NOT A BAD THING FOR SMALLER FIRMS
Unsurprisingly, some have raised concerns about how small and medium-sized companies, especially those already struggling with tight operating margins, could face the strain of higher costs forced upon them by these new disclosure rules and compliance requirements.
But these are weak oft-repeated arguments.
For a start, companies list to raise capital and boost their profile. The decision to become a listed firm would have been made with full knowledge of the costs involved, which in Singapore, can be found publicly on SGX’s website. With listing comes compliance – it is a given, in any market.
The problem is that many firms, especially small and mid-caps, remain in a state of stasis after the initial public offering. They face low liquidity, limited investor interest and undervaluation, but they exist in this purgatory state because of a lack of transparency about their operations and strategy. With little investor relations effort, the market does not know who they are or what they do.
The latest measures are precisely what these smaller listed companies need.
Granted, the cost of compliance could rise a little but financial help is available. As part of the “Value Unlock” programme announced last November, listed firms can tap on grants to build capabilities in corporate strategies, capital management and investor relations.
Subject to market support, the changes are slated to kick in from 2027 onwards, and reflected in annual reports in 2028. That is still some way to go for companies who reckon they need more time to prepare.