15/12/21

SINGAPORE: MAS proposes to introduce due diligence requirements for corporate finance advisers, including on IPOs.

As published on businesstimes.com.sg, Wednesday 15 December, 2021.

THE Monetary Authority of Singapore (MAS) is recommending that issue managers of initial public offerings (IPOs) satisfy additional due diligence requirements, according to a consultation paper published on Wednesday (Dec 15).

The additional requirements would include assessing the suitability of the listing applicant and conducting an independent review of the due diligence performed by the team responsible for advising on the IPO.

This is among the various recommendations as the regulator seeks to raise the standards of conduct of corporate finance advisers and to improve the quality of disclosures from entities seeking to raise funds from the public.

Under the proposal, these advisers will be required to exercise reasonable judgement in determining the scope of the due diligence work to be performed on a corporate finance transaction as well as assess the veracity of information obtained in the course of their due diligence.

The proposed requirements set out the minimum standards which these advisers should adhere to when conducting due diligence on corporate finance transactions.

Holders of a capital markets services licence as well as banks, merchant banks and finance companies exempt from holding such a licence that undertake the regulated activity of advising on corporate finance are the group of corporate finance advisers that would be subject to the requirements, if imposed.

Currently, they are required to have effective internal controls to address the risks associated with their activities and mitigate conflicts of interests that may arise from these activities.

Lim Tuang Lee, assistant managing director (capital markets) at MAS, said: "Corporate finance advisers play an important gatekeeping role in safeguarding the integrity of our capital markets. The proposed requirements are consistent with best practices in major jurisdictions and seek to strengthen investor confidence in our capital markets."

The consultation paper is available on MAS website till Feb 15, 2022 for comments.