentures made by the government or international financial institutions. S$200,000 is carved out into a separate subsection. However, the change is purely drafting in nature. The 6 month restriction on a sale of shares pursuant to the institutional investor and sophisticated / accredited investor safe harbour exemptions has been retained. The language of the section has been tidied up and consequential provisions dealing trusts and corporations comprising beneficiaries and shareholders who are all accredited investors have been inserted. 280 Deleted in 2003 New section 280 inserted. Sets out exemption for offers made using automated teller machines or other electronic means. 281 Sets out when MAS can revoke an exemption made under this Subdivision (4). 282 Provides that nothing in this Division affects liability incurred market misconduct provisions. Page 12

13 COLLECTIVE INVESTMENT SCHEMES ( CIS ) EFFECT(S) OF AM ENDENT(S) Subdivision (1) Interpretation 283 Defines various terms and phrases as used in Part 13, Division 2 of the SFA. Defined terms chief executive officer, control, immediate family and related party not in current SFA. Added the following defined terms: (a) chief executive officer ; (b) control ; (c) immediate family ; and (d) related party. Drafting changes for clarity. Terms (a) to (c) are used in the definition of related party which is used in various sections in Part 13, Division 2 of the SFA. Defined term not in current Division 2 of Part 13 of the SFA. Not in current SFA. Added the defined term preliminary document. Added the defined term recognised securities exchange. Deleted the defined term responsible person. Replaced subsection (3) with a new subsection (3). Subsection (3) expressly provided that certain offers of units in a CIS are an offer to the public. Defined term added to take into account amendments to section 296 to allow the lodgement of a preliminary document instead of prospectus. See section 296 below. Defined term added to take into account amendments to section 300 dealing with when a publication will not be considered an advertisement for the purposes of this section. See section 300 below. No change. Defined term responsible person moved to section 2. New subsection (3) clarifies what is an offer of units in a CIS. 283A Sets out when the term real estate investment trust can be used. 284 Empowers the MAS to issue a Code on CIS. 284A Empowers the MAS to disapply this Division to certain offers and invitations. 284B Stipulated that this Division does not apply to certain CIS which are business trusts. Subdivision (2) Authorisation And Recognition 285 Sets out requirement that a CIS must be approved or recognised Deletes the reference to offer to the public. The new regime for offers requires that all offers of units in Page 13

14 before units in the CIS can be offered. EFFECT(S) OF AM ENDENT(S) a CIS must be accompanied with a prospectus unless falling into one of the safe harbour exemptions set out. Section 285 is therefore amended to reflect this new regime. See sections 303 to 308 which set out the safe harbour exemptions below. 286 Deals with authorised schemes. Note that the circumstances where the MAS need not give an opportunity to be heard has been expanded to include bankruptcy to the existing list of liquidation and appointment of receiver and manager. 287 Deals with recognised schemes. Subsections (2)(d) and (e) replaced with new subsections (2)(d) and (e). 288 Deals with the revocation, suspension or withdrawal of authorisation or recognition by the MAS. 289 Sets our requirement for the approval of trustees by the MAS. 290 Empowers the MAS to carry out inspections of approved trustees. 291 Imposes duty of on trustees to furnish the MAS with such returns and information as the MAS requires. 292 Sets out the liability of trustees. 293 Empowers the MAS to issue directions. 294 Sets out what amounts to service on a CIS. Subsection (1A) not in current SFA. New subsection (1A) added. The new subsections (2)(d) and (3) allow a representative for the scheme to also be a company or branch. Note also that the circumstances where the MAS need not give an opportunity to be heard has been expanded to include bankruptcy to the existing list of liquidation and appointment of receiver and manager. Note that the circumstances where the MAS need not give an opportunity to be heard has been expanded to include bankruptcy to the existing list of liquidation and appointment of receiver and manager. New subsection (1A) clarifies that service includes service of process. Page 14

15 EFFECT(S) OF AM ENDENT(S) 295 Deals with the winding up of a CIS. Subdivision (3) Prospectus Requirements 296 Sets out the requirement for the issue of a prospectus and profile statement for offers of units in a CIS. Not in current SFA. Not in current SFA. 297 Sets out the regime for stop orders. Subsection (2A) not in current SFA. 298 Deals with when a supplementary or replacement document must be lodged. Subsection (1) replaced with a new subsection (1). New subsections (1A) and (1B) added. New subsections (2A), (2B) and (2C) added. New subsection (2A) added. Subsection (10) replaced with a new subsection (10). Subsection (10) stipulates that applicants for units of the CIS and participants of the CIS must be sent a copy of the supplementary or replacement document within 7 days of its lodgement. The new regime for offers requires that all offers of units in a CIS must be accompanied with a prospectus unless falling into one of the safe harbour exemptions set out. The new subsection (1) reflects this new regime. See sections 303 to 308 which set out the safe harbour exemptions below. New subsections (1A) and (1B) provide for lodgement of preliminary document instead of prospectus. Requires prospectus or profile statement to be signed by the directors or equivalent persons and the proposed directors or equivalent persons. For consistency with the regime for securities, a new subsection (2A) provides that the MAS must not issue a stop order if units in the CIS have already been issued and are trading on the exchange. Note also that the circumstances where the MAS need not give an opportunity to be heard has been expanded to include bankruptcy to the existing list of liquidation and appointment of receiver and manager. The new subsection (10) provides as an alternative option notifying applicants within 2 days of lodgement of the supplementary or replacement document as to how they can arrange to obtain a copy of the document, and to take reasonable steps to make the document available. Participants of the CIS no longer need to be informed. 299 Sets out the duration of validity Page 15

16 EFFECT(S) OF AM ENDENT(S) of a prospectus. 300 Restricts advertisements and publications about an offer of units in a CIS both before and after registration of the prospectus or profile statement. Subsection (2) not in current SFA. New subsection (2) added. Stipulates that for the purposes of determining whether a statement is prohibited, regard shall be had to whether the statement forms part of normal advertising and whether it is intended to maintain existing customers or attract new customers. Not in current SFA. New subsection (2A) added. Allows the dissemination of a preliminary document prior to the registration of a prospectus or profile statement to institutional and investors set out in section 305. Not in current SFA. 301 Sets out requirements where a prospectus indicates that an application to list units of a CIS on a securities exchange has been or will be made. 302 Sets out the applicability of various provisions in the SFA relating to securities. Subdivision (4) Exemptions New subsections (3A), (3B) and (3C) added. Subsection (4) amended. This subsection sets out exceptions to the advertising restrictions. Allows tombstone advertisements for CIS. The following exceptions to the advertising restrictions have been added: (a) disclosures made under the SFA or exchange rules; (b) a statement that the prospectus or profile statement has been lodged with the MAS; (c) pre-deal research reports to institutional investors made 14 days prior to lodgement of the prospectus or profile statement; and (d) a media comment providing clarification on erroneous or inaccurate information. 302A Not in current SFA. New section 302A inserted. Deals with the safe harbour exemption of issues or transfers of securities for no consideration. 302B Not in current SFA. New section 302B inserted. Deals with the safe harbour exemption of small offers. A small offer is essentially one Page 16

17 EFFECT(S) OF AM ENDENT(S) where the total amount raised in a 12-month period is below S$5 million. 302C Not in current SFA. New section 302C inserted. Deals with the safe harbour exemption of private placements. A private placement is essentially one where the total number of investors approached is not more than 50 in a 12- month period. 303 Offer or invitation made under certain circumstances 304 Sets out exemption for offers to institutional investors. Section 303 replaced by a new section 303. The new section 303 is essentially the same save that a new subsection providing for a safe harbour exemption for underwriting agreements has been added. Note that the definition of institutional investor will be shifted to section 4A. 304A Deals with subsequent sales of securities acquired under the institutional investors exemption. Section 304A replaced with a new section 304A. The new section 304A restricts onward sales of units in a CIS pursuant to the institutional investor exemption to other institutional investors. The ability to engage in an onward sale of units to sophisticated / accredited investors has been removed. 305 Sets out exemption for offers to sophisticated investors. Note that the term sophisticated investor has been replaced with the term accredited investor which is contained in section 4A. With respect to accredited investors, the exemption will contain a look-through provision for trusts and corporations where the beneficiaries and shareholders are all accredited investors. The current exemption in respect of offers in respect of which the consideration is at least S$200,000 has been carved out into a separate subsection. However, the change is purely drafting in nature. 305A Deals with subsequent sales of securities acquired under the sophisticated / accredited investors exemption. The 6 month restriction on a sale of shares pursuant to the institutional investor and sophisticated / accredited investor safe harbour exemptions has been retained. Page 17

18 January 2005 EFFECT(S) OF AM ENDENT(S) The language of the section has been tidied up and consequential provisions dealing trusts and corporations comprising beneficiaries and shareholders who are all accredited investors have been inserted. 305B Not in current SFA. New section 305B inserted. Sets out exemption for offers of units of CIS where the units are listed on an exchange and an offer information statement is lodged. 305C Not in current SFA. New section 305C inserted. Sets out exemption for offers made using automated teller machines or other electronic means. 306 Empowers the MAS to exempt person from the application of this Division. 307 Empowers the MAS to revoke exemptions made under section Provides that nothing in this Division affects liability incurred market misconduct provisions. Page 18