SGX Requirements for Listed Companies Conducting an Initial Coin Offering



SGX Requirements for Listed Companies Conducting an Initial Coin Offering

A photo of Singapore SGX Centre

Date Published: 16 January 2019

Authors and Contributors: Quek Li Fei, Mike Chiam, Samuel Ling, and Adrian Toh.


On 15 November 2018, Singapore Exchange Regulation (“SGX RegCo”) announced requirements for listed companies planning to conduct an Initial Coin Offering (“ICO”) on the Regulator’s Column. Singapore Exchange (“SGX”) clarified that even if an SGX-listed company is the issuer of digital tokens, those tokens are not listed on SGX. Therefore, SGX’s rules cover only the SGX listed company. Neither the tokens nor token-holders are covered by SGX’s rules.


Listed companies to consult SGX RegCo prior to ICO

The Regulator’s Column set out new requirements for SGX-listed companies which are looking to conduct ICOs.

  1. Before conducting an ICO, listed issuers are expected to consult SGX RegCo. In addition, they must first obtain from reputable professional firms a legal opinion on the nature of the digital tokens, as well as an auditor’s opinion on the ICO’s accounting treatment.
  2. SGX may require additional opinions to be obtained. They will also provide a checklist to the listed issuer on outstanding compliance matters to be addressed.


Disclosure requirements upon ICO

When the issuer announces its ICO, it must make certain disclosures of material information to keep its shareholders apprised of the fund-raising, including the rationale for the ICO, the risks arising from the ICO, the use of funds raised and key milestones to be achieved in utilizing the funds, the accounting and valuation treatments for the ICO, the use of existing issuer funds to conduct the ICO, if any, “know-your-customer” checks to be conducted to address money laundering and terrorist financing risks, the financial impact on the issuer as a result of the token issuance as well as impact of any contingent settlement provisions, and any impact on existing shareholders’ rights. SGX RegCo expects disclosures of material information to shareholders to continue post-ICO as necessary.

Further, listed issuers are required to reach an agreement with their statutory auditors as to the scope of the audit such that it provides assurance that the ICO has been properly accounted for in the company’s financial statements and that the associated risks have been adequately managed and milestones on fund utilization have been adhered to.

Listed issuers may also wish to consider holding sharing sessions with shareholders before the ICO to ensure shareholders understand the implications of the ICO.


Additional measures for ICOs of tokens construed as “securities”

Where the tokens are construed as “securities/capital markets products”, which are regulated under the Securities and Futures Act (“SFA”) {the criteria for regulated products is set out in its 30 November 2018 Guide to Digital Token Offerings, a summary of which can be found here}, additional requirements such as prospectus registration, and securing of applicable licenses, will apply. SGX RegCo may also require listed issuers to establish a subsidiary to carry out the ICO.

Disclaimer: This update is provided to you for general information and should not be relied upon as legal advice.


CNPLaw’s Blockchain, Cryptocurrency and Initial Coin Offerings (ICOs) Lawyers

Quek Li Fei Legal Partner at CNPLaw LLP image


    In addition to Li Fei’s experience in acting for banks on varied transactions and in general corporate law, he also helps individuals in estate planning, including the legal aspects of wealth management, advising on and setting up trusts and off-shore structures to secure their future and the future of their families. Li Fei is also recognised as a Recommended Lawyer for Banking and Finance and Financial Services Regulatory by The Legal 500 Asia Pacific 2021.

    We have a particular passion and interest in blockchain technology applications, cryptocurrencies and ICOs. We currently advise issuers of tokens, ICO advisors, venture capital firms and entrepreneurs involved in this space on Singapore legal issues and regulatory compliance for a range of planned business activities, ranging from utilization of blockchain to enable business applications in diverse fields (including money remittance, solar energy, consumer rewards, structured social interaction; music and entertainment industry; holiday & leisure industry; employment marketplace, consumer rewards, crypto-asset security applications); to setting up cryptocurrency exchanges and issue of tokens on proprietary platforms.