| 新加坡证券期货法 |
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| 2007-04-20 15:33 文章来源：Singapore Statutes Online | | 文章类型：转载 内容分类：其它 |
PART I
PRELIMINARY
Short title
1. This Act may be cited as the Securities and Futures Act.
Notes:—Unless otherwise stated, the abbreviations used in the references to other Acts and statutory provisions are references to the following Acts and statutory provisions. The references are provided for the convenience of users and are not part of the Act:
Aust. Corporations 2001 : Australia, Corporations Act 2001 (No. 50, 2001)
Aust. FSR Bill 2001 : Australia, Financial Services Reform Bill 2001
ASIC 1989 : Australia, Australian Securities and Investment Commission Act 1989
HK SF Bill : Hong Kong, Securities and Futures Bill (Gazette published on 24 November 2000, Legal Supplement No. 3)
HK CUTMF : Hong Kong, Code on Unit Trusts and Mutual Funds
Malaysia SIA : Malaysia, Securities Industry Act 1983
UK FSMA 2000 : United Kingdom, Financial Services and Markets Act 2000 (Chapter c. 8)
Companies : Singapore, Companies Act (Chapter 50, 1994 Revised Edition)
E(DM)A : Singapore, Exchange (Demutualisation and Merger) Act (Chapter 88, 2000 Revised Edition)
FTA : Singapore, Futures Trading Act (Chapter 116, 1996 Revised Edition — repealed)
Insurance Intermediaries : Singapore, Insurance Intermediaries Act (Chapter 142A, 2000 Revised Edition — repealed)
SFA : Singapore, Securities and Futures Act (Chapter 289, 2002 Revised Edition)
SIA : Singapore, Securities Industry Act (Chapter 289, 1985 Revised Edition — repealed)
Interpretation
2. —(1) In this Act, unless the context otherwise requires —
"advising on corporate finance" has the meaning given to it in the Second Schedule;
"advocate and solicitor" means an advocate and solicitor of the Supreme Court or a foreign lawyer as defined in section 130A of the Legal Profession Act (Cap. 161);
"approved exchange" means a corporation that is approved by the Authority under section 8 (1) as an approved exchange;
"approved holding company" means a corporation that is approved by the Authority under section 81W as an approved holding company;
"auditor" means a public accountant who is registered or deemed to be registered under the Accountants Act (Cap. 2) and, in Divisions 1 and 1A of Part XIII, when used in relation to an entity not being a company, includes —
(a) a person who is duly registered, licensed, approved or otherwise authorised to practise as an auditor (such practice to include the issue of any opinion, report or other document on the audit of any financial statement) —
(i) under the laws of the place where the entity is formed or constituted; or
(ii) under the laws of the place of his practice, if the auditing standards that are or will be applied to the financial statements of the entity are —
(A) auditing standards commonly applied in that place; or
(B) international auditing standards (by whatever name called); or
(b) such other person as may be approved by the Authority in any particular case to be an auditor for such entity;
"Authority" means the Monetary Authority of Singapore established under the Monetary Authority of Singapore Act (Cap. 186);
"book" includes any record, register, document or other record of information, and any account or accounting record, however compiled, recorded or stored, whether in written or printed form or on microfilm or in any other electronic form or otherwise;
"business rules" , in relation to an approved holding company, a securities exchange, a futures exchange, a recognised market operator or a designated clearing house, means the rules, regulations, by-laws or such similar body of statements, by whatever name called, that govern the activities and conduct of —
(a) the approved holding company, securities exchange, futures exchange, recognised market operator or designated clearing house and its members; and
(b) other persons in relation to it,
whether or not those rules, regulations, by-laws or similar body of statements are made by the approved holding company, securities exchange, futures exchange, recognised market operator or designated clearing house or are contained in its constituent documents, but does not include the listing rules of a securities exchange or recognised market operator (which is an overseas securities exchange);
"business trust" has the same meaning as in section 2 of the Business Trusts Act (Cap. 31A);
"capital markets products" means any securities, futures contracts, contracts or arrangements for the purposes of foreign exchange trading, contracts or arrangements for the purposes of leveraged foreign exchange trading, and such other products as the Authority may prescribe as capital markets products;
"capital markets services licence" means a licence that is granted by the Authority under section 86 to a person to carry on a business in any regulated activity;
"chairman" means a chairman of a board of directors;
"chief executive officer" , in relation to an approved exchange, a recognised market operator, a designated clearing house, a person operating a clearing facility, an approved holding company or a holder of a capital markets services licence, means any person, by whatever name described, who is —
(a) in the direct employment of, or acting for or by arrangement with, the approved exchange, recognised market operator, designated clearing house, person operating a clearing facility, approved holding company or holder of a capital markets services licence, as the case may be; and
(b) principally responsible for the management and conduct of the business of the approved exchange, recognised market operator, designated clearing house, person operating a clearing facility, approved holding company or holder of a capital markets services licence, as the case may be, in Singapore;
"clearing facility" has the meaning given to it in Part II of the First Schedule;
"clearing or settlement" has the meaning given to it in Part II of the First Schedule;
"closed-end fund" means an arrangement referred to in paragraph (a) or (b) of the definition of “collective investment scheme” under which units that are issued are exclusively or primarily non-redeemable at the election of the holders of units, but does not include an arrangement referred to in paragraph (a) of that definition —
(a) that is a trust;
(b) that invests only in real estate and real estate-related assets specified by the Authority in the Code on Collective Investment Schemes; and
(c) all or any units of which are listed for quotation on a securities exchange;
"Code on Collective Investment Schemes" means the Code on Collective Investment Schemes referred to in section 284 which is issued by the Authority under section 321 (1);
"collective investment scheme" means —
(a) an arrangement in respect of any property —
(i) under which —
(A) the participants do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or to give directions in respect of such management; and
(B) the property is managed as a whole by or on behalf of a manager;
(ii) under which the contributions of the participants and the profits or income from which payments are to be made to them are pooled; and
(iii) the purpose or effect, or purported purpose or effect, of which is to enable the participants (whether by acquiring any right, interest, title or benefit in the property or any part of the property or otherwise) —
(A) to participate in or receive profits, income, or other payments or returns arising from the acquisition, holding, management or disposal of, the exercise of, the redemption of, or the expiry of, any right, interest, title or benefit in the property or any part of the property; or
(B) to receive sums paid out of such profits, income, or other payments or returns; or
(b) an arrangement which is an arrangement, or is of a class or description of arrangements, specified by the Authority as a collective investment scheme by notice published in the Gazette,
but does not include —
(i) an arrangement operated by a person otherwise than by way of business;
(ii) an arrangement under which each of the participants carries on a business other than investment business and enters into the arrangement solely incidental to that other business;
(iii) an arrangement under which each of the participants is a related corporation of the manager;
(iv) an arrangement made by or on behalf of an entity solely for the benefit of persons, each of whom is —
(A) a bona fide director or equivalent person, a former director or equivalent person, a consultant, an adviser, an employee or a former employee of that entity or, where that entity is a corporation, a related corporation of that entity; or
(B) a spouse, widow or widower, or a child, adopted child or step-child below the age of 18 years, of such director or equivalent person, former director or equivalent person, employee or former employee;
(iva) an arrangement made by or on behalf of 2 or more entities solely for the benefit of persons, each of whom is —
(A) a bona fide director or equivalent person, a former director or equivalent person, a consultant, an adviser, an employee or a former employee of any of those entities or, where any of those entities is a corporation, a related corporation of the entity which is a corporation; or
(B) a spouse, widow or widower, or a child, adopted child or step-child below the age of 18 years, of such director or equivalent person, former director or equivalent person, employee or former employee;
(v) a franchise;
(vi) an arrangement under which money received by an advocate and solicitor from his client, whether as a stakeholder or otherwise, acting in his professional capacity in the ordinary course of his practice, or under which money is received by a statutory body as a stakeholder in the carrying out of its statutory functions;
(vii) an arrangement made by any co-operative society registered under the Co-operative Societies Act (Cap. 62) in accordance with the objects thereof solely for the benefit of its members;
(viii) an arrangement made for the purposes of any chit fund permitted to operate under the Chit Funds Act (Cap. 39);
(ix) an arrangement arising out of a life policy within the meaning of the Insurance Act (Cap. 142);
(x) a closed-end fund constituted either as an entity or a trust;
(xi) (Deleted by Act 31/2004)
(xii) an arrangement which is an arrangement, or is of a class or description of arrangements, specified by the Authority as not constituting a collective investment scheme by notice published in the Gazette;
"commodity" , in relation to a futures contract, means —
(a) a financial instrument; or
(b) gold;
"company" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50);
"connected person" , in relation to —
(a) an individual, means —
(i) the individual’s spouse, son, adopted son, step-son, daughter, adopted daughter, step-daughter, father, step-father, mother, step-mother, brother, step-brother, sister or step-sister; and
(ii) a firm, a limited liability partnership or a corporation in which the individual or any of the persons mentioned in sub-paragraph (i) has control of not less than 20% of the voting power in the firm, limited liability partnership or corporation, whether such control is exercised individually or jointly; or
(b) a firm, a limited liability partnership or a corporation, means another firm, limited liability partnership or corporation in which the first-mentioned firm, limited liability partnership or corporation has control of not less than 20% of the voting power in that other firm, limited liability partnership or corporation,
and a reference in this Act to a person connected to another person shall be construed accordingly;
"corporation" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50);
"customer" means —
(a) in relation to a holder of a capital markets services licence —
(i) for the purposes of Parts IV, VI, VII and XV, a person on whose behalf the holder carries on or will carry on any regulated activity; or
(ii) for the purposes of Part V, a person on whose behalf the holder carries on or will carry on any regulated activity, or any other person with whom the holder, as principal, enters or will enter into transactions —
(A) for the sale or purchase of securities;
(B) for the sale or purchase of futures contracts; or
(C) in connection with leveraged foreign exchange trading,
but does not include such person or class of persons as may be prescribed; or
(b) for the purposes of Part III, a person on whose behalf a member of a designated clearing house carries on any activity regulated under this Act, but does not include —
(i) the member, with respect to dealings for the member’s own account;
(ii) any officer, director, employee or representative of the member; or
(iii) a related corporation of the member, with respect to accepted instructions to deal for an account belonging to, and maintained wholly for the benefit of, that related corporation;
"dealing in securities" has the meaning given to it in the Second Schedule;
"debenture" , except for the purposes of Part XIII, includes any debenture stock, bond, note and any other debt securities issued by a corporation or any other entity, whether constituting a charge or not, on the assets of the issuer but does not include —
(a) a cheque, letter of credit, order for the payment of money or bill of exchange; or
(b) for the purposes of the application of this definition to a provision of this Act in respect of which any regulations made thereunder provide that the word “debenture” does not include a prescribed document or a document included in a prescribed class of documents, that document or a document included in that class of documents, as the case may be;
"defalcation" means misapplication, including misappropriation, of any property;
"derivative" , in relation to a unit in a business trust, has the same meaning as in section 2 of the Business Trusts Act (Cap. 31A);
"designated clearing house" means a person that is designated by the Authority under section 55 (1) as a designated clearing house;
"director" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50);
"entity" includes a corporation, an unincorporated association, a partnership and the government of any state, but does not include a trust;
"exempt market operator" means —
(a) a corporation that is exempted under section 14 (2);
(b) a corporation declared under section 14 (8) to be an exempt market operator; or
(c) a corporation operating a market included in a class of markets in relation to which a declaration under section 14 (9) is in force;
"exempt person" means a person who is exempted under section 99;
"financial instrument" includes any currency, currency index, interest rate instrument, interest rate index, share, share index, stock, stock index, debenture, bond index, a group or groups of such financial instruments, and such other financial instruments as the Authority may by order prescribe;
"financial year" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50);
"firm" has the same meaning as in section 2 (1) of the Business Registration Act (Cap. 32);
"foreign company" has the same meaning as in section 4 (1) of the Companies Act;
"foreign exchange trading" has the meaning given to it in the Second Schedule;
"franchise" means a written agreement or arrangement between 2 or more persons by which —
(a) a party (referred to in this definition as the franchisor) to the agreement or arrangement authorises or permits another party (referred to in this definition as the franchisee), or a person associated with the franchisee, to exercise the right to engage in the business of offering, selling or distributing goods or services in Singapore under a plan or system controlled by the franchisor or a person associated with the franchisor;
(b) the business carried on by the franchisee or the person associated with the franchisee, as the case may be, is capable of being identified by the public as being substantially associated with a trade or service mark, logo, symbol or name identifying, commonly connected with or controlled by the franchisor or a person associated with the franchisor;
(c) the franchisor exerts, or has authority to exert, a significant degree of control over the method or manner of operation of the franchisee’s business;
(d) the franchisee or a person associated with the franchisee is required under the agreement or arrangement to make payment or give some other form of consideration to the franchisor or a person associated with the franchisor; and
(e) the franchisor agrees to communicate to the franchisee, or a person associated with the franchisee, knowledge, experience, expertise, know-how, trade secrets or other information whether or not it is proprietary or confidential;
"fund management" has the meaning given to it in the Second Schedule;
"futures contract" means —
(a) for the purposes of Part I of the First Schedule —
(i) a contract the effect of which is that —
(A) one party agrees to deliver a specified commodity, or a specified quantity of a specified commodity, to another party at a specified future time and at a specified price payable at that time; or
(B) the parties will discharge their obligations under the contract by settling the difference between the value of a specified quantity of a specified commodity agreed at the time of the making of the contract and at a specified future time,
and includes a futures option transaction; or
(ii) such other contract or class of contracts as the Authority may prescribe;
(b) for the purposes of any other provision in this Act —
(i) a contract the effect of which is that —
(A) one party agrees to deliver a specified commodity, or a specified quantity of a specified commodity, to another party at a specified future time and at a specified price payable at that time pursuant to the terms and conditions set out in the business rules of a futures market or pursuant to the business practices of a futures market; or
(B) the parties will discharge their obligations under the contract by settling the difference between the value of a specified quantity of a specified commodity agreed at the time of the making of the contract and at a specified future time, such difference being determined in accordance with the business rules or practices of the futures market at which the contract is made,
and includes a futures option transaction; or
(ii) such other contract or class of contracts as the Authority may prescribe;
"futures exchange" means an approved exchange in respect of the operation of its futures market;
"futures market" has the meaning given to it in Part I of the First Schedule;
"futures option transaction" means an option on a specified futures contract which is transacted in accordance with the business rules or practices of a futures exchange, recognised market operator or futures market on which the transaction is made;
"holding company" has the same meaning as in section 5 (4) of the Companies Act (Cap. 50);
"leveraged foreign exchange trading" has the meaning given to it in the Second Schedule;
"licence" means a capital markets services licence or representative’s licence;
"licensed person" means a corporation or an individual holding a licence granted under this Act;
"limited liability partnership" has the same meaning as in section 2 (1) of the Limited Liability Partnerships Act 2005 (Act 5 of 2005);
"listing rules" , in relation to a corporation that establishes or operates, or proposes to establish or operate, a securities market of a securities exchange or a recognised market operator, or an overseas securities exchange that establishes or operates or proposes to establish or operate a securities market of a recognised market operator, means rules governing or relating to —
(a) the admission to the official list of the corporation or overseas securities exchange, of corporations, governments, bodies unincorporate or other persons for the purpose of the quotation on the securities market of the corporation or overseas securities exchange of securities issued, or made available by such corporations, governments, bodies unincorporate or other persons, or the removal from that official list and for other purposes; or
(b) the activities or conduct of corporations, governments, bodies unincorporate and other persons who are admitted to that list,
whether those rules are made —
(i) by the corporation or overseas securities exchange or are contained in any of the constituent documents of the corporation or overseas securities exchange; or
(ii) by another person and adopted by the corporation or overseas securities exchange;
"manager" , in relation to a collective investment scheme, means a person, by whatever name called, who is responsible for managing the property of, or operating, the collective investment scheme;
"market" has the meaning given to it in Part I of the First Schedule;
"member" , in relation to an approved exchange, a recognised market operator or a designated clearing house, means a person who holds membership of any class or description in the approved exchange, recognised market operator or designated clearing house, whether or not he holds any share in the share capital of the approved exchange, recognised market operator or designated clearing house, as the case may be;
"newspaper" has the same meaning as in section 2 of the Newspaper and Printing Presses Act (Cap. 206);
"officer" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50);
"overseas futures exchange" means a person operating a futures market outside Singapore which is regulated by a financial services regulatory authority of a country or territory other than Singapore;
"overseas securities exchange" means a person operating a securities market outside Singapore which is regulated by a financial services regulatory authority of a country or territory other than Singapore;
"participant" means —
(a) for the purposes of Part II, a person who may participate in one or more of the services provided by an approved exchange, a recognised market operator or an exempt market operator, in its capacity as an approved exchange, a recognised market operator or an exempt market operator, respectively;
(b) for the purposes of Part III, a person who, under the business rules of a designated clearing house, may participate in one or more of the services provided by the designated clearing house in its capacity as a designated clearing house; or
(c) for the purposes of any other provision of this Act, a person who participates in a collective investment scheme by way of owning one or more units in a collective investment scheme;
“partner” and “manager”, in relation to a limited liability partnership, have the respective meanings assigned to them in section 2 (1) of the Limited Liability Partnerships Act 2005 (Act 5 of 2005);
"prescribed written law" means this Act or any of the following written laws:
(a) Banking Act (Cap. 19);
(b) Finance Companies Act (Cap. 108);
(c) Financial Advisers Act (Cap. 110);
(d) Insurance Act (Cap. 142);
(e) Monetary Authority of Singapore Act (Cap. 186);
(f) Money-changing and Remittance Businesses Act (Cap. 187); or
(g) such other written law as the Authority may by order prescribe;
"principal" , in relation to a representative, means a person whom the representative is in the direct employment of, acting for or by arrangement with, and for whom the representative carries out any regulated activity;
"providing custodial services for securities" has the meaning given to it in the Second Schedule;
"public company" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50);
"quote" , in relation to securities and a securities market of an approved exchange or of a recognised market operator, means to display or provide, on the securities market of the approved exchange or recognised market operator, information concerning the particular prices or particular consideration at which offers or invitations to sell, purchase or exchange issued or prescribed securities are made on that securities market, being offers or invitations that are intended or may reasonably be expected, to result, directly or indirectly, in the making or acceptance of offers to sell, purchase or exchange issued or prescribed securities;
"recognised market operator" means a corporation that is recognised by the Authority under section 8 (2) as a recognised market operator;
"record" means information that is inscribed, stored or otherwise fixed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;
"registered business trust" has the same meaning as in section 2 of the Business Trusts Act (Cap. 31A);
"regulated activity" means an activity specified in the Second Schedule;
"related corporation" has the same meaning as in section 4 (1) of the Companies Act;
"representative" , except for the purposes of Part XIII, means a person, by whatever name called, in the direct employment of, or acting for, or by arrangement with, a person who carries on business in any regulated activity, who carries out for that person any such activity (other than work ordinarily performed by accountants, clerks or cashiers), whether or not he is remunerated, and whether his remuneration, if any, is by way of salary, wages, commission or otherwise; and includes any officer of a corporation who performs for the corporation any such activity whether or not he is remunerated, and whether his remuneration, if any, is by way of salary, wages, commission or otherwise;
"representative’s licence" means a licence that is granted by the Authority under section 87 or a temporary representative’s licence that is granted by the Authority under section 87A;
"responsible person" , in relation to a collective investment scheme, means —
(a) in the case of a scheme which is constituted as a corporation, the corporation; or
(b) in the case of a scheme which is not constituted as a corporation, the manager for the scheme;
"securities" means —
(a) debentures or stocks issued or proposed to be issued by a government;
(b) debentures, stocks or shares issued or proposed to be issued by a corporation or body unincorporate;
(c) any right, option or derivative in respect of any such debentures, stocks or shares;
(d) any right under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —
(i) the value or price of any such debentures, stocks or shares;
(ii) the value or price of any group of any such debentures, stocks or shares; or
(iii) an index of any such debentures, stocks or shares;
(e) any unit in a collective investment scheme;
(f) any unit in a business trust; or
(g) any derivative of a unit in a business trust,
but does not include —
(i) futures contracts which are traded on a futures market;
(ii) bills of exchange;
(iii) promissory notes; or
(iv) certificates of deposit issued by a bank or finance company whether situated in Singapore or elsewhere;
"securities exchange" means an approved exchange in respect of the operation of its securities market;
"securities financing" has the meaning given to it in the Second Schedule;
"Securities Industry Council" means the Securities Industry Council referred to in section 138;
"securities market" has the meaning given to it in Part I of the First Schedule;
"share" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50);
"subsidiary" has the same meaning as in section 5 of the Companies Act;
"substantial shareholder" has the same meaning as in Division 4 of Part IV of the Companies Act;
"substantial shareholding" has the same meaning as in Division 4 of Part IV of the Companies Act;
"substantial unitholder" , in relation to a collective investment scheme, means a participant who has an interest or interests in units in the scheme representing not less than 5% of the total voting rights of all the participants of the scheme;
"Take-over Code" means the Singapore Code on Take-overs and Mergers referred to in section 139 which is issued by the Authority under section 321 (1);
"take-over offer" means —
(a) an offer for the acquisition by or on behalf of a person of —
(i) in the case of a public company, or of a corporation all or any of the shares of which are listed for quotation on a securities exchange —
(A) some or all of the shares, or some or all of the shares of a particular class, in the company or corporation made to all members of the company or corporation, or where the person already holds shares in the company or corporation, made to all other members of the company or corporation; or
(B) all of the remaining shares in the company or corporation made to all other members of the company or corporation as a result of the person acquiring or consolidating effective control of that company or corporation within the meaning of the Take-over Code; or
(ii) in the case of a registered business trust, or of a business trust all or any of the units of which are listed for quotation on a securities exchange —
(A) some or all of the units, or some or all of the units of a particular class, in the business trust made to all unitholders of the business trust, or where the person already holds units in the business trust, made to all other unitholders of the business trust; or
(B) all of the remaining units in the business trust made to all other unitholders of the business trust as a result of the person acquiring or consolidating effective control of that business trust within the meaning of the Take-over Code; or
(b) a proposed compromise or arrangement which —
(i) in the case of a public company, is referred to in section 210 of the Companies Act (Cap. 50); or
(ii) in the case of a corporation all or any of the shares of which are listed for quotation on a securities exchange, complies with the laws, codes and other requirements (whether or not having the force of law) relating to take-overs, compromises and arrangements of the country or territory in which that corporation was incorporated,
and which, if executed, would result in a change in effective control of the public company or corporation within the meaning of the Take-over Code;
"trading in futures contracts" has the meaning given to it in the Second Schedule;
"transaction information" means information relating to —
(a) offers or invitations to purchase, sell, or exchange securities or futures contracts;
(b) executed transactions in securities or futures contracts; or
(c) transactions cleared or settled by a designated clearing house;
"unit" —
(a) in relation to a collective investment scheme, means a right or interest (however described) in a collective investment scheme (whether or not constituted as an entity), and includes an option to acquire any such right or interest in the collective investment scheme; and
(b) in relation to a business trust, has the same meaning as in section 2 of the Business Trusts Act (Cap. 31A);
"unitholder" , in relation to a business trust, has the same meaning as in section 2 of the Business Trusts Act;
"user" , in relation to an approved exchange or a designated clearing house, means a person who is —
(a) a member; or
(b) a customer of a member,
of the approved exchange or designated clearing house;
"user information" means transaction information that is referable to —
(a) a named user; or
(b) a group of users, from which the name of a user can be directly inferred;
"voting share" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50).
[16/2003; 5/2004;31/2004;1/2005;5/2005]
(2) Any reference in this Act to the affairs of a corporation shall, unless the contrary intention appears, be construed as including a reference to —
(a) the promotion, formation, membership, control, business, trading, transactions and dealings (whether alone or jointly with another person or other persons and including transactions and dealings as agent, bailee or trustee), property (whether held alone or jointly with another person or other persons and including property held as agent, bailee or trustee), liabilities (including liabilities owned jointly with another person or other persons and liabilities as trustee), profits and other income, receipts, losses, outgoings and expenditure of the corporation;
(b) in the case of a corporation (not being a trustee corporation) that is a trustee (but without limiting the generality of paragraph (a)), matters concerned with the ascertainment of the identity of the persons who are beneficiaries under the trust, their rights under the trust and any payments that they have received, or are entitled to receive, under the terms of the trust;
(c) the internal management and proceeding of the corporation;
(d) any act or thing done (including any contract made and any transaction entered into) by or on behalf of the corporation, or to or in relation to the corporation or its business or property, at a time when —
(i) a receiver, or a receiver and manager, is in possession of, or has control over, property of the corporation;
(ii) the corporation is under judicial management;
(iii) a compromise or arrangement referred to in section 210 of the Companies Act made between the corporation and another person or other persons is being administered; or
(iv) the corporation is being wound up,
and without limiting the generality of sub-paragraphs (i) to (iv), any conduct of such a receiver or such a receiver and manager, or such a judicial manager, or any person administering such a compromise or arrangement or of any liquidator or provisional liquidator of the corporation;
(e) the ownership of shares in, debentures of, units of shares in, units of debentures of, and units in a collective investment scheme issued by the corporation;
(f) the power of persons to exercise, or to control the exercise of, the rights to vote attached to shares in the corporation or to dispose of, or to exercise control over the disposal of, such shares;
(g) matters concerned with the ascertainment of the persons who are or have been financially interested in the success or failure, or apparent success or failure, of the corporation or are or have been able to control or materially to influence the policy of the corporation;
(h) the circumstances under which a person acquired or disposed of, or became entitled to acquire or dispose of, shares in, debentures of, units of shares in, units of debentures of, or units in a collective investment scheme issued by, the corporation;
(i) where the corporation has issued units in a collective investment scheme, any matters concerning the financial or business undertaking, scheme, common enterprise or investment contract to which the units in a collective investment scheme relate; or
(j) matters relating to or arising out of the audit of, or working papers or reports of an auditor concerning, any matters referred to in paragraphs (a) to (i).
(3) Where the name of a corporation referred to in this Act is changed pursuant to the Companies Act (Cap. 50), the change of name shall not affect the identity of that corporation or the application of the relevant provisions of this Act or any other written law to that corporation.
[SIA, s. 2; FTA, s. 2; Companies, s. 4 & s. 107; UK FSMA 2000, s. 235; Aust. Corporations 2001, s. 9]
Associated person
3. —(1) Unless the context otherwise requires, any reference in this Act to a person associated with another person shall be construed as a reference to —
(a) where the other person is a corporation —
(i) a director or secretary of the corporation;
(ii) a related corporation; or
(iii) a director or secretary of such a related corporation;
(b) where the matter to which the reference relates is the extent of a power to exercise, or to control the exercise of, the voting power attached to voting shares in a corporation, a person with whom the other person has, or proposes to enter into, an agreement, arrangement, understanding or undertaking, whether formal or informal, or express or implied —
(i) by reason of which either of those persons may exercise, directly or indirectly, control the exercise of, or substantially influence the exercise of, any voting power attached to a share in the corporation;
(ii) with a view to controlling or influencing the composition of the board of directors, or the conduct of affairs, of the corporation; or
(iii) under which either of those persons may acquire from the other of them shares in the corporation or may be required to dispose of such shares in accordance with the directions of the other of them,
except that, in relation to a matter relating to shares in a corporation, a person may be an associate of the corporation and the corporation may be an associate of a person;
(c) a person with whom the other person is acting, or proposes to act, in concert in relation to the matter to which the reference relates;
(d) where the matter to which the reference relates is a matter, other than the extent of a power to exercise, or to control the exercise of, the voting power attached to voting shares in a corporation —
(i) subject to subsection (2), a person who is a director of a corporation of which the other person is a director; or
(ii) a trustee of a trust in relation to which the other person benefits or is capable of benefiting otherwise than by reason of transactions entered into in the ordinary course of business in connection with the lending of money;
(e) a person with whom the other person is, according to any subsidiary legislation made under this Act, to be regarded as associated in respect of the matter to which the reference relates;
(f) a person with whom the other person is, or proposes to become, associated, whether formally or informally, in any other way in respect of the matter to which the reference relates; or
(g) where the other person has entered into, or proposes to enter into, a transaction, or has done, or proposes to do, any other act or thing, with a view to becoming associated with a person as referred to in paragraph (a), (b), (c), (d), (e) or (f), that last-mentioned person.
(2) Where, in any proceedings under this Act, it is alleged that a person referred to in subsection (1) (d) (i) was associated with another person at a particular time, that the first-mentioned person shall not be considered to be so associated in relation to a matter to which the proceedings relate unless the person alleging the association proves that the first-mentioned person at that time knew or ought reasonably to have known the material particulars of that matter.
(3) A person shall not be taken to be associated with another person by virtue of subsection (1) (b), (c), (e) or (f) by reason only of one or more of the following:
(a) that one of those persons furnishes advice to, or acts on behalf of, the other person in the proper performance of the functions attaching to his professional capacity or to his business relationship with the other person;
(b) that one of those persons, a customer, gives specific instructions to the other, whose ordinary business includes dealing in securities, trading in futures contracts or leveraged foreign exchange trading, to acquire shares on the customer’s behalf in the ordinary course of that business;
(c) that one of those persons has sent, or proposes to send, to the other a take-over offer, or has made, or proposes to make, offers under a take-over announcement, within the meaning of the Take-over Code, in relation to shares held by the other;
(d) that one of those persons has appointed the other, otherwise than for valuable consideration given by the other or by an associate of the other, to vote as a proxy or representative at a meeting of members, or of a class of members, of a corporation.
[SIA, s. 3; Aust. Corporations, s. 12 (2) and s. 16 (1)]
Interest in securities
4. —(1) Subject to this section, a person has an interest in securities if he has authority (whether formal or informal, or express or implied) to dispose of, or to exercise control over the disposal of, those securities.
(2) For the purposes of subsection (1), it is immaterial that the authority of a person to dispose of, or to exercise control over the disposal of, particular securities is, or is capable of being made, subject to restraint or restriction.
(3) Where any property held in trust consists of or includes securities and a person knows, or has reasonable grounds for believing, that he has an interest under the trust, he shall be deemed to have an interest in those securities.
(4) Where a corporation has, or is by the provisions of this section deemed to have, an interest in a security and —
(a) the corporation is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of a person; or
(b) a person has a controlling interest in the corporation,
that person shall be deemed to have an interest in that security.
(5) Where a corporation has, or is by the provisions of this section (apart from this subsection) deemed to have, an interest in a security and —
(a) a person is;
(b) the associates of a person are; or
(c) a person and his associates are,
entitled to exercise or control the exercise of not less than 20% of the votes attached to the voting shares in the corporation, that person shall be deemed to have an interest in that security.
(6) For the purposes of subsection (5), a person is an associate of another person if the first-mentioned person is —
(a) a related corporation of the second-mentioned person;
(b) a person in accordance with whose directions, instructions or wishes that the second-mentioned person is accustomed or is under an obligation, whether formal or informal, to act in relation to the security referred to in subsection (4);
(c) a person who is accustomed or is under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the second-mentioned person in relation to that security;
(d) a corporation which is, or the directors of which are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the second-mentioned person in relation to that security; or
(e) a corporation in accordance with the directions, instructions or wishes of which, or of the directors of which, the second-mentioned person is accustomed or under an obligation, whether formal or informal, to act in relation to that security.
(7) A person shall be deemed to have an interest in a security in any one or more of the following circumstances:
(a) where he has entered into a contract to purchase a security;
(b) where he has a right, otherwise than by reason of having an interest under a trust, to have a security transferred to himself or to his order, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not;
(c) where he has the right to acquire a security or an interest in a security, under an option, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not; or
(d) where he is entitled, otherwise than by reason of his having been appointed a proxy or representative to vote at a meeting of members of a corporation or of a class of its members, to exercise or control the exercise of a right attached to a security, not being a security of which he is the registered holder.
(8) A person shall be deemed to have an interest in a security if that security is held jointly with another person.
(9) For the purpose of determining whether a person has an interest in a security, it is immaterial that the interest cannot be related to a particular security.
(10) There shall be disregarded —
(a) an interest in a security if the interest is that of a person who holds the security as bare trustee;
(b) an interest in a security if the interest is that of a person whose ordinary business includes the lending of money if he holds the interest only by way of security for the purposes of a transaction entered into in the ordinary course of business in connection with the lending of money;
(c) an interest of a person in a security if that interest is an interest held by him by reason of his holding a prescribed office;
(d) an interest of a company in its own securities if that interest is purchased or otherwise acquired in accordance with sections 76B to 76G of the Companies Act (Cap. 50); and
(e) a prescribed interest in a security being an interest of such person, or of the persons included in such class of persons, as may be prescribed.
(11) An interest in a security shall not be disregarded by reason only of —
(a) its remoteness;
(b) the manner in which it arose; or
(c) the fact that the exercise of a right conferred by the interest is, or is capable of being made subject to restraint or restriction.
[SIA, s. 4; Companies, s. 7 (4A); HK Securities Ordinance, s. 5]
Specific classes of investors
4A. —(1) Subject to subsection (2), unless the context otherwise requires —
(a) “accredited investor” means —
(i) an individual —
(A) whose net personal assets exceed in value $2 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount; or
(B) whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;
(ii) a corporation with net assets exceeding $10 million in value (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe, in place of the first amount, as determined by —
(A) the most recent audited balance-sheet of the corporation; or
(B) where the corporation is not required to prepare audited accounts regularly, a balance-sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance-sheet, which date shall be within the preceding 12 months;
(iii) the trustee of such trust as the Authority may prescribe, when acting in that capacity; or
(iv) such other person as the Authority may prescribe;
(b) “expert investor” means —
(i) a person whose business involves the acquisition and disposal, or the holding, of capital markets products, whether as principal or agent;
(ii) the trustee of such trust as the Authority may prescribe, when acting in that capacity; or
(iii) such other person as the Authority may prescribe;
(c) “institutional investor” means —
(i) a bank that is licensed under the Banking Act (Cap. 19);
(ii) a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act (Cap. 186);
(iii) a finance company that is licensed under the Finance Companies Act (Cap. 108);
(iv) a company or society registered under the Insurance Act (Cap. 142) as an insurer;
(v) a company licensed under the Trust Companies Act 2005 (Act 11 of 2005);
(vi) the Government;
(vii) a statutory body established under any Act;
(viii) a pension fund or collective investment scheme;
(ix) the holder of a capital markets services licence for —
(A) dealing in securities;
(B) fund management;
(C) providing custodial services for securities;
(D) securities financing; or
(E) trading in futures contracts;
(x) a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors;
(xi) the trustee of such trust as the Authority may prescribe, when acting in that capacity; or
(xii) such other person as the Authority may prescribe.
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(2) The definitions in subsection (1) may be subject to such modifications as the Authority may prescribe for any specified provision of this Act.
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PART II
MARKETS
Objectives of this Part
5. The objectives of this Part are —
(a) to promote fair, orderly and transparent markets;
(b) to facilitate efficient markets for the allocation of capital and the transfer of risks; and
(c) to reduce systemic risk.
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Division 1 — Establishment of Markets
Requirement for approval or recognition
6. —(1) No person shall establish or operate a market, or hold himself out as operating a market, unless the person is —
(a) an approved exchange; or
(b) a recognised market operator.
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(2) No person shall hold himself out —
(a) as an approved exchange unless he is an approved exchange; or
(b) as a recognised market operator unless he is a recognised market operator.
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(3) Except with the written approval of the Authority, no person other than an approved exchange shall take or use, or have attached to or exhibited at any place —
(a) the title or description “securities exchange”, “stock exchange”, “futures exchange” or “derivatives exchange” in any language; or
(b) any title or description which resembles a title or description referred to in paragraph (a).
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(4) Any person who contravenes subsection (1) or (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction.
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(5) Any person who contravenes subsection (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $20,000 and, in the case of a continuing offence, to a further fine not exceeding $2,000 for every day or part thereof during which the offence continues after conviction.
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Subdivision (1) — Approved exchange and recognised market operator
Application for approval or recognition
7. —(1) A corporation may apply to the Authority to be —
(a) approved as an approved exchange; or
(b) recognised as a recognised market operator.
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(2) An application made under subsection (1) shall be —
(a) made in such form and manner as the Authority may prescribe; and
(b) accompanied by a non-refundable prescribed application fee, which shall be paid in the manner specified by the Authority.
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(3) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application.
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Power of Authority to approve exchanges and recognise market operators
8. —(1) Where —
(a) a corporation has made an application under section 7 (1) (a);
(b) a corporation which is a recognised market operator has made an application under section 11 (1) to change its status to that of an approved exchange; or
(c) the Authority has conducted a review under section 11 (5) and has determined that a corporation would be more appropriately regulated as an approved exchange,
the Authority may approve the corporation as an approved exchange.
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(2) Where —
(a) a corporation has made an application under section 7 (1) (b);
(b) a corporation which is an approved exchange has made an application under section 11 (1) to change its status to that of a recognised market operator; or
(c) the Authority has conducted a review under section 11 (5) and has determined that a corporation would be more appropriately regulated as a recognised market operator,
the Authority may recognise the corporation as a recognised market operator.
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(3) Notwithstanding subsections (1) and (2), the Authority may, with the consent of the applicant —
(a) treat an application under section 7 (1) (a) as an application under section 7 (1) (b) if it is of the opinion that the applicant would be more appropriately regulated as a recognised market operator; or
(b) treat an application under section 7 (1) (b) as an application under section 7 (1) (a) if it is of the opinion that the applicant would be more appropriately regulated as an approved exchange.
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(4) The Authority may approve a corporation as an approved exchange under subsection (1) or recognise a corporation as a recognised market operator under subsection (2) subject to such conditions or restrictions as the Authority may think fit to impose by notice in writing, including conditions or restrictions relating to —
(a) the activities that the corporation may undertake;
(b) the securities or futures contracts that may be traded on any market established or operated by the corporation; and
(c) the nature of the investors or participants who may use, invest in or participate in the securities or futures contracts traded on any market established or operated by the corporation.
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(5) The Authority may, at any time, by notice in writing to the corporation, vary any condition or restriction or impose such further condition or restriction as it may think fit.
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(6) An approved exchange or a recognised market operator shall, for the duration of the approval or recognition, satisfy all conditions and restrictions that may be imposed on it under subsections (4) and (5).
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(7) The Authority may refuse to approve a corporation as an approved exchange or recognise a corporation as a recognised market operator if —
(a) the corporation has not provided the Authority with such information relating to —
(i) the corporation or any person employed by or associated with the corporation for the purposes of the corporation’s business; or
(ii) any circumstances likely to affect the corporation’s manner of conducting business,
as the Authority may require;
(b) any information or document provided by the corporation to the Authority is false or misleading;
(c) the corporation or a substantial shareholder of the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(d) execution against the corporation or a substantial shareholder of the corporation in respect of a judgment debt has been returned unsatisfied in whole or in part;
(e) a receiver, a receiver and manager, a judicial manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the corporation or a substantial shareholder of the corporation;
(f) the corporation or a substantial shareholder of the corporation has, whether in Singapore or elsewhere, entered into a compromise or scheme of arrangement with the creditors of the corporation or shareholder, as the case may be, being a compromise or scheme of arrangement that is still in operation;
(g) the corporation, a substantial shareholder of the corporation or any officer of the corporation —
(i) has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that the corporation, shareholder or officer, as the case may be, had acted fraudulently or dishonestly; or
(ii) has been convicted of an offence under this Act;
(h) the Authority is not satisfied as to the educational or other qualifications or experience of the officers or employees of the corporation, having regard to the nature of the duties they are to perform in connection with the establishment or operation of any market;
(i) the corporation fails to satisfy the Authority that the corporation is a fit and proper person or that all of its officers, employees and substantial shareholders are fit and proper persons;
(j) the Authority has reason to believe that the corporation may not be able to act in the best interests of investors or its members, participants or customers, having regard to the reputation, character, financial integrity and reliability of the corporation or its officers, employees or substantial shareholders;
(k) the Authority is not satisfied as to —
(i) the financial standing of the corporation or any of its substantial shareholders; or
(ii) the manner in which the business of the corporation is to be conducted;
(l) the Authority is not satisfied as to the record of past performance or expertise of the corporation, having regard to the nature of the business which the corporation may carry on in connection with the establishment or operation of any market;
(m) there are other circumstances which are likely to —
(i) lead to the improper conduct of business by the corporation or any of its officers, employees or substantial shareholders; or
(ii) reflect discredit on the manner of conducting the business of the corporation or any of its substantial shareholders;
(n) in the case of any market that the corporation operates, the Authority has reason to believe that the corporation, or any of its officers or employees, will not operate a fair, orderly and transparent market;
(o) the corporation does not satisfy the criteria prescribed under section 9 to be approved as an approved exchange or recognised as a recognised market operator, as the case may be; or
(p) the Authority is of the opinion that it would be contrary to the interests of the public to approve or recognise the corporation.
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(8) Subject to subsection (9), the Authority shall not refuse to approve a corporation as an approved exchange or recognise a corporation as a recognised market operator under subsection (7) without giving the corporation an opportunity to be heard.
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(9) The Authority may refuse to approve a corporation as an approved exchange or recognise a corporation as a recognised market operator on any of the following grounds without giving the corporation an opportunity to be heard:
(a) the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(b) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the corporation;
(c) the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly.
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(10) The Authority shall give notice in the Gazette of any corporation approved as an approved exchange under subsection (1) or recognised as a recognised market operator under subsection (2), and such notice may include the conditions or restrictions imposed by the Authority on the corporation under subsection (4) (b) in relation to the securities or futures contracts that may be traded on any market established or operated by the corporation.
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(11) Any applicant who is aggrieved by a refusal of the Authority to grant an approval under subsection (1) or a recognition under subsection (2) may, within 30 days after the applicant is notified of the decision, appeal to the Minister whose decision shall be final.
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(12) Any approved exchange or recognised market operator which contravenes subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
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[SIA, s. 16; FTA, s. 4; UK FSMA 2000, s. 289 (1) & (2)]
General criteria to be taken into account by Authority
9. —(1) The Authority may prescribe the criteria which it may take into account for the purposes of deciding —
(a) whether an applicant referred to in section 7 (1) or 11 (1) should be approved as an approved exchange or recognised as a recognised market operator;
(b) whether an approved exchange or a recognised market operator that is subject to a review by the Authority under section 11 (5) should be approved as an approved exchange or recognised as a recognised market operator; and
(c) the conditions or restrictions that the Authority may impose under section 8 (4) or (5).
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(2) Without prejudice to section 8 and subsection (1), the Authority may, for the purposes of recognising an operator of an overseas market as a recognised market operator under section 8 (2), have regard, in addition to any criteria prescribed under subsection (1), to —
(a) whether adequate arrangements exist for co-operation between the Authority and the financial services regulatory authority responsible for the supervision of the operator in the country or territory in which the head office or principal place of business of the operator is situated; and
(b) whether the operator is, in the country or territory in which the head office or principal place of business of the operator is situated, subject to requirements and supervision comparable, in the degree to which the objectives specified in section 5 are achieved, to the requirements and supervision to which approved exchanges and recognised market operators are subject under this Act.
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(3) In considering whether it is satisfied that the operator of an overseas market has met the requirements mentioned in subsection (2), the Authority may have regard to —
(a) the relevant laws and practices of the country or territory in which the head office or principal place of business of the operator is situated; and
(b) the rules and practices of the operator.
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(4) In this section, “operator of an overseas market” means a person whose head office is situated in a country or territory outside Singapore, and who is authorised to operate a market by a financial services regulatory authority of —
(a) that country or territory; or
(b) the country or territory in which the principal place of business of that person is situated.
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Annual fees payable by approved exchange and recognised market operator
10. —(1) Every approved exchange and recognised market operator shall pay to the Authority such annual fees as may be prescribed in such manner as may be specified by the Authority.
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(2) The Authority may, where it considers appropriate, refund or remit the whole or any part of any annual fee paid or payable to it.
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Change in status
11. —(1) A corporation which is an approved exchange or a recognised market operator may apply to the Authority to change its status in the manner referred to in subsection (6).
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(2) An application under subsection (1) shall be made in such form and manner as the Authority may prescribe.
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(3) An application made under subsection (1) shall be accompanied by a non-refundable prescribed application fee, which shall be paid in the manner specified by the Authority.
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(4) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application.
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(5) The Authority may, from time to time, on its own initiative, review the status of a corporation that is an approved exchange or a recognised market operator under this Part in accordance with the criteria prescribed under section 9.
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(6) Where an application is made by a corporation under subsection (1) or where a review of the status of a corporation is conducted by the Authority under subsection (5), the Authority may —
(a) where the corporation is an approved exchange, withdraw the approval as such and recognise the corporation as a recognised market operator under section 8 (2);
(b) where the corporation is a recognised market operator, withdraw the recognition as such and approve the corporation as an approved exchange under section 8 (1); or
(c) make no change to the status of the corporation as an approved exchange or a recognised market operator.
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(7) Where an application is made under subsection (1), the Authority shall not exercise its power under subsection (6) (c) without giving the corporation an opportunity to be heard.
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(8) Where a review of the status of a corporation is conducted by the Authority on its own initiative under subsection (5), the Authority shall not exercise its powers under subsection (6) (a) or (b) without giving the corporation an opportunity to be heard.
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(9) Any corporation which is aggrieved by a decision of the Authority made in relation to the corporation after a review under subsection (5) may, within 30 days after the corporation is notified of the decision, appeal to the Minister whose decision shall be final.
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Cancellation of approval or recognition
12. —(1) An approved exchange or a recognised market operator which intends to cease operating its market or, where it operates more than one market, all of its markets, may apply to the Authority to cancel its approval as an approved exchange or recognition as a recognised market operator, as the case may be.
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(2) The Authority may cancel the approval or recognition if it is satisfied that the approved exchange or recognised market operator referred to in subsection (1) has ceased operating its market or all of its markets, as the case may be.
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[FTA, s. 7]
Power of Authority to revoke approval and recognition
13. —(1) The Authority may revoke any approval of a corporation as an approved exchange under section 8 (1) or any recognition of a corporation as a recognised market operator under section 8 (2) if —
(a) there exists a ground under section 8 (7) on which the Authority may refuse an application;
(b) the corporation does not commence operating its market or, where it operates more than one market, all of its markets, within 12 months from the date on which it was granted the approval under section 8 (1) or recognition under section 8 (2), as the case may be;
(c) the corporation ceases to operate its market or, where it operates more than one market, all of its markets;
(d) the corporation contravenes —
(i) any condition or restriction applicable in respect of its approval or recognition, as the case may be;
(ii) any direction issued to it by the Authority under this Act; or
(iii) any provision in this Act;
(e) the corporation operates in a manner that is, in the opinion of the Authority, contrary to the interests of the public; or
(f) any information or document provided by the corporation to the Authority is false or misleading.
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(2) Subject to subsection (3), the Authority shall not revoke under subsection (1) any approval under section 8 (1) or recognition under section 8 (2) that was granted to a corporation without giving the corporation an opportunity to be heard.
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(3) The Authority may revoke an approval under section 8 (1) or a recognition under section 8 (2) that was granted to a corporation on any of the following grounds without giving the corporation an opportunity to be heard:
(a) the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(b) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the corporation;
(c) the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly.
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(4) For the purposes of subsection (1) (c), a corporation shall be deemed to have ceased to operate its market if —
(a) it has ceased to operate the market for more than 30 days, unless it has obtained the prior approval of the Authority to do so; or
(b) it has ceased to operate the market under a direction issued by the Authority under section 46.
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(5) Any corporation which is aggrieved by a decision of the Authority made in relation to the corporation under subsection (1) may, within 30 days after the corporation is notified of the decision, appeal to the Minister whose decision shall be final.
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(6) Notwithstanding the lodging of an appeal under subsection (5), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister.
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(7) The Minister may, when deciding an appeal under subsection (5), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the decision of the Minister.
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(8) Any revocation of approval or recognition of a corporation referred to in subsection (1) shall not operate so as to —
(a) avoid or affect any agreement, transaction or arrangement entered into on a market operated by the corporation, whether the agreement, transaction or arrangement was entered into before or after the revocation of the approval or recognition; or
(b) affect any right, obligation or liability arising under such agreement, transaction or arrangement.
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(9) The Authority shall give notice in the Gazette of any revocation of approval or recognition referred to in subsection (1).
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[UK FSMA, s. 297; FTA, s. 7]
Subdivision (2) — Exempt market operator
Power of Authority to exempt corporations from approval or recognition
14. —(1) A corporation that wishes to establish or operate a market may apply to the Authority, in such form and manner as the Authority may prescribe, to be exempted from the requirement under section 6 (1) to be an approved exchange or a recognised market operator.
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(2) The Authority may exempt a corporation referred to in subsection (1) from the requirement under section 6 (1) if, in the opinion of the Authority, the objectives specified in section 5 can be achieved without regulating the corporation as an approved exchange or a recognised market operator.
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(3) An application made under subsection (1) shall be accompanied by a non-refundable prescribed application fee, which shall be paid in the manner specified by the Authority.
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(4) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application.
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(5) The Authority may, by notice in writing, impose on a corporation exempted under subsection (2) such conditions or restrictions relating to the exemption as the Authority may think fit, including conditions or restrictions relating to —
(a) the activities that the corporation may undertake;
(b) the securities or futures contracts that may be traded on any market established or operated by the corporation; and
(c) the nature of the investors or participants who may use, participate or invest in the securities or futures contracts traded on any market established or operated by the corporation.
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(6) The Authority may, at any time, by notice in writing to a corporation exempted under subsection (2), vary any condition or restriction referred to in subsection (5) or impose such further condition or restriction relating to the exemption as the Authority may think fit.
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(7) The Authority shall give notice in the Gazette of any corporation exempted under subsection (2), and such notice may include the conditions or restrictions imposed by the Authority on the corporation under subsection (5) (b) in relation to the securities or futures contracts that may be traded on any market established or operated by the corporation.
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(8) The Authority may —
(a) exempt any corporation operating any market from the requirement under section 6 (1) to be an approved exchange or a recognised market operator;
(b) by order published in the Gazette, declare that corporation to be an exempt market operator; and
(c) by notice in writing to that corporation, impose such conditions or restrictions relating to the exemption as the Authority may think fit.
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(9) The Authority may —
(a) exempt corporations operating any class of markets from the requirement under section 6 (1) to be approved exchanges or recognised market operators, subject to such conditions or restrictions as the Authority may think fit to impose by regulations; and
(b) by order published in the Gazette, declare such corporations to be exempt market operators.
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(10) An exempt market operator shall comply with all conditions or restrictions imposed on it under subsection (5), (6) or (8), as the case may be.
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(11) Any corporation which contravenes subsection (10) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Power of Authority to revoke exemption
15. —(1) The Authority may revoke any exemption granted to a corporation under section 14 (2), (8) or (9) if —
(a) the corporation does not commence operating its market or, where it operates more than one market, all of its markets, within 12 months from the date on which it was granted the exemption;
(b) the corporation ceases to operate its market or, where it operates more than one market, all of its markets;
(c) the corporation contravenes —
(i) any condition or restriction relating to the exemption;
(ii) any direction issued to it by the Authority under this Act; or
(iii) any provision in this Act;
(d) the Authority is of the opinion that the corporation has operated in a manner that is contrary to the interests of the public;
(e) the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(f) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the corporation;
(g) the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly;
(h) the Authority is of the opinion that the corporation would be more appropriately regulated as an approved exchange or a recognised market operator; or
(i) any information or document provided by the corporation to the Authority is false or misleading.
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(2) Subject to subsection (3), the Authority shall not revoke under subsection (1) any exemption granted to a corporation without giving the corporation an opportunity to be heard.
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(3) The Authority may revoke an exemption granted to a corporation on any of the following grounds without giving the corporation an opportunity to be heard:
(a) the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(b) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect, of any property of the corporation;
(c) the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly.
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(4) For the purposes of subsection (1) (b), a corporation shall be deemed to have ceased to operate its market if —
(a) it has ceased to operate the market for more than 30 days, unless it has obtained the prior approval of the Authority to do so; or
(b) it has ceased to operate the market under a direction issued by the Authority under section 46.
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(5) A corporation which is aggrieved by a decision of the Authority made in relation to the corporation under subsection (1) may, within 30 days after the corporation is notified of the decision, appeal to the Minister whose decision shall be final.
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(6) Notwithstanding the lodging of an appeal under subsection (5), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister.
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(7) The Minister may, when deciding an appeal under subsection (5), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the decision of the Minister.
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(8) Any revocation under subsection (1) of an exemption granted to a corporation shall not operate so as to —
(a) avoid or affect any agreement, transaction or arrangement entered into on a market operated by the corporation, whether the agreement, transaction or arrangement was entered into before or after the revocation of the exemption; or
(b) affect any right, obligation or liability arising under such agreement, transaction or arrangement.
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(9) The Authority shall give notice in the Gazette of any revocation of an exemption referred to in subsection (1).
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Division 2 — Regulation of Approved Exchanges
Subdivision (1) — Obligations of approved exchanges
General obligations
16. —(1) An approved exchange shall, in respect of every market it operates —
(a) as far as is reasonably practicable, ensure that the market is fair, orderly and transparent;
(b) manage any risks associated with its business and operations prudently;
(c) in discharging its obligations under this Act, not act contrary to the interests of the public, having particular regard to the interests of the investing public;
(d) ensure that access for participation in its facilities is subject to criteria that are fair and objective, and that are designed to ensure the orderly functioning of the market and to protect the interests of the investing public;
(e) maintain business rules and, where appropriate, listing rules that make satisfactory provision for —
(i) a fair, orderly and transparent market in securities or futures contracts that are traded through its facilities; and
(ii) the proper regulation and supervision of its members;
(f) enforce compliance with its business rules and, where appropriate, its listing rules;
(g) have sufficient financial, human and system resources —
(i) to operate a fair, orderly and transparent market;
(ii) to meet contingencies or disasters; and
(iii) to provide adequate security arrangements; and
(h) ensure that it appoints or employs fit and proper persons as its chairman, chief executive officer, directors and key management officers.
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(2) In subsection (1) (g), “contingencies or disasters” includes technical disruptions occurring within automated systems.
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Obligation to notify Authority of certain matters
17. —(1) An approved exchange shall, as soon as practicable after the occurrence of any of the following circumstances, notify the Authority of the circumstance:
(a) any material change to the information provided by the approved exchange in its application under section 7 (1) or 11 (1);
(b) the carrying on of any business by the approved exchange other than —
(i) the business of operating a market;
(ii) a business incidental to operating a market; or
(iii) such business or class of businesses as the Authority may prescribe;
(c) the acquisition by the approved exchange of a substantial shareholding in a corporation which does not carry on —
(i) the business of operating a market;
(ii) a business incidental to operating a market; or
(iii) such business or class of businesses as the Authority may prescribe;
(d) the approved exchange becoming aware of a financial irregularity or other matter which in its opinion —
(i) may affect its ability to discharge its financial obligations; or
(ii) may affect the ability of a member of the approved exchange to meet its financial obligations to the approved exchange;
(e) the approved exchange reprimanding, fining, suspending, expelling or otherwise taking disciplinary action against a member of the approved exchange;
(f) any other matter that the Authority may prescribe by regulations or specify by notice in writing to the approved exchange.
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(2) Without prejudice to the generality of section 46 (1), the Authority may, at any time after receiving a notification referred to in subsection (1), issue directions to the approved exchange —
(a) where the notification relates to a matter referred to in subsection (1) (b) —
(i) to cease carrying on the first-mentioned business referred to in subsection (1) (b); or
(ii) to carry on the first-mentioned business referred to in subsection (1) (b) subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 46 (1); or
(b) where the notification relates to a matter referred to in subsection (1) (c) —
(i) to dispose of the shareholding referred to in subsection (1) (c); or
(ii) to exercise its rights relating to such shareholding subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 46 (1),
and the approved exchange shall comply with such directions.
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Obligation to maintain proper records
18. An approved exchange shall maintain a record of all transactions effected through its facilities in such form and manner as the Authority may prescribe, including —
(a) the extent to which the record includes details of each transaction; and
(b) the period of time that the record is to be maintained.
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Obligation to submit periodic reports
19. An approved exchange shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe.
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Obligation to assist Authority
20. An approved exchange shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —
(a) such books and other information —
(i) relating to the business of the approved exchange; or
(ii) in respect of such dealings in securities or trading in futures contracts; and
(b) such other information,
as the Authority may require for the proper administration of this Act.
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Obligation to maintain confidentiality
21. —(1) Subject to subsection (2), an approved exchange and its officers and employees shall maintain, and aid in maintaining, the confidentiality of all user information that —
(a) comes to the knowledge of the approved exchange or any of its officers or employees; or
(b) is in the possession of the approved exchange or any of its officers or employees.
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(2) Subsection (1) shall not apply to —
(a) the disclosure of user information for such purposes, or in such circumstances, as the Authority may prescribe;
(b) any disclosure of user information which is authorised by the Authority to be disclosed or furnished; or
(c) the disclosure of user information pursuant to any requirement imposed under any written law or order of court in Singapore.
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(3) For the avoidance of doubt, nothing in this section shall be construed as preventing an approved exchange from entering into a written agreement with a user which obliges the approved exchange to maintain a higher degree of confidentiality than that specified in this section.
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Penalties under this Subdivision
22. Any approved exchange which contravenes section 16 (1), 17, 18, 19, 20 or 21 (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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Subdivision (2) — Rules of approved exchanges
Business rules and listing rules of approved exchanges
23. —(1) Without limiting the generality of sections 16 and 45 —
(a) the Authority may prescribe the matters that an approved exchange shall make provision for in the business rules or listing rules of the approved exchange; and
(b) the approved exchange shall make provision for those matters in its business rules or listing rules, as the case may be.
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(2) An approved exchange shall not make any amendment to its business rules or listing rules unless it complies with such requirements as the Authority may prescribe.
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(3) In this Subdivision, any reference to an amendment to a business rule or listing rule shall be construed as a reference to a change to the scope of, or to any requirement, obligation or restriction under, the business rule or listing rule, as the case may be, whether the change is made by an alteration to the text of the rule or by any other notice issued by or on behalf of the approved exchange.
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(4) Any approved exchange which contravenes subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Business rules of approved exchanges have effect as contract
24. —(1) The business rules of an approved exchange shall be deemed to be, and shall operate as, a binding contract —
(a) between the approved exchange and each member; and
(b) between each member and every other member.
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(2) The approved exchange and each member shall be deemed to have agreed to observe and perform the provisions of the business rules that are in force for the time being, so far as those provisions are applicable to the approved exchange or that member, as the case may be.
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[Aust. Corporations 2001, s. 772A]
Power of court to order observance or enforcement of business rules or listing rules
25. —(1) Where any person who is under an obligation to comply with, observe, enforce or give effect to the business rules or listing rules of an approved exchange fails to do so, the High Court may, on the application of the Authority, an approved exchange or a person aggrieved by the failure, and after giving the first-mentioned person an opportunity to be heard, make an order directing the first- mentioned person to comply with, observe, enforce or give effect to those business rules or listing rules.
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(2) A person against whom an order under subsection (1) may be made shall be —
(a) a corporation which —
(i) has been admitted to the official list of an approved exchange; and
(ii) has not been removed from that official list;
(b) a person associated with a corporation which —
(i) has been admitted to the official list of an approved exchange; and
(ii) has not been removed from that official list,
to the extent to which the business rules or listing rules purport to apply to him; or
(c) an approved exchange.
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(3) This section is in addition to, and not in derogation of, any other remedy available to an aggrieved person referred to in subsection (1).
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[SIA, s. 20; FTA, s. 10]
Non-compliance with business rules or listing rules not to substantially affect rights of person
26. Any failure by an approved exchange to comply with —
(a) this Act;
(b) its business rules; or
(c) where applicable, its listing rules,
in relation to a matter shall not prevent the matter from being treated, for the purposes of this Act, as done in accordance with the business rules or listing rules so long as the failure does not substantially affect the rights of any person entitled to require compliance with the business rules or listing rules.
[1/2005]
Subdivision (3) — Matters requiring approval of Authority
Control of substantial shareholding in approved exchanges
27. —(1) No person shall enter into any agreement to acquire shares in an approved exchange by virtue of which he would, if the agreement had been carried out, become a substantial shareholder of the approved exchange without first obtaining the approval of the Authority to enter into the agreement.
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(2) No person shall become —
(a) a 12% controller; or
(b) a 20% controller,
of an approved exchange without first obtaining the approval of the Authority.
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(3) In subsection (2) —
"12% controller" means a person, not being a 20% controller, who alone or together with his associates —
(a) holds not less than 12% of the shares in the approved exchange; or
(b) is in a position to control not less than 12% of the votes in the approved exchange;
"20% controller" means a person who, alone or together with his associates —
(a) holds not less than 20% of the shares in the approved exchange; or
(b) is in a position to control not less than 20% of the votes in the approved exchange.
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(4) In this section —
(a) a person holds a share if —
(i) he is deemed to have an interest in that share under section 7 (6) to (10) of the Companies Act (Cap. 50); or
(ii) he otherwise has a legal or an equitable interest in that share, except such interest as is to be disregarded under section 7 (6) to (10) of the Companies Act;
(b) a reference to the control of a percentage of the votes in an approved exchange shall be construed as a reference to the control, whether direct or indirect, of that percentage of the total number of votes that might be cast in a general meeting of the approved exchange; and
(c) a person, A, is an associate of another person, B, if —
(i) A is the spouse, a parent, remoter lineal ancestor or step-parent, a son, daughter, remoter issue, step-son or step-daughter or a brother or sister of B;
(ii) A is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B or, where B is a corporation, of the directors of B;
(iii) B is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A or, where A is a corporation, of the directors of A;
(iv) A is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B;
(v) B is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A;
(vi) A is a related corporation of B;
(vii) A is a corporation in which B, alone or together with other associates of B as described in sub-paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in A;
(viii) B is a corporation in which A, alone or together with other associates of A as described in sub-paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in B; or
(ix) A is a person with whom B has an agreement or arrangement, whether oral or in writing and whether express or implied, to act together with respect to the acquisition, holding or disposal of shares or other interests in, or with respect to the exercise of their votes in relation to, the approved exchange.
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(5) The Authority may grant its approval referred to in subsection (1) or (2) subject to such conditions or restrictions as the Authority may think fit.
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(6) Without prejudice to subsection (11), the Authority may, for the purposes of securing compliance with subsection (1) or (2), or any condition or restriction imposed under subsection (5), by notice in writing, direct the transfer or disposal of all or any of the shares of an approved exchange in which a substantial shareholder, 12% controller or 20% controller of the approved exchange has an interest.
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(7) Until a person to whom a direction has been issued under subsection (6) transfers or disposes of the shares which are the subject of the direction, and notwithstanding anything to the contrary in the Companies Act (Cap. 50) or the memorandum or articles of association or other constituent document or documents of the approved exchange —
(a) no voting rights shall be exercisable in respect of the shares which are the subject of the direction;
(b) the approved exchange shall not offer or issue any shares (whether by way of rights, bonus, share dividend or otherwise) in respect of the shares which are the subject of the direction; and
(c) except in a liquidation of the approved exchange, the approved exchange shall not make any payment (whether by way of cash dividend, dividend in kind or otherwise) in respect of the shares which are the subject of the direction.
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(8) Any issue of shares by an approved exchange in contravention of subsection (7) (b) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return those shares to the approved exchange, upon which the approved exchange shall return to the person any payment received from him in respect of those shares.
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(9) Any payment made by an approved exchange in contravention of subsection (7) (c) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return the payment he has received to the approved exchange.
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(10) The Authority may exempt —
(a) any person or class of persons; or
(b) any class or description of shares or interests in shares,
from the requirement under subsection (1) or (2), subject to such conditions or restrictions as may be imposed by the Authority.
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(11) Any person who contravenes subsection (1) or (2), or any condition or restriction imposed by the Authority under subsection (5), shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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(12) Any person who contravenes subsection (7) (b) or (c), (8) or (9) or any direction issued by the Authority under subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
[E (DM) A, s. 15]
Approval of chairman, chief executive officer, director and key persons
28. —(1) No approved exchange shall appoint a person as its chairman, chief executive officer or director unless the approved exchange has obtained the approval of the Authority.
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(2) The Authority may, by notice in writing, require an approved exchange to obtain the approval of the Authority for the appointment of any person to any key management position or committee of the approved exchange and the approved exchange shall comply with the notice.
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(3) An application for approval under subsection (1) or (2) shall be made in such form and manner as the Authority may prescribe.
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(4) Without prejudice to the generality of section 45 and to any other matter that the Authority may consider relevant, the Authority may, in determining whether to grant its approval under subsection (1) or (2), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing.
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(5) Subject to subsection (6), the Authority shall not refuse an application for approval under this section without giving the approved exchange an opportunity to be heard.
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(6) The Authority may refuse an application for approval on any of the following grounds without giving the approved exchange an opportunity to be heard:
(a) the person is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the person has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
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(7) Where the Authority refuses an application for approval under this section, the Authority need not give the person who was proposed to be appointed an opportunity to be heard.
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(8) An approved exchange shall, as soon as practicable, give written notice to the Authority of the resignation or removal of its chairman, chief executive officer, director or person referred to in the notice issued by the Authority under subsection (2).
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(9) Without prejudice to the generality of section 45, the Authority may make regulations relating to the composition and duties of the board of directors or any committee of an approved exchange.
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(10) In this section, “committee” includes any committee of directors, disciplinary committee, appeals committee or any body responsible for disciplinary action against a member of an approved exchange.
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(11) The Authority may exempt any approved exchange or class of approved exchanges from the requirement under subsection (1) or (8), subject to such conditions or restrictions as may be imposed by the Authority.
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(12) Any approved exchange which contravenes subsection (1), (2) or (8) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Power of Authority to approve instruments, contracts and transactions
29. —(1) No approved exchange shall, without the approval of the Authority, list, de-list or permit the trading of —
(a) any futures contract;
(b) any right, option or derivative in respect of any debentures, stocks or shares;
(c) any right under a contract for differences or under any other contract the purpose or purported purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —
(i) the value or price of any debentures, stocks or shares;
(ii) the value or price of any group of debentures, stocks or shares; or
(iii) an index of any debentures, stocks or shares; or
(d) such other instrument, contract or transaction, or class of instruments, contracts or transactions as the Authority may prescribe,
on any market operated by the approved exchange.
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(2) The Authority may grant approval for an approved exchange to list, de-list or permit the trading of any instrument, contract or transaction, or any class of instruments, contracts or transactions, referred to in subsection (1), subject to such conditions or restrictions as the Authority may think fit to impose by notice in writing to the approved exchange.
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(3) Any approved exchange which contravenes subsection (1) or any of the conditions or restrictions imposed under subsection (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Listing of approved exchanges on securities market
30. —(1) The securities of an approved exchange shall not be listed for quotation on a securities market that is operated by the approved exchange or any of its related corporations unless the approved exchange and the operator of the securities market have entered into such arrangements as the Authority may require —
(a) for dealing with possible conflicts of interest that may arise from such listing; and
(b) for the purpose of ensuring the integrity of the trading of the securities of the approved exchange on the securities market.
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(2) Where the securities of an approved exchange are listed for quotation on a securities market operated by the approved exchange or any of its related corporations, the listing rules of the securities market shall be deemed to allow the Authority to act in place of the operator of the securities market in making decisions and taking action, or to require the operator of the securities market to make decisions and to take action on behalf of the Authority, on —
(a) the admission or removal of the approved exchange to or from the official list of the securities market; and
(b) granting approval for the securities of the approved exchange to be, or stopping or suspending the securities of the approved exchange from being, listed for quotation or quoted on the securities market.
[1/2005]
(3) The Authority may, by notice in writing to the operator of the securities market —
(a) modify the listing rules of the securities market for the purpose of their application to the listing for quotation or trading of the securities of the approved exchange; or
(b) waive the application of any listing rule of the securities market to the approved exchange.
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(4) Any approved exchange which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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Subdivision (4) — Powers of Authority
Fixing of position and trading limits in futures contracts
31. —(1) For the purpose of diminishing, eliminating or preventing excessive speculation in any commodity under a futures contract, the Authority, or an approved exchange with the approval of the Authority, may, by notice in writing from time to time, establish and fix such limits as it considers necessary on the amount of trading which may be done, or positions which may be held, by any person, generally or specifically, under a futures contract traded on the futures market, or traded subject to the business rules, of —
(a) in the case of the establishing and fixing of limits by the Authority, any approved exchange; or
(b) in the case of the establishing and fixing of limits by an approved exchange, that approved exchange.
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(2) In determining whether a person has exceeded such limits, the positions held and trading done by any other person, directly or indirectly, controlled by the first-mentioned person shall be included with the positions held and trading done by the first-mentioned person.
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(3) Such limits upon positions and trading shall apply to positions held by, and trading done by, 2 or more persons acting pursuant to an express or implied agreement or understanding as if the positions were held by, or the trading was done by, a single person.
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(4) This section shall not apply to positions as defined by an approved exchange in accordance with such regulations as may be prescribed.
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(5) No person shall, directly or indirectly —
(a) buy or sell, or agree to buy or sell, under a futures contract traded on the futures market of, or subject to the business rules of, an approved exchange, any amount of a commodity in excess of the trading limits fixed for one business day, or any other stated period set by the Authority or the approved exchange; or
(b) hold or control a net buy or sell position under a futures contract traded on the futures market of, or subject to the business rules of, an approved exchange in excess of any position limit fixed by the Authority or the approved exchange.
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(6) Nothing in this section shall preclude the Authority, or an approved exchange with the approval of the Authority, from —
(a) establishing or fixing different trading or position limits for different futures contracts, for different delivery months or for different days remaining until the last day of trading in a futures contract;
(b) fixing different limits for the purposes of subsection (5); or
(c) excluding transactions from the limits established or fixed under this section.
[1/2005]
[FTA, s. 42]
Power of Authority in securities market
32. —(1) Without prejudice to the generality of section 46, where the Authority is of the opinion that it is necessary to prohibit trading in —
(a) particular securities of, or made available by, an entity;
(b) particular units or derivatives of units in a business trust; or
(c) particular units of a collective investment scheme,
on a securities market of an approved exchange —
(i) in order to protect persons buying or selling the securities, units or derivatives of units in a business trust or units in a collective investment scheme; or
(ii) in the interests of the public,
the Authority may give notice in writing to the approved exchange stating that it is of that opinion and setting out the reasons for its opinion.
[1/2005]
(2) If, after the receipt of the notice given under subsection (1), the approved exchange fails to take any action in relation to those securities, units or derivatives of units in a business trust or units in a collective investment scheme on that securities market and the Authority continues to be of the opinion that it is necessary to prohibit trading in those securities, units or derivatives of units in a business trust or units in a collective investment scheme on that securities market, the Authority may, by notice in writing to the approved exchange, prohibit trading in those securities, units or derivatives of units in a business trust or units in a collective investment scheme on that securities market for such period, not exceeding 14 days, as is specified in the notice.
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(3) Where the Authority gives a notice to an approved exchange under subsection (2), the Authority shall —
(a) at the same time send a copy of the notice to —
(i) in the case of securities, the entity;
(ii) in the case of units or derivatives of units in a business trust, the trustee of the business trust; or
(iii) in the case of units in a collective investment scheme, the responsible person of the collective investment scheme,
together with a statement setting out the reasons for the giving of the notice; and
(b) as soon as practicable, furnish to the Minister a written report setting out the reasons for the giving of the notice and send a copy of the report to the approved exchange.
[1/2005]
(4) Any person who is aggrieved by any action taken by the Authority or an approved exchange under this section may, within 30 days after the person is notified of the action, appeal to the Minister whose decision shall be final.
[1/2005]
(5) Notwithstanding the lodging of an appeal under subsection (4), any action taken by the Authority or an approved exchange under this section shall continue to have effect pending the decision of the Minister.
[1/2005]
(6) The Minister may, when deciding an appeal under subsection (4), make such modification as he considers necessary to any action taken by the Authority or an approved exchange under this section, and such modified action shall have effect from the date of the decision of the Minister.
[1/2005]
(7) Any approved exchange which permits trading in securities on the securities market of the approved exchange in contravention of a notice given under subsection (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 and, in the case of a continuing offence, to a further fine not exceeding $10,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
[SIA, s. 22]
Additional powers of Authority in respect of auditors
33. —(1) If an auditor of an approved exchange, in the course of the performance of his duties, becomes aware of —
(a) any matter which, in his opinion, adversely affects or may adversely affect the financial position of the approved exchange to a material extent;
(b) any matter which, in his opinion, constitutes or may constitute a breach of any provision of this Act or an offence involving fraud or dishonesty; or
(c) any irregularity that has or may have a material effect upon the accounts of the approved exchange, including any irregularity that affects or jeopardises, or may affect or jeopardise, the funds or property of investors in securities or futures contracts,
the auditor shall immediately send to the Authority a written report of the matter or the irregularity.
[1/2005]
(2) An auditor of an approved exchange shall not, in the absence of malice on his part, be liable to any action for defamation at the suit of any person in respect of any statement made in his report under subsection (1).
[1/2005]
(3) Subsection (2) shall not restrict or affect any right, privilege or immunity that the auditor of an approved exchange may have, apart from this section, as a defendant in an action for defamation.
[1/2005]
(4) The Authority may impose all or any of the following duties on an auditor of an approved exchange:
(a) a duty to submit such additional information and reports in relation to his audit as the Authority considers necessary;
(b) a duty to enlarge, extend or alter the scope of his audit of the business and affairs of the approved exchange;
(c) a duty to carry out any other examination or establish any procedure in any particular case;
(d) a duty to submit a report on any matter arising out of his audit, examination or establishment of procedure referred to in paragraph (b) or (c),
and the auditor shall carry out such duties.
[1/2005]
(5) The approved exchange shall remunerate the auditor in respect of the discharge by him of all or any of the duties referred to in subsection (4).
[1/2005]
[E (DM) A, s. 16]
Emergency powers of Authority
34. —(1) Where the Authority has reason to believe that an emergency exists, or thinks that it is necessary or expedient in the interests of the public or a section of the public or for the protection of investors, the Authority may direct by notice in writing an approved exchange to take such action as it considers necessary to maintain or restore orderly trading in securities or futures contracts or any class of securities or futures contracts.
[1/2005]
(2) Without prejudice to subsection (1), the actions which the Authority may direct an approved exchange to take shall include —
(a) terminating or suspending trading on the approved exchange;
(b) confining trading to liquidation of securities or futures contracts positions;
(c) ordering the liquidation of all positions or any part thereof or the reduction in such positions;
(d) limiting trading to a specific price range;
(e) modifying trading days or hours;
(f) altering conditions of delivery;
(g) fixing the settlement price at which positions are to be liquidated;
(h) requiring any person to act in a specified manner in relation to trading in securities or futures contracts or any class of securities or futures contracts;
(i) requiring margins or additional margins for any securities or futures contracts; and
(j) modifying or suspending any of the business rules of the approved exchange.
[1/2005]
(3) Where the approved exchange fails to comply with any direction of the Authority under subsection (1) within such time as is specified by the Authority, the Authority may —
(a) set margin levels in any securities or futures contract or class of securities or futures contracts to cater for the emergency;
(b) set limits that may apply to market positions acquired in good faith prior to the date of the notice issued by the Authority; or
(c) take such other action as the Authority may think fit to maintain or restore orderly trading in any securities or futures contracts or class of securities or futures contracts, or liquidation of any position in respect of any securities or futures contract or class of securities or futures contracts.
[1/2005]
(4) In this section, “emergency” means any threatened or actual market manipulation or cornering, and includes —
(a) any act of any government affecting a commodity or securities;
(b) any major market disturbance which prevents the market from accurately reflecting the forces of supply and demand for such commodity or securities; or
(c) any undesirable situation or practice which, in the opinion of the Authority, constitutes an emergency.
[1/2005]
(5) The Authority may modify any action taken by an approved exchange under subsection (1), including the setting aside of that action.
[1/2005]
(6) Any person who is aggrieved by any action taken by the Authority or an approved exchange under this section may, within 30 days after the person is notified of the action, appeal to the Minister whose decision shall be final.
[1/2005]
(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority or an approved exchange under this section shall continue to have effect pending the decision of the Minister.
[1/2005]
(8) The Minister may, when deciding an appeal under subsection (6), make such modification as he considers necessary to any action taken by the Authority or an approved exchange under this section, and such modified action shall have effect from the date of the decision of the Minister.
[1/2005]
(9) Any approved exchange which fails to comply with a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
[FTA, s. 41]
Power of Authority to exempt approved exchanges from provisions of this Part
35. The Authority may exempt an approved exchange or a class of approved exchanges from any of the provisions of this Part if it is satisfied that the non-compliance by such approved exchange or class of approved exchanges with such provision would not detract from the objectives specified in section 5, subject to such conditions or restrictions as may be imposed by the Authority.
[1/2005]
Subdivision (5) — Immunity
Immunity from criminal or civil liability
36. No criminal or civil liability shall be incurred by —
(a) an approved exchange; or
(b) any person acting on behalf of an approved exchange, including —
(i) any director of the approved exchange; or
(ii) any member of any committee established by the approved exchange,
for any thing done (including any statement made) or omitted to be done with reasonable care and in good faith in the course of, or in connection with, the discharge or purported discharge of its obligations under this Act or the business rules or, where appropriate, listing rules of the approved exchange.
[1/2005]
Division 3 — Regulation of Recognised Market Operators
General obligations
37. —(1) A recognised market operator shall, in respect of every market which it operates —
(a) as far as is reasonably practicable, ensure that the market is fair, orderly and transparent;
(b) manage any risks associated with its business and operations prudently;
(c) in discharging its obligations under this Act, not act contrary to the interests of the public, having particular regard to the interests of the investing public; and
(d) have sufficient financial, human and system resources —
(i) to operate a fair, orderly and transparent market;
(ii) to meet contingencies or disasters; and
(iii) to provide adequate security arrangements.
[1/2005]
(2) In subsection (1) (d), “contingencies or disasters” includes technical disruptions occurring within automated systems.
[1/2005]
Obligation to notify Authority of certain matters
38. A recognised market operator shall, as soon as practicable after the occurrence of any of the following circumstances, notify the Authority of the circumstance:
(a) any material change to the information provided by the recognised market operator in its application under section 7 (1) or 11 (1);
(b) any change of a director or the chief executive officer of the recognised market operator;
(c) the recognised market operator becoming aware of a financial irregularity or other matter which in its opinion —
(i) may affect its ability to discharge its financial obligations; or
(ii) may affect the ability of a participant of the recognised market operator to meet its financial obligations to the recognised market operator;
(d) any other matter that the Authority may prescribe by regulations or specify by notice in writing to the recognised market operator.
[1/2005]
Obligation to maintain proper records
39. A recognised market operator shall maintain a record of all transactions effected through its facilities in such form and manner as the Authority may prescribe, including —
(a) the extent to which the record includes details of each transaction; and
(b) the period of time that the record is to be maintained.
[1/2005]
Obligation to submit periodic reports
40. A recognised market operator shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe.
[1/2005]
Obligation to assist Authority
41. A recognised market operator shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —
(a) such books and other information —
(i) relating to the business of the recognised market operator; or
(ii) in respect of such dealings in securities or trading in futures contracts; and
(b) such other information,
as the Authority may require for the proper administration of this Act.
[1/2005]
Power of Authority to approve instruments, contracts and transactions
42. —(1) No recognised market operator shall, without the approval of the Authority, list, de-list or permit the trading of —
(a) any futures contract;
(b) any right, option or derivative in respect of any debentures, stock or shares;
(c) any right under a contract for differences or under any other contract the purpose or purported purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —
(i) the value or price of any debentures, stock or shares;
(ii) the value or price of any group of debentures, stock or shares; or
(iii) an index of any debentures, stock or shares; and
(d) such other instrument, contract or transaction, or class of instruments, contracts or transactions, as the Authority may prescribe,
on any market operated by the recognised market operator.
[1/2005]
(2) The Authority may grant approval for any instrument, contract or transaction, or any class of instruments, contracts or transactions, referred to in subsection (1), subject to such conditions or restrictions as the Authority may think fit to impose by notice in writing to the recognised market operator.
[1/2005]
(3) The recognised market operator shall comply with the conditions and restrictions imposed under subsection (2).
[1/2005]
[FTA, s. 5]
Penalties under this Division
43. Any recognised market operator which contravenes section 37 (1), 38, 39, 40, 41 or 42 (1) or (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Division 4 — General Powers of Authority
Power of Authority to remove officers
44. —(1) Where the Authority is satisfied that an officer of an approved exchange or a recognised market operator —
(a) has wilfully contravened or wilfully caused that approved exchange or recognised market operator to contravene —
(i) this Act;
(ii) where applicable, its business rules; or
(iii) where applicable, its listing rules;
(b) has, without reasonable excuse, failed to ensure compliance by that approved exchange or recognised market operator, a member of that approved exchange or recognised market operator, or a person associated with that member with —
(i) this Act;
(ii) where applicable, the business rules of that approved exchange or recognised market operator; or
(iii) where applicable, the listing rules of that approved exchange or recognised market operator;
(c) has failed to discharge the duties or functions of his office or employment;
(d) is an undischarged bankrupt, whether in Singapore or elsewhere;
(e) has had execution against him in respect of a judgment debt returned unsatisfied in whole or in part;
(f) has, whether in Singapore or elsewhere, made a compromise or scheme of arrangement with his creditors, being a compromise or scheme of arrangement that is still in operation; or
(g) has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly,
the Authority may, if it thinks it necessary in the interests of the public or a section of the public or for the protection of investors, by notice in writing direct that approved exchange or recognised market operator to remove the officer from his office or employment, and that approved exchange or recognised market operator shall comply with such notice, notwithstanding the provisions of section 152 of the Companies Act (Cap. 50).
[1/2005]
(2) Without prejudice to any other matter that the Authority may consider relevant, the Authority may, in determining whether an officer of an approved exchange or a recognised market operator has failed to discharge the duties or functions of his office or employment for the purposes of subsection (1) (c), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing.
[1/2005]
(3) Subject to subsection (4), the Authority shall not direct an approved exchange or a recognised market operator to remove an officer from his office or employment without giving the approved exchange or recognised market operator an opportunity to be heard.
[1/2005]
(4) The Authority may direct an approved exchange or a recognised market operator to remove an officer from his office or employment under subsection (1) on any of the following grounds without giving the approved exchange or recognised market operator an opportunity to be heard:
(a) the officer is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the officer has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
[1/2005]
(5) Where the Authority directs an approved exchange or a recognised market operator to remove an officer from his office or employment under subsection (1), the Authority need not give that officer an opportunity to be heard.
[1/2005]
(6) Any approved exchange or a recognised market operator that is aggrieved by a direction of the Authority made in relation to the approved exchange or recognised market operator, as the case may be, under subsection (1) may, within 30 days after the approved exchange or recognised market operator, as the case may be, is notified of the direction, appeal to the Minister whose decision shall be final.
[1/2005]
(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority under this section, shall continue to have effect pending the decision of the Minister.
[1/2005]
(8) The Minister may, when deciding an appeal under subsection (6), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the decision of the Minister.
[1/2005]
(9) Subject to subsection (10), no criminal or civil liability shall be incurred by an approved exchange or a recognised market operator in respect of any thing done or omitted to be done with reasonable care and in good faith in the discharge or purported discharge of its obligations under this section.
[1/2005]
(10) Any approved exchange or a recognised market operator which, without reasonable excuse, contravenes a written notice issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Power of Authority to make regulations
45. —(1) Without prejudice to section 341, the Authority may make regulations relating to the exemption, recognition or approval of, and the requirements applicable to, persons who establish, operate or assist in establishing or operating markets.
[1/2005]
(2) Regulations made under this section may provide —
(a) that a contravention of any specified provision thereof shall be an offence; and
(b) for a penalty not exceeding a fine of $150,000 or imprisonment for a term not exceeding 12 months or both for each offence and, in the case of a continuing offence, a further penalty not exceeding a fine of 10% of the maximum fine prescribed for that offence for every day or part thereof during which the offence continues after conviction.
[1/2005]
Power of Authority to issue directions
46. —(1) The Authority may, if it thinks it necessary or expedient —
(a) for ensuring fair, orderly and transparent markets;
(b) for ensuring the integrity and stability of the capital markets or the financial system;
(c) in the interests of the public or a section of the public or for the protection of investors;
(d) for the effective administration of this Act; or
(e) for ensuring compliance with any condition or restriction as may be imposed by the Authority under section 8 (4) or (5), 14 (5), (6), (8) or (9), 17 (2), 27 (5) or (10), 28 (11), 29 (2), 35 or 42 (2), or such other obligations or requirements under this Act or as may be prescribed by the Authority,
issue directions, whether of a general or specific nature, by notice in writing, to an approved exchange, a recognised market operator or an exempt market operator, and the approved exchange, recognised market operator or exempt market operator shall comply with such directions.
[1/2005]
(2) Any approved exchange, a recognised market operator or an exempt market operator which, without reasonable excuse, contravenes a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
(3) For the avoidance of doubt, a direction issued under subsection (1) shall be deemed not to be subsidiary legislation.
[1/2005]
[SIA, s. 21; E (DM) A, s. 14]
PART III
CLEARING FACILITIES
Objectives of this Part
47. The objectives of this Part are —
(a) to promote the safety and efficiency of clearing facilities that support systemically-important markets or form an integral part of the financial infrastructure; and
(b) to reduce systemic risk.
[1/2005]
Interpretation of this Part
48. —(1) In this Part, unless the context otherwise requires —
"default proceedings" means proceedings or other action taken by a designated clearing house under its default rules;
"default rules" , in relation to a designated clearing house, means the business rules of the designated clearing house which provide for the taking of proceedings or other action if a participant has failed, or appears to be unable or to be likely to become unable, to meet his obligations for all unsettled or open market contracts to which he is a party;
"defaulter" means a participant who is the subject of any default proceedings;
"market charge" means a security interest, whether fixed or floating, granted in favour of a designated clearing house —
(a) over property held by or deposited with the designated clearing house; and
(b) to secure liabilities arising directly in connection with the designated clearing house ensuring the performance of a market contract;
"market collateral" means property held by, or deposited with, a designated clearing house for the purpose of securing liabilities arising directly in connection with the designated clearing house ensuring the performance of market contracts;
"market contract" means —
(a) a contract subject to the business rules of a designated clearing house that is entered into between the designated clearing house and a participant pursuant to a novation (however described), whether before or after default proceedings have commenced, which is in accordance with those business rules and for the purposes of the clearing or settlement of transactions using the clearing facility of the designated clearing house; or
(b) a transaction which is being cleared or settled using the clearing facility of a designated clearing house and in accordance with the business rules of the designated clearing house, whether or not a novation referred to in paragraph (a) is to take place;
“property”, in relation to a market charge or market collateral, means —
(a) money, letters of credit, banker’s drafts, certified cheques, guarantees or other similar instruments;
(b) securities;
(c) futures contracts and any similar financial contract; or
(d) other assets of value acceptable to a designated clearing house;
"relevant office holder" means —
(a) the Official Assignee exercising his powers under the Bankruptcy Act (Cap. 20);
(b) a person acting in relation to a company as its liquidator, its provisional liquidator, its receiver, its receiver and manager, its judicial manager or an equivalent person; or
(c) a person acting in relation to an individual as his trustee in bankruptcy, the interim receiver of his property or an equivalent person;
"settlement" , in relation to a market contract, includes partial settlement.
[1/2005]
(2) Where a charge is granted partly for the purpose specified in the definition of “market charge” and partly for any other purpose or purposes, the charge shall be treated as a market charge under this Part insofar as it has effect for that specified purpose.
[1/2005]
(3) Where collateral is granted partly for the purpose specified in the definition of “market collateral” and partly for any other purpose or purposes, the collateral shall be treated as market collateral under this Part insofar as it has been provided for that specified purpose.
[1/2005]
(4) References in this Part to the law of insolvency are references to —
(a) the Bankruptcy Act;
(b) Parts VIIIA, IX and X of the Companies Act (Cap. 50); and
(c) any other written law, whether in Singapore or elsewhere, which is concerned with, or in any way related to, the bankruptcy or insolvency of a person, other than the Banking Act (Cap. 19).
[1/2005]
(5) References in this Part to settlement, in relation to a market contract, are references to the discharge of the rights and liabilities of the parties to the market contract, whether by performance, compromise or otherwise.
[1/2005]
[HK SF Bill, Clause 18]
Division 1 — Establishment of Clearing Facilities
Requirement to notify
49. —(1) Subject to subsection (2), no person shall establish or operate a clearing facility unless that person has notified the Authority of its intent to establish or operate a clearing facility at least 60 business days prior to the establishment, or commencement of operation, of the clearing facility.
[1/2005]
(2) A person may apply to the Authority to reduce the period referred to in subsection (1) and the Authority may, in its discretion and in relation only to that person, substitute such other period as may be determined by the Authority in place of the period referred to in subsection (1).
[1/2005]
(3) The notice referred to in subsection (1) shall provide information in such form and manner as may be prescribed by the Authority.
[1/2005]
(4) The application referred to in subsection (2) shall provide information in such form and manner as may be prescribed by the Authority.
[1/2005]
(5) The Authority may require a person providing the notice referred to in subsection (1) to furnish the Authority with such information or documents as the Authority considers necessary in relation to the notice.
[1/2005]
(6) In subsection (1), “business day” has the same meaning as in section 4 (1) of the Companies Act (Cap. 50).
[1/2005]
(7) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
(8) Any person who contravenes subsection (5) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Provision of information to Authority
50. —(1) A person operating a clearing facility shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe.
[1/2005]
(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Notification of change of particulars
51. —(1) A person operating a clearing facility shall, no later than 14 days after the occurrence of any of the following circumstances, notify the Authority of the circumstance:
(a) a change of its chief executive officer;
(b) a change of the address of the principal place of business at which it carries on the business of operating a clearing facility;
(c) a material change in the business of the clearing facility;
(d) an intention to cease operations of the clearing facility;
(e) such other matter as the Authority may prescribe.
[1/2005]
(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Obligation to assist Authority
52. —(1) A person operating a clearing facility shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —
(a) such books and other information —
(i) relating to the business of the clearing facility; or
(ii) in respect of any transaction or class of transactions cleared or settled by the clearing facility; and
(b) such other information,
as the Authority may require for the proper administration of this Act.
[1/2005]
(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
[Aust. Corporations 2001, s. 779D]
Exemption
53. Sections 49, 50 and 51 shall not apply to such persons or class of persons as may be prescribed by the Authority.
[1/2005]
Power to stop commencement or order cessation
54. —(1) The Authority may, prior to the end of the notification period referred to in section 49 (1) or such other period as may be substituted by the Authority under section 49 (2), by notice in writing, order a person who has given notice under section 49 (1) not to establish or commence operation of a clearing facility if —
(a) the person did not furnish the Authority with such information or documents as required under section 49 (5);
(b) any information or document provided by the person to the Authority is false or misleading; or
(c) the Authority is of the opinion that it is in the interests of the public to do so.
[1/2005]
(2) The Authority may, by notice in writing, order a person to cease operating its clearing facility if —
(a) the person has contravened any provision of this Act or any other written law in the course of operating its clearing facility;
(b) the person provided any information or document to the Authority that is false or misleading;
(c) in the opinion of the Authority, the person is operating the clearing facility in a manner that is likely to pose systemic risk to the financial system of Singapore;
(d) the person is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(e) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the person;
(f) the person has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly; or
(g) the Authority is of the opinion that it is in the interests of the public to do so.
[1/2005]
(3) Subject to subsection (4), the Authority shall not make an order under subsection (1) or (2) without giving the person an opportunity to be heard.
[1/2005]
(4) The Authority may order a person not to establish or commence operation of a clearing facility under subsection (1) or to cease operating its clearing facility under subsection (2) on any of the following grounds without giving the person an opportunity to be heard:
(a) the person is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(b) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the person;
(c) the person has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly.
[1/2005]
(5) Any person who is aggrieved by an order of the Authority made in relation to the person under subsection (1) or (2) may, within 30 days after the person is notified of that order, appeal to the Minister whose decision shall be final.
[1/2005]
(6) Notwithstanding the lodging of an appeal under subsection (5), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister.
[1/2005]
(7) The Minister may, when deciding an appeal under subsection (5), make such modification as he considers necessary to any action taken by the Authority, and such modified action shall have effect from the date of the decision of the Minister.
[1/2005]
(8) Any order made under subsection (2) shall not operate so as to —
(a) avoid or affect any agreement, transaction or arrangement entered into in connection with the use of a clearing facility operated by the person, whether the agreement, transaction or arrangement was entered into before or after the order of the cessation; or
(b) affect any right, obligation or liability arising under such agreement, transaction or arrangement.
[1/2005]
(9) Any person who contravenes an order made under subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Division 2 — Designation of Persons Operating Clearing Facilities
Designation of persons operating clearing facilities
55. —(1) The Authority may designate a person operating a clearing facility as a designated clearing house for the purposes of this Act, if it is satisfied that —
(a) a disruption in the operations of the clearing facility could trigger, cause or transmit further systemic disruptions to capital markets or the financial system of Singapore;
(b) a disruption in the operations of the clearing facility could affect public confidence in capital markets, financial institutions or the financial system of Singapore; or
(c) it is in the interests of the public to do so.
[1/2005]
(2) The Authority shall give notice in the Gazette of any person designated under subsection (1).
[1/2005]
(3) A designation by the Authority under subsection (1) shall continue to have effect until it is withdrawn by the Authority.
[1/2005]
(4) The Authority shall not designate any person operating a clearing facility as a designated clearing house without giving that person an opportunity to be heard.
[1/2005]
(5) Any person operating a clearing facility who is aggrieved by a decision of the Authority to designate the person as a designated clearing house under subsection (1) may, within 30 days after the person is notified of the decision, appeal to the Minister whose decision shall be final.
[1/2005]
(6) Notwithstanding the lodging of an appeal under subsection (5), the designation by the Authority under this section shall continue to have effect pending the decision of the Minister.
[1/2005]
(7) The Minister may, when deciding an appeal under subsection (5), direct that the Authority shall not designate the person as a designated clearing house, and such order shall have effect from the date of the decision of the Minister.
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Prohibition on holding out
56. —(1) No person shall hold himself out as a designated clearing house unless he has been designated by the Authority under section 55 (1).
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(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
General criteria to be taken into account by Authority
57. Without affecting the generality of section 55, the Authority may have regard to the following matters in determining whether it is satisfied of the considerations in section 55 (1):
(a) the size and structure, or proposed size and structure, of the clearing facility;
(b) the nature of the services provided, or to be provided, by the clearing facility;
(c) the nature of the transactions cleared, or to be cleared, by the clearing facility;
(d) the market where the transactions cleared through the clearing facility are traded or to be traded;
(e) the nature of the investors or participants, or proposed investors or participants, who may use or have an interest in the clearing facility;
(f) whether the person operating the clearing facility is otherwise regulated by the Authority under this Act or any other written law;
(g) whether the clearing facility takes on counterparty risks, through novation or otherwise, in the clearing or settlement of transactions;
(h) the parties who may be affected in the event that the clearing facility runs into difficulties;
(i) the interests of the public; and
(j) any other circumstances that the Authority may deem relevant.
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Withdrawal of designation
58. —(1) The Authority may withdraw the designation of any designated clearing house at any time, on its own initiative or on the application of the designated clearing house, if the Authority is of the opinion that the considerations in section 55 (1) are no longer valid or satisfied.
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(2) The Authority shall give notice in the Gazette of any withdrawal under subsection (1).
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(3) The Authority shall not withdraw on its own initiative the designation of any person operating a clearing facility as a designated clearing house without giving the person an opportunity to be heard.
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Division 3 — Regulation of Designated Clearing Houses
Subdivision (1) — Obligations of designated clearing houses
General obligations
59. —(1) A designated clearing house shall —
(a) as far as is reasonably practicable, operate a safe and efficient clearing facility;
(b) manage any risks associated with its business and operations prudently;
(c) in discharging its obligations under this Act, not act contrary to the interests of the public, having particular regard to the interests of the investing public;
(d) ensure that access for participation in its clearing facility is subject to criteria that are fair and objective, and that are designed to ensure the safe and efficient functioning of its facility and to protect the interests of the investing public;
(e) maintain business rules that make satisfactory provision for —
(i) the clearing facility to be operated in a safe and efficient manner; and
(ii) the proper regulation and supervision of its members;
(f) enforce compliance by its members with its business rules;
(g) have sufficient financial, human and system resources —
(i) to operate a safe and efficient clearing facility;
(ii) to meet contingencies or disasters; and
(iii) to provide adequate security arrangements; and
(h) ensure that it appoints or employs fit and proper persons as its chairman, chief executive officer, directors and key management officers.
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(2) The obligations imposed on the designated clearing house under this Act shall apply to all facilities for clearing or settlement operated by the designated clearing house.
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(3) Notwithstanding subsection (2), the Authority may by notice in writing exempt any clearing facility operated by a designated clearing house from all or any of the provisions of this Act, if the Authority is satisfied that such exemption would not detract from the objectives specified in section 47.
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(4) In subsection (1) (g), “contingencies or disasters” includes technical disruptions occurring within automated systems.
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Obligation to notify Authority of certain matters
60. —(1) A designated clearing house shall, as soon as practicable after the occurrence of any of the following circumstances, notify the Authority of the circumstance:
(a) the carrying on of any business by the designated clearing house other than —
(i) the business of operating a clearing facility;
(ii) a business incidental to operating a clearing facility; or
(iii) such business or class of businesses as the Authority may prescribe;
(b) the acquisition by the designated clearing house of a substantial shareholding in a corporation which does not carry on —
(i) the business of operating a clearing facility;
(ii) a business incidental to operating a clearing facility; or
(iii) such business or class of businesses as the Authority may prescribe;
(c) the designated clearing house becoming aware of a financial irregularity or other matter which in its opinion —
(i) may affect its ability to discharge its financial obligations; or
(ii) may affect the ability of a member of the designated clearing house to meet its financial obligations to the designated clearing house;
(d) the designated clearing house reprimanding, fining, suspending, expelling or otherwise taking disciplinary action against a member of the designated clearing house;
(e) any other matter that the Authority may prescribe by regulations or specify by notice in writing to the designated clearing house.
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(2) Without prejudice to the generality of section 79 (1), the Authority may, at any time after receiving a notification referred to in subsection (1), issue directions to the designated clearing house —
(a) where the notification relates to a matter referred to in subsection (1) (a) —
(i) to cease carrying on the first-mentioned business referred to in subsection (1) (a); or
(ii) to carry on the first-mentioned business referred to in subsection (1) (a) subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 79 (1); or
(b) where the notification relates to a matter referred to in subsection (1) (b) —
(i) to dispose of the shareholding referred to in subsection (1) (b); or
(ii) to exercise its rights relating to such shareholding subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 79 (1),
and the designated clearing house shall comply with such directions.
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Obligation to manage risks prudently
61. —(1) Without prejudice to the generality of section 59 (1) (b), a designated clearing house shall ensure that the systems and controls concerning the assessment and management of risks to its clearing facility are adequate and appropriate for the scale and nature of its operations.
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(2) Without prejudice to the generality of section 81S, the Authority may make regulations relating to the matters in subsection (1), including —
(a) the limits in respect of positions held with the designated clearing house; and
(b) the measures to manage any risks assumed by the designated clearing house.
[1/2005]
Obligation in relation to customers’ money and assets held by designated clearing house
62. —(1) A designated clearing house which accepts money or assets deposited with or paid to it by its members in respect of or in relation to contracts of the customers of such members shall, in respect of all market contracts in relation to which money or assets are deposited with or paid to it (being market contracts which are cleared or settled by it), require each of its members to notify it in such manner as it may determine —
(a) whether a market contract is a contract of a customer of the member; and
(b) whether the money or assets being deposited with or paid to the designated clearing house is or are deposited or paid in respect of or in relation to a contract of a customer of the member.
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(2) Where a member has notified the designated clearing house under subsection (1) that the money or assets are deposited or paid in respect of or in relation to a contract of a customer of the member, the designated clearing house shall —
(a) account for all such money and assets on an aggregated basis, separate from all other money and assets received by the designated clearing house from the member; and
(b) subject to sections 63 and 64, ensure that such money is deposited in a trust account, or such assets are deposited in a custody account, to be held for the benefit of the customers of the member and disposed of or used only in respect of or in relation to contracts of customers of the member.
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(3) Where a designated clearing house has been convicted of an offence under section 70 for a contravention of subsection (2) (b), in so far as any money which has been deposited in a trust account, or any asset which has been deposited in a custody account, is used for any purpose other than —
(a) in respect of or in relation to contracts of a customer of the member; or
(b) in accordance with sections 63 and 64,
the designated clearing house shall —
(i) in the case of money, repay the money to the trust account referred to in subsection (2) (b); or
(ii) in the case of assets —
(A) return the asset to the custody account referred to in subsection (2) (b); or
(B) if the asset cannot be returned to the custody account, deposit an amount of money which is equivalent to the monetary value of the asset at the time of the contravention of subsection (2) (b) in a trust account referred to in subsection (2) (b) for the benefit of the customers of the member.
[1/2005]
Permissible use of customers’ money and assets by designated clearing house
63. —(1) Where a member of a designated clearing house fails to meet its obligations to the designated clearing house, the designated clearing house may use any money or assets deposited or paid in respect of or in relation to contracts of customers of the member and held by the designated clearing house, including any money deposited in the trust account and any assets deposited in the custody account referred to in section 62 (2) (b), to meet the obligations of the member to the designated clearing house, if the designated clearing house has reasonable grounds for forming an opinion that —
(a) the failure of the member to meet the member’s obligations is directly attributable to the failure of any of the customers of the member to meet that customer’s obligations under any market contract; and
(b) the failure to use the money or assets to meet the obligations of the member may jeopardise the financial integrity of the designated clearing house.
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(2) A designated clearing house shall notify the Authority prior to using any such money or assets in the circumstances specified in subsection (1).
[1/2005]
Permissible investments of customers’ money and assets by designated clearing house
64. —(1) Subject to subsection (2), a designated clearing house may invest any money or assets deposited or paid in respect of or in relation to contracts of customers of a member and held by the designated clearing house in the course of its clearing or settlement activities, including any money deposited in the trust account and any assets deposited in the custody account referred to in section 62 (2) (b), in any security, instrument or other form of investment arrangement as the Authority may prescribe.
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(2) The designated clearing house shall seek the approval of the Authority before investing any such money or assets under subsection (1).
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(3) The designated clearing house seeking the approval of the Authority under subsection (2) shall satisfy the Authority —
(a) that the management of the investments made by the designated clearing house is consistent with the principles of preserving principal and maintaining sufficient liquidity to meet the obligations of customers of members of the designated clearing house;
(b) that prudential measures have been adopted to manage the risks in respect of the designated clearing house’s investment activities; and
(c) of any other matter which the Authority considers necessary for the sound management of the investments.
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(4) The Authority may grant the approval referred to in subsection (2) subject to such conditions or restrictions as the Authority may think fit.
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Obligation to maintain proper records
65. —(1) A designated clearing house shall maintain a record of all transactions effected through its clearing facility in such form and manner as the Authority may prescribe.
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(2) The matters which the Authority may prescribe under subsection (1) shall include —
(a) the extent to which the record includes details of each transaction; and
(b) the period of time that the record is to be maintained.
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Obligation to submit periodic reports
66. A designated clearing house shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe.
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Obligation to assist Authority
67. A designated clearing house shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —
(a) such books and other information —
(i) relating to the business of the designated clearing house; or
(ii) in respect of any transaction or class of transactions cleared or settled by the designated clearing house; and
(b) such other information,
as the Authority may require for the proper administration of this Act.
[1/2005]
Obligation to maintain confidentiality
68. —(1) Subject to subsection (2), a designated clearing house and its officers and employees shall maintain, and aid in maintaining, confidentiality of all user information that —
(a) comes to the knowledge of the designated clearing house or any of its officers or employees; or
(b) is in the possession of the designated clearing house or any of its employees.
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(2) Subsection (1) shall not apply to —
(a) the disclosure of user information for such purposes, or in such circumstances, as the Authority may prescribe;
(b) any disclosure of user information which is authorised by the Authority to be disclosed or furnished; or
(c) the disclosure of user information pursuant to any requirement imposed under any written law or order of court in Singapore.
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(3) For the avoidance of doubt, nothing in this section shall be construed as preventing a designated clearing house from entering into a written agreement with a user which obliges the designated clearing house to maintain a higher degree of confidentiality than that specified in this section.
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Annual fees payable by designated clearing house
69. —(1) Every designated clearing house shall pay to the Authority such annual fees as may be prescribed and in such manner as may be specified by the Authority.
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(2) The Authority may, where it considers appropriate, refund or remit the whole or part of any annual fee paid or payable to it.
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Penalties under this Subdivision
70. Any designated clearing house which contravenes section 59 (1), 60, 61 (1), 62 (2) or (3), 63 (2), 64 (2), 65, 66, 67 or 68 (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Subdivision (2) — Rules of designated clearing houses
Business rules of designated clearing houses
71. —(1) Without limiting the generality of sections 59 and 81S —
(a) the Authority may prescribe the matters that a designated clearing house shall make provision for in the business rules of the designated clearing house; and
(b) the designated clearing house shall make provision for these matters in its business rules.
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(2) A designated clearing house shall not make any amendment to its business rules unless it complies with such requirements as the Authority may prescribe.
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(3) In this Subdivision, any reference to an amendment to a business rule shall be construed as a reference to a change to the scope of, or to any requirement, obligation or restriction under the business rule, whether the change is made by an alteration to the text of the rule or by any other notice issued by or on behalf of the designated clearing house.
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(4) Any designated clearing house which contravenes subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Business rules of designated clearing houses have effect as contract
72. —(1) The business rules of a designated clearing house shall be deemed to be, and shall operate as, a binding contract —
(a) between the designated clearing house and each issuer of securities;
(b) between the designated clearing house and each participant;
(c) between each issuer of securities and each participant; and
(d) between each participant and every other participant.
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(2) The designated clearing house, each issuer of securities and each participant shall be deemed to have agreed to observe, and perform the obligations under, the provisions of the business rules that are in force for the time being, so far as those provisions are applicable to the designated clearing house, issuer or participant, as the case may be.
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(3) In this section, “issuer”, in relation to any securities, means a person who issued or made available, or proposes to issue or make available, the securities, being securities that are cleared or settled by the designated clearing house.
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Power of court to order observance or enforcement of business rules
73. —(1) Where any person who is under an obligation to comply with, observe, enforce or give effect to the business rules of a designated clearing house fails to do so, the High Court may, on the application of the Authority, a designated clearing house or a person aggrieved by the failure, after giving the first-mentioned person an opportunity to be heard, make an order directing the first-mentioned person to comply with, observe, enforce or give effect to those business rules.
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(2) In this section, “person” includes a designated clearing house.
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(3) This section is in addition to, and not in derogation of, any other remedies available to the aggrieved person referred to in subsection (1).
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Non-compliance with business rules not to substantially affect rights of person
74. Any failure by a designated clearing house to comply with this Act or its business rules in relation to a matter shall not prevent the matter from being treated, for the purposes of this Act, as done in accordance with the business rules so long as the failure does not substantially affect the rights of any person entitled to require compliance with the business rules.
[1/2005]
Subdivision (3) — Matters requiring approval of Authority
Control of substantial shareholding in designated clearing houses
75. —(1) No person shall enter into any agreement to acquire shares in a designated clearing house by virtue of which he would, if the agreement had been carried out, become a substantial shareholder of the designated clearing house without first obtaining the approval of the Authority to enter into the agreement.
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(2) No person shall become —
(a) a 12% controller; or
(b) a 20% controller,
of a designated clearing house without first obtaining the approval of the Authority.
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(3) In subsection (2) —
"12% controller" means a person, not being a 20% controller, who alone or together with his associates —
(a) holds not less than 12% of the shares in the designated clearing house; or
(b) is in a position to control not less than 12% of the votes in the designated clearing house;
"20% controller" means a person who, alone or together with his associates —
(a) holds not less than 20% of the shares in the designated clearing house; or
(b) is in a position to control not less than 20% of the votes in the designated clearing house.
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(4) In this section —
(a) a person holds a share if —
(i) he is deemed to have an interest in that share under section 7 (6) to (10) of the Companies Act (Cap. 50); or
(ii) he otherwise has a legal or an equitable interest in that share, except such interest as is to be disregarded under section 7 (6) to (10) of the Companies Act;
(b) a reference to the control of a percentage of the votes in a designated clearing house shall be construed as a reference to the control, whether direct or indirect, of that percentage of the total number of votes that might be cast in a general meeting of the designated clearing house; and
(c) a person, A, is an associate of another person, B, if —
(i) A is the spouse, a parent, remoter lineal ancestor or step-parent, a son, daughter, remoter issue, step-son or step-daughter or a brother or sister of B;
(ii) A is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B or, where B is a corporation, of the directors of B;
(iii) B is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A or, where A is a corporation, of the directors of A;
(iv) A is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B;
(v) B is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A;
(vi) A is a related corporation of B;
(vii) A is a corporation in which B, alone or together with other associates of B as described in sub-paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in A;
(viii) B is a corporation in which A, alone or together with other associates of A as described in sub-paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in B; or
(ix) A is a person with whom B has an agreement or arrangement, whether oral or in writing and whether express or implied, to act together with respect to the acquisition, holding or disposal of shares or other interests in, or with respect to the exercise of their votes in relation to, the designated clearing house.
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(5) The Authority may grant its approval referred to in subsection (1) or (2) subject to such conditions or restrictions as the Authority may think fit.
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(6) Without prejudice to subsection (11), the Authority may, for the purposes of securing compliance with subsection (1) or (2) or any condition or restriction imposed under subsection (5), by notice in writing, direct the transfer or disposal of all or any of the shares of a designated clearing house in which a substantial shareholder, 12% controller or 20% controller of the designated clearing house has an interest.
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(7) Until a person to whom a direction has been issued under subsection (6) transfers or disposes of the shares which are the subject of the direction, and notwithstanding anything to the contrary in the Companies Act (Cap. 50) or the memorandum or articles of association or other constituent document or documents of the designated clearing house —
(a) no voting rights shall be exercisable in respect of the shares which are the subject of the direction;
(b) the designated clearing house shall not offer or issue any shares (whether by way of rights, bonus, share dividend or otherwise) in respect of the shares which are the subject of the direction; and
(c) except in a liquidation of the designated clearing house, the designated clearing house shall not make any payment (whether by way of cash dividend, dividend in kind, or otherwise) in respect of the shares which are the subject of the direction.
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(8) Any issue of shares by a designated clearing house in contravention of subsection (7) (b) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return those shares to the designated clearing house, upon which the designated clearing house shall return to the person any payment received from him in respect of those shares.
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(9) Any payment made by a designated clearing house in contravention of subsection (7) (c) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return the payment he has received to the designated clearing house.
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(10) The Authority may exempt —
(a) any person or class of persons; or
(b) any class or description of shares or interests in shares,
from subsection (1) or (2), subject to such conditions or restrictions as may be imposed by the Authority.
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(11) Any person who contravenes subsection (1) or (2), or any condition or restriction imposed by the Authority under subsection (5), shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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(12) Any person who contravenes subsection (7) (b) or (c), (8) or (9) or any direction issued by the Authority under subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
[E (DM) A, s. 15]
Approval of chairman, chief executive officer, director and key persons
76. —(1) No designated clearing house shall appoint a person as its chairman, chief executive officer or director unless the designated clearing house has obtained the approval of the Authority.
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(2) The Authority may, by notice in writing, require a designated clearing house to obtain the approval of the Authority for the appointment of any person to any key management position or committee of the designated clearing house and the designated clearing house shall comply with the notice.
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(3) An application for approval under subsection (1) or (2) shall be made in such form and manner as the Authority may prescribe.
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(4) Without prejudice to the generality of section 81S and any other matter that the Authority may consider relevant, the Authority may, in determining whether to grant its approval under subsection (1) or (2), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing.
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(5) Subject to subsection (6), the Authority shall not refuse an application for approval under this section without giving the designated clearing house an opportunity to be heard.
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(6) The Authority may refuse an application for approval on any of the following grounds without giving the designated clearing house an opportunity to be heard:
(a) the person is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the person has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
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(7) Where the Authority refuses an application for approval under this section, the Authority need not give the person who was proposed to be appointed an opportunity to be heard.
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(8) A designated clearing house shall, as soon as practicable, give written notice to the Authority of the resignation or removal of its chairman, chief executive officer, director or person referred to in the notice issued by the Authority under subsection (2).
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(9) Without prejudice to the generality of section 81S, the Authority may make regulations relating to the composition and duties of the board of directors or any committee of a designated clearing house.
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(10) In this section, “committee” includes any committee of directors, disciplinary committee, appeals committee or any body responsible for disciplinary action against a member of a designated clearing house.
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(11) The Authority may exempt any designated clearing house or a class of designated clearing houses from complying with subsection (1) or (8), subject to such conditions or restrictions as may be imposed by the Authority.
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(12) Subject to subsection (11), any designated clearing house which contravenes subsection (1), (2) or (8) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Listing of designated clearing houses on securities market
77. —(1) The securities of a designated clearing house shall not be listed for quotation on a securities market that is operated by any of its related corporations unless the designated clearing house and the operator of the securities market have entered into such arrangements as the Authority may require —
(a) for dealing with possible conflicts of interest that may arise from such listing; and
(b) for the purpose of ensuring the integrity of the trading of the securities of the designated clearing house.
[1/2005]
(2) Where the securities of a designated clearing house are listed for quotation on a securities market operated by any of its related corporations, the listing rules of the securities market shall be deemed to allow the Authority to act in place of the operator of the securities market in making decisions and taking action, or to require the operator of the securities market to make decisions and to take action on behalf of the Authority, on —
(a) the admission or removal of the designated clearing house to or from the official list of the securities market; and
(b) granting approval for the securities of a designated clearing house to be, or stopping or suspending the securities of the designated clearing house from being listed for quotation or quoted on the securities market.
[1/2005]
(3) The Authority may, by notice in writing to the operator of the securities market —
(a) modify the listing rules of the securities market for the purpose of their application to the listing of the securities of the designated clearing house for quotation or trading; or
(b) waive the application of any listing rule of the securities market to the designated clearing house.
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(4) Any designated clearing house which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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Subdivision (4) — Powers of Authority
Power to impose conditions or restrictions
78. —(1) The Authority may impose on a designated clearing house such conditions or restrictions as it thinks fit by notice in writing, in addition to the obligations imposed on the designated clearing house under this Division, for the purposes of furthering the objectives specified in section 47.
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(2) The Authority may, at any time, by notice in writing to the designated clearing house, vary any condition or restriction as it may think fit.
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(3) Without affecting the generality of subsection (1) or (2), the conditions or restrictions that the Authority may impose include conditions or restrictions relating to —
(a) the activities that the designated clearing house may undertake;
(b) the products that may be cleared by the clearing facility;
(c) the nature of investors or participants who may use or participate in the clearing facility; and
(d) the requirement for the designated clearing house to operate as a corporation.
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(4) Any designated clearing house which contravenes any condition or restriction imposed under subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Power of Authority to issue directions
79. —(1) The Authority may, if it thinks it necessary or expedient —
(a) for ensuring the safe and efficient clearing and settlement of transactions;
(b) for ensuring the integrity and stability of the capital markets or the financial system;
(c) in the interests of the public or a section of the public or for the protection of investors;
(d) for the effective administration of this Act; or
(e) for ensuring compliance with any condition or restriction as may be imposed by the Authority under section 60 (2), 64 (4), 75 (5) or (10), 76 (11), 78 (1) or (2) or 81C, or such other obligations or requirements under this Act or as may be prescribed by the Authority,
issue directions by notice in writing either of a general or specific nature to a designated clearing house, and the designated clearing house shall comply with such directions.
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(2) Any designated clearing house which, without reasonable excuse, contravenes a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
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(3) For the avoidance of doubt, a direction issued under subsection (1) shall be deemed not to be subsidiary legislation.
[1/2005]
[SIA, s. 21; E (DM) A, s. 14]
Power to order cessation of designated clearing houses
80. —(1) The Authority may, by notice in writing to a designated clearing house, order the designated clearing house to cease operating any of its clearing facilities if —
(a) the designated clearing house fails to comply with any obligation imposed on it under section 59 (1);
(b) the designated clearing house contravenes any provision of this Act or any condition or restriction imposed on it, or direction issued to it, by the Authority under any provision of this Act;
(c) the designated clearing house is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(d) the designated clearing house operates in a manner that is, in the opinion of the Authority, contrary to the interests of the public;
(e) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the designated clearing house;
(f) the designated clearing house has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly; or
(g) the designated clearing house has provided any information or document to the Authority that is false or misleading.
[1/2005]
(2) The Authority shall give notice in the Gazette of any order made under subsection (1).
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(3) Subject to subsection (4), the Authority shall not order a designated clearing house to cease operating a clearing facility under subsection (1) without giving the designated clearing house an opportunity to be heard.
[1/2005]
(4) The Authority may order a designated clearing house to cease operating a clearing facility under subsection (1) on any of the following grounds without giving the designated clearing house an opportunity to be heard:
(a) the designated clearing house is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(b) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the designated clearing house;
(c) the designated clearing house has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly.
[1/2005]
(5) Any designated clearing house that is aggrieved by a decision of the Authority made in relation to the designated clearing house under subsection (1) may, within 30 days after the designated clearing house is notified of the decision, appeal to the Minister whose decision shall be final.
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(6) Notwithstanding the lodging of an appeal under subsection (5), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister.
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(7) The Minister may, when deciding an appeal under subsection (5), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the decision of the Minister.
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(8) The Authority may direct, by notice in writing, a designated clearing house, to whom an order to cease operations of its clearing facility has been made by the Authority under subsection (1), to take such action as it considers necessary, including any of the following actions:
(a) ordering the liquidation of all positions or part thereof or the reduction in such positions;
(b) altering conditions of delivery of transactions cleared or settled or to be cleared or settled through the clearing facility;
(c) fixing the settlement price at which transactions are to be liquidated;
(d) requiring margins or additional margins for transactions cleared or settled or to be cleared or settled through the clearing facility;
(e) modifying or suspending any of the business rules of the designated clearing house,
and the designated clearing house shall comply with that direction.
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(9) The Authority may modify any action taken by a designated clearing house under subsection (8), including the setting aside of that action.
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(10) Any person who is aggrieved by any action taken by the Authority or a designated clearing house under subsection (8) or (9) may, within 30 days after the person is notified of the action, appeal to the Minister whose decision shall be final.
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(11) Notwithstanding the lodging of an appeal under subsection (10), any action taken by the Authority or a designated clearing house under this section shall continue to have effect pending the decision of the Minister.
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(12) The Minister may, when deciding an appeal under subsection (10), make such modification as he considers necessary to any action taken by the Authority or a designated clearing house under this section, and such modified action shall have effect from the date of the decision of the Minister.
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(13) Subject to any direction issued by the Authority under subsection (8) to the contrary, an order of cessation made under subsection (1) shall not operate so as to —
(a) avoid or affect any agreement, transaction or arrangement entered into in connection with the use of the clearing facility operated by the designated clearing house, whether the agreement, transaction or arrangement was entered into before or after the order of the cessation; or
(b) affect any right, obligation or liability arising under such agreement, transaction or arrangement.
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(14) Any designated clearing house which contravenes an order of cessation made under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction.
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(15) Any designated clearing house which fails to comply with a direction issued under subsection (8) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Emergency powers of Authority
81. —(1) Where the Authority has reason to believe that an emergency exists, or thinks that it is necessary or expedient in the interests of the public or a section of the public or for the protection of investors, the Authority may direct by notice in writing a designated clearing house to take such action as it considers necessary to maintain or restore safe and efficient operations of the clearing facilities operated by the designated clearing house.
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(2) Without prejudice to subsection (1), the actions which the Authority may direct a designated clearing house to take include —
(a) ordering the liquidation of all positions or part thereof or the reduction of such positions;
(b) altering conditions of delivery of transactions cleared or settled or to be cleared or settled through the clearing facility;
(c) fixing the settlement price at which transactions are to be liquidated;
(d) requiring margins or additional margins for transactions cleared or settled or to be cleared or settled through the clearing facility; and
(e) modifying or suspending any of the business rules of the designated clearing house.
[1/2005]
(3) Where a designated clearing house fails to comply with any direction of the Authority under subsection (1) within such time as is specified by the Authority, the Authority may —
(a) set margin levels for transactions cleared or settled or to be cleared or settled through the clearing facility to cater for the emergency;
(b) set limits that may apply to market positions acquired in good faith prior to the date of the notice issued by the Authority; or
(c) take such other action as the Authority thinks fit to maintain or restore safe and efficient operations of the clearing facilities operated by the designated clearing house.
[1/2005]
(4) In this section, “emergency” means any threatened or actual market manipulation or cornering, and includes —
(a) any act of any government affecting a commodity or securities;
(b) any major market disturbance which prevents the market from accurately reflecting the forces of supply and demand for such commodity or securities; or
(c) any undesirable situation or practice which, in the opinion of the Authority, constitutes an emergency.
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(5) The Authority may modify any action taken by a designated clearing house under subsection (1), including the setting aside of that action.
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(6) Any person who is aggrieved by any action taken by the Authority or a designated clearing house under this section may, within 30 days after the person is notified of the action, appeal to the Minister whose decision shall be final.
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(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority or a designated clearing house under this section shall continue to have effect pending the decision of the Minister.
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(8) The Minister may, when deciding an appeal under subsection (6), make such modification as he considers necessary to any action taken by the Authority or a designated clearing house under this section, and such modified action shall have effect from the date of the decision of the Minister.
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(9) Any designated clearing house which fails to comply with a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
[FTA, s. 41]
Power of Authority to remove officers
81A. —(1) Where the Authority is satisfied that an officer of a designated clearing house —
(a) has wilfully contravened or wilfully caused that designated clearing house to contravene this Act or its business rules;
(b) has, without reasonable excuse, failed to ensure compliance with this Act or the business rules of that designated clearing house, by that designated clearing house or a member of that designated clearing house or a person associated with that member;
(c) has failed to discharge the duties or functions of his office or employment;
(d) is an undischarged bankrupt, whether in Singapore or elsewhere;
(e) has had execution against him in respect of a judgment debt returned unsatisfied in whole or in part;
(f) has, whether in Singapore or elsewhere, made a compromise or scheme of arrangement with his creditors, being a compromise or scheme of arrangement that is still in operation; or
(g) has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly,
the Authority may, if it thinks it necessary in the interests of the public or a section of the public or for the protection of investors, by notice in writing direct that designated clearing house to remove the officer from his office or employment, and that designated clearing house shall comply with such notice, notwithstanding the provisions of section 152 of the Companies Act (Cap. 50).
[1/2005]
(2) Without prejudice to any other matter that the Authority may consider relevant, the Authority may, in determining whether an officer of a designated clearing house has failed to discharge the duties or functions of his office or employment for the purposes of subsection (1) (c), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing.
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(3) Subject to subsection (4), the Authority shall not direct a designated clearing house to remove an officer from his office or employment without giving the designated clearing house an opportunity to be heard.
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(4) The Authority may direct a designated clearing house to remove an officer from his office or employment under subsection (1) on any of the following grounds without giving the designated clearing house an opportunity to be heard:
(a) the officer is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the officer has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
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(5) Where the Authority directs a designated clearing house to remove an officer from his office or employment under subsection (1), the Authority need not give that officer an opportunity to be heard.
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(6) Any designated clearing house that is aggrieved by a direction of the Authority made in relation to the designated clearing house under subsection (1) may, within 30 days after the designated clearing house is notified of the direction, appeal to the Minister whose decision shall be final.
[1/2005]
(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister.
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(8) The Minister may, when deciding an appeal under subsection (6), make such modifications as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the decision of the Minister.
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(9) Subject to subsection (10), no criminal or civil liability shall be incurred by a designated clearing house in respect of any thing done or omitted to be done with reasonable care and in good faith in the discharge or purported discharge of its obligations under this section.
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(10) Any designated clearing house which, without reasonable excuse, contravenes a written notice issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Additional powers of Authority in respect of auditors
81B. —(1) If an auditor of a designated clearing house, in the course of the performance of his duties, becomes aware of —
(a) any matter which, in his opinion, adversely affects or may adversely affect the financial position of the designated clearing house to a material extent;
(b) any matter which, in his opinion, constitutes or may constitute a breach of any provision of this Act or an offence involving fraud or dishonesty; or
(c) any irregularity that has or may have a material effect upon the accounts of the designated clearing house, including any irregularity that affects or jeopardises, or may affect or jeopardise, the funds or property of investors,
the auditor shall immediately send to the Authority a written report of the matter or the irregularity.
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(2) An auditor shall not, in the absence of malice on his part, be liable to any action for defamation at the suit of any person in respect of any statement made in his report under subsection (1).
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(3) Subsection (2) shall not restrict or affect any right, privilege or immunity that the auditor may have, apart from this section, as a defendant in an action for defamation.
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(4) The Authority may impose all or any of the following duties on an auditor of a designated clearing house:
(a) a duty to submit such additional information and reports in relation to his audit as the Authority considers necessary;
(b) a duty to enlarge, extend or alter the scope of his audit of the business and affairs of the designated clearing house;
(c) a duty to carry out any other examination or establish any procedure in any particular case;
(d) a duty to submit a report on any matter arising out of his audit, examination or establishment of procedure referred to in paragraph (b) or (c),
and the auditor shall carry out such duties.
[1/2005]
(5) The designated clearing house shall remunerate the auditor in respect of the discharge by him of all or any of the duties referred to in subsection (4).
[1/2005]
[E (DM) A, s. 16]
Power of Authority to exempt designated clearing houses from provisions of this Part
81C. The Authority may exempt a designated clearing house or a class of designated clearing houses from any of the provisions of this Part if it is satisfied that the non-compliance by such designated clearing house or class of designated clearing houses with such provision would not detract from the objectives specified in section 47, subject to such conditions or restrictions as may be imposed by the Authority.
[1/2005]
Subdivision (5) — Immunity
Immunity from criminal or civil liability
81D. No criminal or civil liability shall be incurred by —
(a) a designated clearing house; or
(b) any person acting on behalf of a designated clearing house, including —
(i) any director of the designated clearing house; or
(ii) any member of any committee established by the designated clearing house,
for any thing done (including any statement made) or omitted to be done with reasonable care and in good faith in the course of, or in connection with, the discharge or purported discharge of its or his obligations under this Act or the business rules of the designated clearing house, including its default rules.
[1/2005]
[E (DM) A, s. 16]
Division 4 — Insolvency
Application of this Division
81E. This Division shall apply to such transaction or class of transactions cleared or settled by any designated clearing house or class of designated clearing houses, and to such extent as may be prescribed by the Authority.
[1/2005]
Proceedings of designated clearing house shall take precedence over law of insolvency
81F. —(1) The following shall not be invalid to any extent at law by reason only of inconsistency with any law relating to the distribution of the assets of a person on insolvency, bankruptcy or winding up, or on the appointment of a receiver, a receiver and manager or an equivalent person over any of the assets of a person:
(a) a market contract;
(b) a disposition of property pursuant to a market contract;
(c) the provision of market collateral;
(d) a contract effected by a designated clearing house for the purpose of realising property provided as market collateral, or any disposition of property pursuant to such a contract;
(e) a disposition of property in accordance with the business rules of a designated clearing house as to the application of property provided as market collateral;
(f) a disposition of property as a result of which the property becomes subject to a market charge, or any transaction pursuant to which that disposition is made;
(g) a disposition of property for the purpose of enforcing a market charge;
(h) a market charge;
(i) any default proceedings.
[1/2005]
(2) A relevant office holder, or a court applying the law relating to insolvency in Singapore, shall not exercise his or its power to prevent, or interfere with —
(a) the settlement of a market contract in accordance with the business rules of a designated clearing house, or proceedings or other action taken under those business rules; or
(b) default proceedings.
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(3) Subsection (2) shall not operate to prevent a relevant office holder from recovering an amount under section 81L after the completion of a specified event referred to in section 81L (3).
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(4) Where a participant which is also a bank licensed under the Banking Act (Cap. 19) becomes insolvent, the liabilities of the bank accorded priority under sections 61 and 62 of that Act and the Payment and Settlement Systems (Finality and Netting) Act (Cap. 231) shall have priority over unsecured liabilities of the bank accorded priority under the provisions of this Division.
[1/2005]
[HK SF Bill, Clause 45]
Supplementary provisions as to default proceedings
81G. —(1) A court may, on the application of a relevant office holder, make an order to alter, or to release the relevant office holder from complying with, the functions of his office that are affected by default proceedings if default proceedings have been, could be, or could have been, taken.
[1/2005]
(2) The functions of the relevant office holder shall be construed subject to an order made under subsection (1).
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(3) Sections 45, 74 and 76 of the Bankruptcy Act (Cap. 20) and sections 210, 258, 260, 262 (3), 299 (1) and 309 of the Companies Act (Cap. 50) shall not prevent, or interfere with, any default proceedings.
[1/2005]
[HK SF Bill, Clause 46]
Duty to report on completion of default proceedings
81H. —(1) A designated clearing house shall, upon the conclusion of any default proceeding commenced by it, make a report on those proceedings stating in respect of each defaulter who is a subject of those proceedings —
(a) the net sum, if any, certified by the designated clearing house to be payable by or to the defaulter; or
(b) the fact that no sum is so payable,
as the case may be, and the designated clearing house may include in that report such other particulars in respect of those proceedings as it thinks fit.
[1/2005]
(2) A designated clearing house which has made a report under subsection (1) shall supply the report to —
(a) the Authority;
(b) any relevant office holder acting in relation to —
(i) the defaulter to whom the report relates; or
(ii) the estate of that defaulter; and
(c) where there is no relevant office holder referred to in paragraph (b), the defaulter to whom the report relates.
[1/2005]
(3) The designated clearing house shall publish a notice of the fact that a report has been made under subsection (1) in such manner as it thinks appropriate to bring that fact to the attention of the creditors of the defaulter to whom the report relates.
[1/2005]
(4) Where a relevant office holder or defaulter receives under subsection (2) a report made under subsection (1), he shall, at the request of a creditor of the defaulter to whom the report relates —
(a) make the report available for inspection by the creditor; and
(b) on payment of such reasonable fee as the relevant office holder or defaulter, as the case may be, determines, supply to the creditor all or any part of that report.
[1/2005]
(5) In subsections (2), (3) and (4), “report” includes a copy of a report.
[1/2005]
[HK SF Bill, Clause 47]
Net sum payable on completion of default proceedings
81I. —(1) This section shall apply to any net sum certified under section 81H (1) ( a) by a designated clearing house, upon the completion by it of any default proceedings, to be payable by or to a defaulter.
[1/2005]
(2) Notwithstanding section 87 or 88 of the Bankruptcy Act (Cap. 20), and section 327 of the Companies Act (Cap. 50), where a receiving or winding up order has been made, or a resolution for voluntary winding up has been passed, any net sum as certified under section 81H (1) (a) shall —
(a) be provable in the bankruptcy or winding up or payable to the relevant office holder, as the case may be; and
(b) be taken into account, where appropriate, under section 88 of the Bankruptcy Act or section 327 of the Companies Act.
[1/2005]
[HK SF Bill, Clause 48]
Disclaimer of onerous property, rescission of contracts, etc.
81J. —(1) Section 110 of the Bankruptcy Act and section 332 of the Companies Act shall not apply —
(a) to a market contract;
(b) to a contract effected by a designated clearing house for the purpose of realising property provided as market collateral;
(c) to a market charge; or
(d) to any default proceedings.
[1/2005]
(2) Section 77 of the Bankruptcy Act and sections 259 and 299 (1) of the Companies Act shall not apply to any act, matter or thing which has been done under —
(a) a market contract;
(b) a disposition of property pursuant to a market contract;
(c) the provision of market collateral;
(d) a contract effected by a designated clearing house for the purpose of realising property provided as market collateral, or any disposition of property pursuant to such a contract;
(e) a disposition of property in accordance with the business rules of a designated clearing house relating to the application of property provided as market collateral;
(f) a disposition of property as a result of which the property becomes subject to a market charge, or any transaction pursuant to which that disposition is made;
(g) a disposition of property for the purpose of enforcing a market charge;
(h) a market charge; or
(i) any default proceedings.
[1/2005]
[HK SF Bill, Clause 49]
Adjustment of prior transactions
81K. —(1) No order shall be made by a court under —
(a) section 98 or 99 of the Bankruptcy Act (Cap. 20);
(b) section 227T, 329 or 331 of the Companies Act (Cap. 50); or
(c) section 73B of the Conveyancing and Law of Property Act (Cap. 61),
in relation to any matter to which this section applies.
[1/2005]
(2) The matters to which this section applies are —
(a) a market contract;
(b) a disposition of property pursuant to a market contract;
(c) the provision of market collateral;
(d) a contract effected by a designated clearing house for the purpose of realising property provided as market collateral;
(e) a disposition of property in accordance with the business rules of a designated clearing house relating to the application of property provided as market collateral;
(f) a disposition of property as a result of which the property becomes subject to a market charge, or any transaction pursuant to which that disposition is made;
(g) a disposition of property for the purpose of enforcing a market charge;
(h) a market charge;
(i) any default proceedings.
[1/2005]
[HK SF Bill, Clause 50]
Right of relevant office holder to recover certain amounts arising from certain transactions
81L. —(1) Where a participant (referred to as the first participant) sells securities at an over-value to, or purchases securities at an under-value from, another participant (referred to as the second participant) in the circumstances referred to in subsection (3), and thereafter a relevant office holder acts for —
(a) the second participant;
(b) the principal of the second participant in the sale or purchase; or
(c) the estate of the second participant or person referred to in paragraph (b),
then, unless a court otherwise orders, the relevant office holder may recover from the first participant, or the principal of the first participant, an amount equal to the specified gain obtained under the sale or purchase by the first participant, or the principal of the first participant.
[1/2005]
(2) The amount equal to the specified gain is recoverable even if the sale or purchase may have been discharged according to the business rules of a designated clearing house and replaced by a market contract.
[1/2005]
(3) The circumstances referred to in subsection (1) are that —
(a) a specified event has occurred in relation to the second participant or the principal of the second participant within the period of 6 months immediately following the date on which the sale or purchase was entered into; and
(b) at the time the sale or purchase was entered into, the first participant or the principal of the first participant knew, or ought reasonably to have known, that a specified event was likely to occur in relation to the second participant or the principal of the second participant.
[1/2005]
(4) In this section —
"specified event" , in relation to a second participant or a person who is or was, in respect of a sale or purchase referred to in subsection (1), the principal of the second participant, means —
(a) the making of a bankruptcy order against the second participant or that person, as the case may be;
(b) the making of a statutory declaration in respect of the second participant or that person, as the case may be, under section 291 (1) of the Companies Act (Cap. 50);
(c) the summoning of a meeting of creditors in relation to the second participant or that person, as the case may be, under section 296 of the Companies Act;
(d) the making of an application for the winding up of the second participant or that person, as the case may be, before a court; or
(e) the making of a judicial management order by a court under Part VIIIA of the Companies Act in respect of the second participant or that person, as the case may be;
"specified gain" , in relation to a sale or purchase referred to in subsection (1), means the difference between —
(a) the market value of the securities which are the subject of the sale or purchase; and
(b) the value of the consideration for the sale or purchase,
as at the time the sale or purchase was entered into.
[1/2005;42/2005]
[HK SF Bill, Clause 51]
Application of market collateral not affected by certain other interest, etc.
81M. —(1) This section shall have effect with respect to the application of a designated clearing house of property provided as market collateral (referred to in this section as the property).
[1/2005]
(2) The property may be applied in accordance with the business or default rules of a designated clearing house so far as it is necessary for it to be so applied notwithstanding —
(a) any prior equitable interest or right, or any right or remedy arising from a breach of fiduciary duty, unless the designated clearing house had actual notice of the interest, right or breach of duty (other than any interest or right arising from the situation referred to in paragraph (b)), as the case may be, at the time the property was provided as market collateral; or
(b) that the property is deposited by the designated clearing house in a trust account held for the benefit of a participant.
[1/2005]
(3) No right or remedy arising subsequent to the provision of the property as market collateral may be enforced to prevent, or interfere with, the application of the property by the designated clearing house in accordance with its business or default rules.
[1/2005]
(4) Where a designated clearing house has power under this section to apply the property notwithstanding an interest, a right or a remedy, a person to whom the designated clearing house disposes of the property in accordance with its business or default rules shall take free from that interest, right or remedy.
[1/2005]
[HK SF Bill, Clause 52]
Enforcement of judgments over property subject to market charge, etc.
81N. —(1) Where property is subject to a market charge or has been provided as market collateral, no execution or other legal process for the enforcement of a judgment or an order may be commenced or continued, and no distress may be levied, against the property by a person not seeking to enforce any interest in, or security over, the property, except with the consent of the designated clearing house concerned.
[1/2005]
(2) Where by virtue of this section a person would not be entitled to enforce a judgment or an order against any property, any injunction or other remedy granted by any court with a view to facilitating the enforcement of any such judgment or order shall not extend to that property.
[1/2005]
[HK SF Bill, Clause 53]
Law of insolvency in other jurisdictions
81O. —(1) Notwithstanding any other written law or rule of law, a court shall not recognise or give effect to —
(a) an order of a court exercising jurisdiction under the law of insolvency in a place outside Singapore; or
(b) an act of a person appointed in a place outside Singapore to perform a function under the law of insolvency in that place,
insofar as the making of the order or doing of the act would be prohibited under this Act for a court in Singapore or a relevant office holder, respectively.
[1/2005]
(2) In this section, “law of insolvency”, in relation to a place outside Singapore, means any law of that place which is similar to, or serves the same purposes as, any part of the law of insolvency in Singapore.
[1/2005]
[HK SF Bill, Clause 54]
Participant to be party to certain transactions as principal
81P. —(1) Where a participant —
(a) in his capacity as such enters into any transaction (including a market contract) with a designated clearing house; and
(b) but for this subsection or any provision in the business rules or default rules of a designated clearing house, would be a party to that transaction as agent,
then, notwithstanding any other written law or rule of law, as between, but only as between, the designated clearing house and any other person (including the participant and the person who is his principal in respect of that transaction), the participant shall for all purposes (including any action, claim or demand, whether civil or criminal) —
(i) be deemed not to be a party to that transaction as agent; and
(ii) be deemed to be a party to that transaction as principal.
[1/2005]
(2) Where —
(a) 2 or more participants in their capacities as such enter into any transaction; and
(b) but for this subsection, any of the participants would be a party to that transaction as agent,
then, notwithstanding any other written law or rule of law, a participant to whom paragraph (b) applies shall for all purposes (including any action, claim or demand, whether civil or criminal), except as between, but only as between, him and the person who is his principal in respect of that transaction —
(i) be deemed not to be a party to the transaction as agent; and
(ii) be deemed to be a party to the transaction as principal.
[1/2005]
[HK SF Bill, Clause 55]
Preservation of rights, etc.
81Q. Except to the extent that it expressly provides, this Division shall not operate to limit, restrict or otherwise affect —
(a) any right, title, interest, privilege, obligation or liability of a person; or
(b) any investigation, legal proceedings or remedy in respect of any such right, title, interest, privilege, obligation or liability.
[1/2005]
[HK SF Bill, Clause 57]
Immunity from criminal or civil liability
81R. —(1) No criminal or civil liability shall be incurred by —
(a) a person discharging, by virtue of a delegation under the default rules of a designated clearing house, an obligation of the designated clearing house in connection with any default proceedings; or
(b) any person acting on behalf of a person referred to in paragraph (a), including —
(i) any member of the board of directors of the last- mentioned person; and
(ii) any member of any committee established by the last- mentioned person,
in respect of any thing done or omitted to be done with reasonable care and in good faith in the discharge or purported discharge of that obligation.
[1/2005]
(2) Where a relevant office holder takes action in relation to any property of a defaulter which is liable to be dealt with in accordance with the default rules of a designated clearing house, and reasonably believes or has reasonable grounds for believing that he is entitled to take that action, he shall not be liable to any person in respect of any loss or damage resulting from his action except insofar as the loss or damage, as the case may be, is caused by the negligence of the office holder.
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[HK SF Bill, Clause 39]
Division 5 — General Powers of Authority
Power of Authority to make regulations
81S. —(1) Without prejudice to section 341, the Authority may make regulations relating to requirements applicable to any person operating a clearing facility, whether or not the person has been designated by the Authority as a designated clearing house under section 55 (1).
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(2) Regulations made under this section may provide —
(a) that a contravention of any specified provision thereof shall be an offence; and
(b) for penalties not exceeding a fine of $150,000 or imprisonment for a term not exceeding 12 months or both for each offence and, in the case of a continuing offence, to a further penalty not exceeding a fine of 10% of the maximum fine prescribed for that offence for every day or part thereof during which the offence continues after conviction.
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PART IIIA
APPROVED HOLDING COMPANIES
Objectives of this Part
81T. The objectives of this Part are —
(a) to provide a regulatory framework for the establishment and operation of holding companies of —
(i) approved exchanges;
(ii) designated clearing houses; and
(iii) corporations that are approved holding companies,
and to ensure that such holding companies are fit and proper to perform their functions; and
(b) to reduce systemic risk.
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Division 1 — Establishment of Approved Holding Companies
Requirement for approval
81U. —(1) No corporation shall be the holding company of any approved exchange, designated clearing house, or corporation which is an approved holding company, unless the first-mentioned corporation is an approved holding company.
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(2) Any corporation which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction.
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Application for approval
81V. —(1) A corporation may apply to the Authority to be approved as an approved holding company.
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(2) An application made under subsection (1) shall be —
(a) made in such form and manner as the Authority may prescribe; and
(b) accompanied by a non-refundable prescribed application fee, which shall be paid in the manner specified by the Authority.
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(3) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application.
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Power of Authority to approve holding companies
81W. —(1) Where an application is made under section 81V (1), the Authority may approve the corporation as an approved holding company subject to such conditions or restrictions as the Authority may think fit to impose by notice in writing, if the Authority is satisfied that —
(a) it would not be contrary to the interests of the public or contrary to the objectives specified in section 81T to approve the corporation; and
(b) the grounds referred to in subsection (5) for refusing such approval do not apply.
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(2) The Authority may, at any time, by notice in writing to the corporation, vary any condition or restriction or impose such further conditions or restrictions as the Authority may think fit.
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(3) An approved holding company shall, for the duration of the approval, satisfy all conditions and restrictions that may be imposed on it under subsections (1) and (2).
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(4) Subject to subsection (5), the Authority shall not refuse to approve a corporation under subsection (1) without giving the corporation an opportunity to be heard.
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(5) The Authority may refuse to approve a corporation on any of the following grounds without giving the corporation an opportunity to be heard:
(a) the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(b) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the corporation;
(c) the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly.
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(6) The Authority shall give notice in the Gazette of any corporation approved under subsection (1).
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(7) Any applicant that is aggrieved by the refusal of the Authority to grant an approval under subsection (1) may, within 30 days after the applicant is notified of the decision, appeal to the Minister whose decision shall be final.
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(8) Any corporation which contravenes subsection (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
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Annual fees payable by approved holding company
81X. —(1) Every approved holding company shall pay to the Authority such annual fees as may be prescribed and in such manner as may be specified by the Authority.
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(2) The Authority may, where it considers appropriate, refund or remit the whole or part of any annual fee paid or payable to it.
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Cancellation of approval
81Y. —(1) An approved holding company which intends to cease its activities as an approved holding company may apply to the Authority to cancel its approval.
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(2) The Authority may cancel the approval if it is satisfied that the approved holding company referred to in subsection (1) has ceased its activities as an approved holding company.
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Power of Authority to revoke approval
81Z. —(1) The Authority may revoke any approval of a corporation as an approved holding company under section 81W (1) if —
(a) the corporation ceases to be the holding company of any approved exchange, designated clearing house or corporation which is an approved holding company;
(b) the corporation is being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(c) the corporation contravenes —
(i) any condition or restriction applicable in respect of its approval;
(ii) any direction issued to it by the Authority under this Act; or
(iii) any provision in this Act;
(d) the corporation operates in a manner that is, in the opinion of the Authority, contrary to the interests of the public;
(e) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the corporation;
(f) the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly; or
(g) any information or document provided by the corporation to the Authority is false or misleading.
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(2) Subject to subsection (3), the Authority shall not revoke under subsection (1) any approval under section 81W (1) that was granted to a corporation without giving the corporation an opportunity to be heard.
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(3) The Authority may revoke an approval under section 81W (1) that was granted to a corporation on any of the following circumstances without giving the corporation an opportunity to be heard:
(a) the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(b) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the corporation;
(c) the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly.
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(4) Any corporation which is aggrieved by a decision of the Authority made in relation to the corporation under subsection (1) may, within 30 days after the corporation is notified of the decision, appeal to the Minister whose decision shall be final.
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(5) Notwithstanding the lodging of an appeal under subsection (4), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister.
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(6) The Minister may, when deciding an appeal under subsection (4), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the decision of the Minister.
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(7) The Authority shall give notice in the Gazette of any revocation of approval referred to in subsection (1).
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Division 2 — Regulation of Approved Holding Companies
Obligation to notify Authority of certain matters
81ZA. —(1) An approved holding company shall, as soon as practicable after the occurrence of any of the following circumstances, notify the Authority of the circumstance:
(a) any material change to the information provided by the approved holding company in its application under section 81V (1);
(b) the carrying on of any activity by the approved holding company other than —
(i) the activities of a holding company of any approved exchange, designated clearing house or corporation that is an approved holding company;
(ii) an activity incidental to being a holding company of any approved exchange, designated clearing house or corporation that is an approved holding company; or
(iii) such activity or class of activities as the Authority may prescribe;
(c) the acquisition by the approved holding company of a substantial shareholding in a corporation which does not carry on —
(i) any activity of a holding company of any approved exchange, designated clearing house or corporation that is an approved holding company;
(ii) any activity incidental to being a holding company of any approved exchange, designated clearing house or corporation that is an approved holding company; or
(iii) such activity or class of activities as the Authority may prescribe;
(d) any other matter that the Authority may prescribe by regulations or specify by notice in writing to the approved holding company.
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(2) Without prejudice to the generality of section 81ZL (1), the Authority may, at any time after receiving a notification referred to in subsection (1), issue directions to the approved holding company —
(a) where the notification relates to a matter referred to in subsection (1) (b) —
(i) to cease carrying on the first-mentioned activity referred to in subsection (1) (b); or
(ii) to carry on the first-mentioned activity referred to in subsection (1) (b) subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 81ZL (1); or
(b) where the notification relates to a matter referred to in subsection (1) (c) —
(i) to dispose of the shareholding referred to in subsection (1) (c); or
(ii) to exercise its rights relating to such shareholding subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 81ZL (1),
and the approved holding company shall comply with such directions.
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(3) Any approved holding company which contravenes subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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Obligation to submit periodic reports
81ZB. —(1) An approved holding company shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe.
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(2) Any approved holding company which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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Obligation to assist Authority
81ZC. —(1) An approved holding company shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —
(a) such books and other information relating to the activities of the approved holding company; and
(b) such other information,
as the Authority may require for the proper administration of this Act.
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(2) Any approved holding company which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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Obligation to maintain confidentiality
81ZD. —(1) Subject to subsection (2), an approved holding company and its officers and employees shall maintain, and aid in maintaining, the confidentiality of all user information that —
(a) comes to the knowledge of the approved holding company or any of its officers or employees; or
(b) is in the possession of the approved holding company or any of its officers or employees.
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(2) Subsection (1) shall not apply to —
(a) the disclosure of user information for such purposes, or in such circumstances, as the Authority may prescribe;
(b) any disclosure of user information which is authorised by the Authority to be disclosed or furnished; or
(c) the disclosure of user information pursuant to any requirement imposed under any written law or order of court in Singapore.
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(3) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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(4) For the avoidance of doubt, nothing in this section shall be construed as preventing an approved holding company from entering into a written agreement with a user which obliges the approved holding company to maintain a higher degree of confidentiality than that specified in this section.
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Control of substantial shareholding in approved holding companies
81ZE. —(1) No person shall enter into any agreement to acquire shares in an approved holding company by virtue of which he would, if the agreement had been carried out, become a substantial shareholder of the approved holding company without first obtaining the approval of the Authority to enter into the agreement.
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(2) No person shall become —
(a) a 12% controller; or
(b) a 20% controller,
of an approved holding company without first obtaining the approval of the Authority.
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(3) In subsection (2) —
"12% controller" means a person, not being a 20% controller, who alone or together with his associates —
(a) holds not less than 12% of the shares in the approved holding company; or
(b) is in a position to control not less than 12% of the votes in the approved holding company;
"20% controller" means a person who, alone or together with his associates —
(a) holds not less than 20% of the shares in the approved holding company; or
(b) is in a position to control not less than 20% of the votes in the approved holding company.
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(4) In this section —
(a) a person holds a share if —
(i) he is deemed to have an interest in that share under section 7 (6) to (10) of the Companies Act (Cap. 50); or
(ii) he otherwise has a legal or an equitable interest in that share, except such interest as is to be disregarded under section 7 (6) to (10) of the Companies Act;
(b) a reference to the control of a percentage of the votes in an approved holding company shall be construed as a reference to the control, whether direct or indirect, of that percentage of the total number of votes that might be cast in a general meeting of the approved holding company; and
(c) a person, A, is an associate of another person, B, if —
(i) A is the spouse, a parent, remoter lineal ancestor or step-parent, a son, daughter, remoter issue, step-son or step-daughter or a brother or sister of B;
(ii) A is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B, or where B is a corporation, of the directors of B;
(iii) B is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A, or where A is a corporation, of the directors of A;
(iv) A is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B;
(v) B is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A;
(vi) A is a related corporation of B;
(vii) A is a corporation in which B, alone or together with other associates of B as described in sub-paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in A;
(viii) B is a corporation in which A, alone or together with other associates of A as described in sub-paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in B; or
(ix) A is a person with whom B has an agreement or arrangement, whether oral or in writing and whether express or implied, to act together with respect to the acquisition, holding or disposal of shares or other interests in, or with respect to the exercise of their votes in relation to, the approved holding company.
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(5) The Authority may grant its approval referred to in subsection (1) or (2) subject to such conditions or restrictions as the Authority may think fit.
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(6) Without prejudice to subsection (11), the Authority may, for the purposes of securing compliance with subsection (1) or (2) or any condition or restriction imposed under subsection (5), by notice in writing, direct the transfer or disposal of all or any of the shares of an approved holding company in which a substantial shareholder, 12% controller or 20% controller of the approved holding company has an interest.
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(7) Until a person to whom a direction has been issued under subsection (6) transfers or disposes of the shares which are the subject of the direction, and notwithstanding any thing to the contrary in the Companies Act (Cap. 50) or the memorandum or articles of association or other constituent document or documents of the approved holding company —
(a) no voting rights shall be exercisable in respect of the shares which are the subject of the direction;
(b) the approved holding company shall not offer or issue any shares (whether by way of rights, bonus, share dividend or otherwise) in respect of the shares which are the subject of the direction; and
(c) except in a liquidation of the approved holding company, the approved holding company shall not make any payment (whether by way of cash dividend, dividend in kind or otherwise) in respect of the shares which are the subject of the direction.
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(8) Any issue of shares by an approved holding company in contravention of subsection (7) (b) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return those shares to the approved holding company, upon which the approved holding company shall return to the person any payment received from him in respect of those shares.
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(9) Any payment made by an approved holding company in contravention of subsection (7) (c) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return the payment he has received to the approved holding company.
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(10) The Authority may exempt —
(a) any person or class or persons; or
(b) any class or description of shares or interests in shares,
from the requirement under subsection (1) or (2), subject to such conditions or restrictions as may be imposed by the Authority.
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(11) Any person who contravenes subsection (1) or (2), or any condition or restriction imposed by the Authority under subsection (5), shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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(12) Any person who contravenes subsection (7) (b) or (c), (8) or (9) or any direction issued by the Authority under subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
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[E (DM) A, s. 15]
Approval of chairman, chief executive officer, director and key persons
81ZF. —(1) An approved holding company shall ensure that it appoints or employs fit and proper persons as its chairman, chief executive officer, directors and key management officers.
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(2) No approved holding company shall appoint a person as its chairman, chief executive officer or director unless the approved holding company has obtained the approval of the Authority.
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(3) The Authority may, by notice in writing, require an approved holding company to obtain the approval of the Authority for the appointment of any person to any key management position or committee of the approved holding company and the approved holding company shall comply with the notice.
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(4) An application for approval under subsection (2) or (3) shall be made in such form and manner as the Authority may prescribe.
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(5) Without prejudice to the generality of section 81ZK and to any other matter that the Authority may consider relevant, the Authority may, in determining whether to grant its approval under subsection (2) or (3), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing.
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(6) Subject to subsection (7), the Authority shall not refuse an application for approval under this section without giving the approved holding company an opportunity to be heard.
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(7) The Authority may refuse an application for approval on any of the following grounds without giving the approved holding company an opportunity to be heard:
(a) the person is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the person has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
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(8) Where the Authority refuses an application for approval under this section, the Authority need not give the person who was proposed to be appointed an opportunity to be heard.
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(9) An approved holding company shall, as soon as practicable, give written notice to the Authority of the resignation or removal of its chairman, chief executive officer, director or person referred to in the notice issued by the Authority under subsection (3).
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(10) Without prejudice to the generality of section 81ZK, the Authority may make regulations relating to the composition and duties of the board of directors or any committee of an approved holding company.
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(11) In this section, “committee” includes any committee of directors, disciplinary committee, appeals committee or any body responsible for disciplinary action against a member of an approved exchange or a designated clearing house of which an approved holding company is the holding company.
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(12) The Authority may exempt an approved holding company or a class of approved holding companies from the requirement under subsection (1), (2) or (9), subject to such conditions or restrictions as may be imposed by the Authority.
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(13) Any approved holding company which contravenes subsection (1), (2), (3) or (9) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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Listing of approved holding companies on securities market
81ZG. —(1) The securities of an approved holding company shall not be listed for quotation on a securities market that is operated by any of its related corporations unless the approved holding company and the operator of the securities market have entered into such arrangements as the Authority may require —
(a) for dealing with possible conflicts of interest that may arise from such listing; and
(b) for the purpose of ensuring the integrity of trading of the securities of the approved holding company.
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(2) Where the securities of an approved holding company are listed for quotation on a securities market operated by any of its related corporations, the listing rules of the securities market shall be deemed to allow the Authority to act in place of the operator of the securities market in making decisions and taking action, or to require the operator of the securities market to make decisions and to take action on behalf of the Authority, on —
(a) the admission to, or removal of, the approved holding company from the official list of the securities market; and
(b) granting, stopping or suspending the securities of the approved holding company from being listed for quotation or quoted on the securities market.
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(3) The Authority may, by notice in writing to the operator of the securities market —
(a) modify the listing rules of the securities market for the purpose of their application to the listing for quotation or trading of the securities of the approved holding company; or
(b) waive the application of any listing rule of the securities market to the approved holding company.
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(4) Any approved holding company which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction.
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Additional powers of Authority in respect of auditors
81ZH. —(1) If an auditor of an approved holding company, in the course of the performance of his duties, becomes aware of —
(a) any matter which, in his opinion, adversely affects or may adversely affect the financial position of the approved holding company to a material extent;
(b) any matter which, in his opinion, constitutes or may constitute a breach of any provision of this Act or an offence involving fraud or dishonesty; or
(c) any irregularity that has or may have a material effect upon the accounts of the approved holding company, including any irregularity that affects or jeopardises, or may affect or jeopardise, the funds or property of investors,
the auditor shall immediately send to the Authority a written report of the matter or the irregularity.
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(2) An auditor shall not, in the absence of malice on his part, be liable to any action for defamation at the suit of any person in respect of any statement made in his report under subsection (1).
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(3) Subsection (2) shall not restrict or affect any right, privilege or immunity that the auditor has, apart from this section, as a defendant in an action for defamation.
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(4) The Authority may impose all or any of the following duties on an auditor of an approved holding company:
(a) a duty to submit such additional information and reports in relation to his audit as the Authority considers necessary;
(b) a duty to enlarge, extend or alter the scope of his audit of the business and affairs of the approved holding company;
(c) a duty to carry out any other examination or establish any procedure in any particular case;
(d) a duty to submit a report on any matter arising out of his audit, examination or establishment of procedure referred to in paragraph (b) or (c),
and the auditor shall carry out such duties.
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(5) The approved holding company shall remunerate the auditor in respect of the discharge by him of all or any of the duties referred to in subsection (4).
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[E (DM) A, s. 16]
Power of Authority to exempt approved holding companies from provisions of this Part
81ZI. The Authority may exempt an approved holding company or a class of approved holding companies from any of the provisions of this Part, if it is satisfied that the non-compliance by such approved holding company or class of approved holding companies with such provision would not detract from the objectives specified in section 81T, subject to such conditions or restrictions as may be imposed by the Authority.
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Power of Authority to remove officers
81ZJ. —(1) Where the Authority is satisfied that an officer of an approved holding company —
(a) has wilfully contravened or wilfully caused that approved holding company to contravene this Act;
(b) has, without reasonable excuse, failed to ensure compliance with this Act by that approved holding company;
(c) has failed to discharge the duties or functions of his office or employment;
(d) is an undischarged bankrupt, whether in Singapore or elsewhere;
(e) has had execution against him in respect of a judgment debt returned unsatisfied in whole or in part;
(f) has, whether in Singapore or elsewhere, made a compromise or scheme of arrangement with his creditors, being a compromise or scheme of arrangement that is still in operation; or
(g) has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that he acted fraudulently or dishonestly,
the Authority may, if it thinks it necessary in the interests of the public or a section of the public or for the protection of investors, by notice in writing direct that approved holding company to remove the officer from his office or employment and that approved holding company shall comply with such notice, notwithstanding the provisions of section 152 of the Companies Act (Cap. 50).
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(2) Without prejudice to any other matter that the Authority may consider relevant, the Authority may, in determining whether an officer of an approved holding company has failed to discharge the duties or functions of his office or employment for the purposes of subsection (1) (c), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing.
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(3) Subject to subsection (4), the Authority shall not direct an approved holding company to remove an officer from his office or employment without giving the approved holding company an opportunity to be heard.
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(4) The Authority may direct an approved holding company to remove an officer from his office or employment under subsection (1) on any of the following grounds without giving the approved holding company an opportunity to be heard:
(a) the officer is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the officer has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
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(5) Where the Authority directs an approved holding company to remove an officer from his office or employment under subsection (1), the Authority need not give that officer an opportunity to be heard.
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(6) Any approved holding company that is aggrieved by a direction of the Authority made in relation to the approved holding company under subsection (1) may, within 30 days after the approved holding company is notified of the direction, appeal to the Minister whose decision shall be final.
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(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister.
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(8) The Minister may, when deciding an appeal under subsection (6), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the decision of the Minister.
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(9) Subject to subsection (10), no criminal or civil liability shall be incurred by an approved holding company in respect of any thing done or omitted to be done with reasonable care and in good faith in the discharge or purported discharge of its obligations under this section.
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(10) Any approved holding company which, without reasonable excuse, contravenes a written notice issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
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Power of Authority to make regulations
81ZK. —(1) Without prejudice to section 341, the Authority may make regulations relating to the approval of, and the requirements applicable to, persons who establish, operate, or assist in establishing or operating approved holding companies.
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(2) Regulations made under this section may provide —
(a) that a contravention of any specified provision thereof shall be an offence; and
(b) for penalties not exceeding a fine of $150,000 or imprisonment for a term not exceeding 12 months or both for each offence and, in the case of a continuing offence, a further penalty not exceeding a fine of 10% of the maximum fine prescribed for that offence for every day or part thereof during which the offence continues after conviction.
[1/2005]
Power of Authority to issue directions
81ZL. —(1) The Authority may, if it thinks it necessary or expedient —
(a) for ensuring fair, orderly and transparent markets;
(b) for ensuring safe and efficient clearing facilities;
(c) for ensuring the integrity and stability of the capital markets or the financial system;
(d) in the interests of the public or a section of the public or for the protection of investors;
(e) for the effective administration of this Act; or
(f) for ensuring compliance with any condition or restriction as may be imposed by the Authority under section 81W (1) or (2), 81ZA (2), 81ZE (5) or (10), 81ZF (12) or 81ZI, or such other obligations or requirements under this Act or as may be prescribed by the Authority,
issue directions by notice in writing either of a general or specific nature to an approved holding company, and the approved holding company shall comply with such directions.
[1/2005]
(2) Any approved holding company which, without reasonable excuse, contravenes a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
(3) For the avoidance of doubt, a direction issued under subsection (1) shall be deemed not to be subsidiary legislation.
[1/2005]
[SIA, s 21; E (DM) A, s. 14]
PART IV
CAPITAL MARKETS SERVICES LICENCE AND REPRESENTATIVE’S LICENCE
Division 1 — Licensing
Need for capital markets services licence
82. —(1) Subject to subsection (2) and section 99, no person shall, whether as principal or agent, carry on business in any regulated activity or hold himself out as carrying on such business unless he is the holder of a capital markets services licence for that regulated activity.
(2) Subsection (1) shall not apply to any person specified in the Third Schedule.
(3) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
[SIA, s. 24 and s. 26; FTA, s. 11]
Need for representative’s licence
83. —(1) Subject to subsection (2), no person shall act as a representative in respect of any regulated activity or hold himself out as doing so, unless —
(a) he is the holder of a representative’s licence for that regulated activity; and
(b) when so acting or holding himself out, he is doing so for the holder of a capital markets services licence which supported his application for, or for renewal of, the representative’s licence, as the case may be, subject to regulations made under this Act.
[1/2005]
(2) Subsection (1) shall not apply —
(a) to any person who acts as a representative of an exempt person, in so far as —
(i) the type and scope of regulated activity carried out by the first-mentioned person are within the type and scope of, or are the same as, those carried out by the exempt person (in his capacity as an exempt person); and
(ii) the manner in which the first-mentioned person carries out the regulated activity referred to in subsection (1) is the same as the manner in which the exempt person (in his capacity as an exempt person) carries out the regulated activity; and
(b) to any person or class of persons whom the Authority may exempt from holding a representative’s licence in respect of any regulated activity.
[1/2005]
(3) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 12 months or to both and, in the case of a continuing offence, to a further fine not exceeding $5,000 for every day or part thereof during which the offence continues after conviction.
[SIA, s. 25 and s. 27; FTA, s. 12]
Application for grant or renewal of licence
84. —(1) An application for the grant or renewal of a licence shall be —
(a) made to the Authority in such form and manner as the Authority may prescribe; and
(b) in the case of an application for renewal of a licence, made not later than one month or such other period as the Authority may prescribe, before the expiry of the licence.
(2) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application.
[1/2005]
(3) An application for the grant or renewal of a licence shall be accompanied by a non-refundable prescribed application fee which shall be paid in the manner specified by the Authority.
(4) An application for the grant of a representative’s licence in respect of any regulated activity shall be supported in the prescribed manner by such person, who is the holder of or who has applied for a capital markets services licence for that regulated activity, as may be specified by the Authority.
[16/2003]
(5) An application for the renewal of a representative’s licence in respect of any regulated activity shall be supported in the prescribed manner by such person, who is the holder of a capital markets services licence for that regulated activity, as may be specified by the Authority.
[16/2003]
(5A) An application for the grant of a representative’s licence in respect of any regulated activity shall be deemed to be withdrawn with effect from the date on which the person who supported the application —
(a) withdraws his support in writing;
(b) withdraws his application for a capital markets services licence in respect of that regulated activity; or
(c) has his application for a capital markets services licence in respect of that regulated activity refused by the Authority.
[16/2003]
(5B) An application for the renewal of a representative’s licence in respect of any regulated activity shall be deemed to be withdrawn with effect from the date on which the person who supported the application withdraws his support in writing.
[16/2003]
(6) Where a person submits an application for renewal of his licence before the expiration of his licence but after the period referred to in subsection (1), the Authority may impose a late renewal fee not exceeding $100 for every day or part thereof that the renewal is late, subject to a maximum of $3,000.
(7) Where a person would be guilty of an offence for not being the holder of a particular licence, no proceedings shall be instituted against him for the offence for the period from the expiry of that licence until that licence is renewed or his application for renewal is withdrawn or refused if before the expiration of that licence he has applied for renewal of that licence and he complies with the requirements of this Act as though he were the holder of that licence.
(8) In this section, “licence” and “representative’s licence” do not include a temporary representative’s licence.
[16/2003]
[SIA, s. 28; FTA, s. 13]
Licence fee
85. —(1) A licensed person shall pay such licence fee in respect of each regulated activity as may be prescribed by the Authority.
(2) Any licence fee paid to the Authority in respect of any regulated activity shall not be refunded if —
(a) the licence is revoked or suspended, or lapses during the period to which the licence fee relates;
(b) the licence fee is paid in relation to an application for the renewal of a licence and such application is withdrawn after the date on which, but for its renewal, the licence would have expired;
(c) the licensed person —
(i) being the holder of a capital markets services licence, ceases to carry on business in that regulated activity; or
(ii) being a representative, ceases to act as a representative in respect of that regulated activity,
during the period to which the licence fee relates; or
(d) a prohibition order has been made against the licensed person under section 95.
[1/2005]
(3) Subject to subsection (2), the Authority may, where it considers appropriate, refund the whole or part of any licence fee paid to it.
[SIA, s. 28; FTA, s. 13]
Grant of capital markets services licence
86. —(1) A corporation may make an application for a capital markets services licence to carry on business in one or more regulated activities.
(2) In granting a capital markets services licence, the Authority shall specify the regulated activity or activities to which the licence relates, described in such manner as the Authority considers appropriate.
(3) A capital markets services licence shall only be granted if the applicant meets such minimum financial and other requirements as the Authority may prescribe, either generally or specifically, or as are provided in the business rules of a securities exchange, futures exchange or recognised market operator.
[1/2005]
(4) Subject to regulations made under this Act, where an application is made for the grant or renewal of a capital markets services licence, the Authority may refuse the application if —
(a) the applicant has not provided the Authority with such information or documents relating to it or any person employed by or associated with it for the purposes of its business, and to any circumstances likely to affect its manner of conducting business, as the Authority may require;
(aa) any information or document that is furnished by the applicant to the Authority is false or misleading;
(b) the applicant or its substantial shareholder is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(c) execution against the applicant or its substantial shareholder in respect of a judgment debt has been returned unsatisfied in whole or in part;
(d) a receiver, a receiver and manager, judicial manager or an equivalent person has been appointed whether in Singapore or elsewhere in relation to, or in respect of, any property of the applicant or its substantial shareholder;
(e) the applicant or its substantial shareholder has, whether in Singapore or elsewhere, entered into a compromise or scheme of arrangement with its creditors, being a compromise or scheme of arrangement that is still in operation;
(f) the applicant or its substantial shareholder, or any officer of the applicant —
(i) has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it or he had acted fraudulently or dishonestly; or
(ii) has been convicted of an offence under this Act;
(g) the Authority is not satisfied as to the educational or other qualification or experience of the officers or employees of the applicant having regard to the nature of the duties they are to perform in connection with the holding of the licence;
(h) the applicant fails to satisfy the Authority that it is a fit and proper person to be licensed or that all of its officers, employees and substantial shareholders are fit and proper persons;
(i) the Authority has reason to believe that the applicant may not be able to act in the best interests of its subscribers or customers having regard to the reputation, character, financial integrity and reliability of the applicant or its officers, employees or substantial shareholders;
(j) the Authority is not satisfied as to the financial standing of the applicant or its substantial shareholders or the manner in which the applicant’s business is to be conducted;
(k) the Authority is not satisfied as to the record of past performance or expertise of the applicant having regard to the nature of the business which the applicant may carry on in connection with the holding of the licence;
(l) there are other circumstances which are likely to —
(i) lead to the improper conduct of business by the applicant, any of its officers, employees or substantial shareholders; or
(ii) reflect discredit on the manner of conducting the business of the applicant or its substantial shareholders;
(m) the Authority has reason to believe that the applicant, or any of its officers or employees, will not perform the functions for which the applicant seeks to be licensed, efficiently, honestly or fairly; or
(n) the Authority is of the opinion that it would be contrary to the interests of the public to grant or renew the licence.
[16/2003;1/2005]
(5) Subject to subsection (6), the Authority shall not refuse an application for a grant or renewal of a capital markets services licence without giving the applicant an opportunity to be heard.
[1/2005]
(6) The Authority may refuse an application for the grant or renewal of a capital markets services licence on any of the following grounds without giving the applicant an opportunity to be heard:
(a) the applicant is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(b) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the applicant;
(c) the applicant has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly.
[16/2003]
[SIA, s. 29; FTA, s. 14 and s. 24]
Grant of representative’s licence
87. —(1) An individual may apply to the Authority in such form and manner as the Authority may prescribe for a representative’s licence to act as a representative in respect of one or more regulated activities.
[16/2003;1/2005]
(2) In granting a representative’s licence, the Authority shall —
(a) specify the regulated activity or activities to which the licence relates, described in such manner as the Authority considers appropriate; and
(b) relate the licence to the holder of a capital markets services licence which supported that application for a representative’s licence.
[16/2003]
(3) Subject to regulations made under this Act, the Authority may refuse an application for the grant or renewal of a representative’s licence if —
(a) the applicant has not provided the Authority with such information or documents relating to him as the Authority may require;
(aa) any information or document that is furnished by the applicant to the Authority is false or misleading;
(b) the applicant is an undischarged bankrupt whether in Singapore or elsewhere;
(c) execution against the applicant in respect of a judgment debt has been returned unsatisfied in whole or in part;
(d) the applicant has, whether in Singapore or elsewhere, entered into a compromise or scheme of arrangement with his creditors, being a compromise or scheme of arrangement that is still in operation;
(e) the applicant —
(i) has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; or
(ii) has been convicted of an offence under this Act;
(f) the Authority is not satisfied as to the educational or other qualification or experience of the applicant having regard to the nature of the duties he is to perform in connection with the holding of the licence;
(g) the applicant fails to satisfy the Authority that he is a fit and proper person to be licensed;
(h) the Authority has reason to believe that the applicant may not be able to act in the best interests of the subscribers or customers of a holder of a capital markets services licence having regard to his reputation, character, financial integrity and reliability;
(i) the Authority is not satisfied as to the financial standing of the applicant;
(j) the Authority is not satisfied as to the record of past performance or expertise of the applicant having regard to the nature of the duties which he may perform in connection with the holding of the licence;
(k) there are other circumstances which are likely to lead to the improper conduct of business by, or reflect discredit on the manner of conducting the business of, the applicant or any person employed by or associated with him for the purpose of his business;
(l) the applicant is in arrears in the payment of such contributions on his own behalf to the Central Provident Fund as are required under the Central Provident Fund Act (Cap. 36);
(m) the Authority has reason to believe that the applicant will not perform the functions for which he seeks to be licensed, efficiently, honestly or fairly; or
(n) the Authority is of the opinion that it would be contrary to the interests of the public to grant or renew the licence.
[16/2003;1/2005]
(4) Subject to subsection (5), the Authority shall not refuse an application for the grant or renewal of a representative’s licence without giving the applicant an opportunity to be heard.
(5) The Authority may refuse an application for the grant or renewal of a representative’s licence on any of the following grounds without giving the applicant an opportunity to be heard:
(a) the applicant is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the applicant has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
[16/2003]
(6) In this section, “representative’s licence” does not include a temporary representative’s licence.
[16/2003]
[SIA, s. 30; FTA, s. 14]
Temporary representative’s licence
87A. —(1) An individual may apply to the Authority in such form and manner as the Authority may prescribe for a temporary representative’s licence to act as a representative in respect of one or more regulated activities.
[16/2003;1/2005]
(2) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application.
[1/2005]
(3) An application for the grant of a temporary representative’s licence shall be accompanied by a non-refundable prescribed application fee which shall be paid in the manner specified by the Authority.
[16/2003]
(4) An application for the grant of a temporary representative’s licence in respect of any regulated activity shall be supported in the prescribed manner by a holder of a capital markets services licence for that regulated activity.
[16/2003]
(5) An application for the grant of a temporary representative’s licence in respect of any regulated activity shall be deemed to be withdrawn with effect from the date the holder of a capital markets services licence which supported the application withdraws its support in writing.
[16/2003]
(6) The Authority shall not grant a temporary representative’s licence to any applicant —
(a) if the applicant has held a temporary representative’s licence for a period which exceeds, or for periods which together exceed, the prescribed number of months within the prescribed period; or
(b) if the holder of a capital markets services licence which supported the application fails to furnish to the Authority, in respect of any regulated activity to be carried out by the applicant for the holder, an undertaking in such form and manner as may be prescribed by the Authority.
[16/2003]
(7) In granting a temporary representative’s licence, the Authority —
(a) shall specify the regulated activity or activities to which the licence relates, described in such manner as the Authority considers appropriate; and
(b) shall relate the licence to the holder of a capital markets services licence which supported that application for a temporary representative’s licence.
[16/2003]
(8) A temporary representative’s licence shall be in force for a period of 3 months from the date of its issue under this Act, or such other period as the Authority may specify in writing to the holder of the temporary representative’s licence.
[16/2003]
(9) A temporary representative’s licence shall not be renewable.
[16/2003]
(10) Subject to regulations made under this Act, the Authority may refuse an application for the grant of a temporary representative’s licence on any of the grounds referred to in section 87 (3) (a) to (n).
[16/2003]
(11) Subject to subsection (12), the Authority shall not refuse an application for the grant of a temporary representative’s licence without giving the applicant an opportunity to be heard.
[16/2003]
(12) The Authority may refuse an application for the grant of a temporary representative’s licence on any of the following grounds without giving the applicant an opportunity to be heard:
(a) the applicant is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the applicant has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
[16/2003]
Power of Authority to impose conditions or restrictions
88. —(1) The Authority may grant or renew a licence subject to such conditions or restrictions as it thinks fit.
(2) The Authority may, at any time, by notice in writing to a licensed person, vary any condition or restriction or impose such further condition or restriction as it may think fit.
(3) Any person who contravenes any condition or restriction in his licence shall be guilty of an offence.
[SIA, s. 33; FTA, s. 15]
Period of licence
89. —(1) Subject to subsection (2), a licence shall be in force for a period of 3 years or such other period as the Authority may specify in writing to the licensed person, from the date of its issue under this Act.
(2) A licence that has been renewed in accordance with the provisions of this Part shall continue in force for a period of 3 years or such other period as the Authority may specify in writing to the licensed person, from the date immediately following that on which, but for its renewal, it would have expired.
(3) In this section —
"licence" does not include a temporary representative’s licence;
"licensed person" does not include a holder of a temporary representative’s licence.
[16/2003]
[SIA, s. 35; FTA, s. 16]
Variation of licence
90. —(1) The Authority may, on the application of a licensed person, vary his licence by adding a regulated activity to those already specified in the licence.
[16/2003]
(1A) The Authority may require an applicant to supply the Authority with such information or documents as it considers necessary in relation to the application.
[16/2003]
(2) An application under subsection (1) shall —
(a) be accompanied by a non-refundable prescribed application fee which shall be paid in the manner specified by the Authority; and
(b) if made in respect of a representative’s licence, be supported in the prescribed manner by such person, who is —
(i) the holder of a capital markets services licence for that regulated activity; or
(ii) the holder of a capital markets services licence which has applied under subsection (1) to add to its licence that regulated activity,
as may be specified by the Authority.
[16/2003]
(2A) An application under subsection (1), if made in respect of a representative’s licence, shall be deemed to be withdrawn with effect from the date on which the holder of a capital markets services licence which supported the application —
(a) withdraws its support in writing;
(b) withdraws its application to add to its licence that regulated activity; or
(c) has its application to add to its licence that regulated activity refused by the Authority.
[16/2003]
(3) The Authority may —
(a) approve the application subject to such conditions or restrictions as the Authority thinks fit; or
(b) refuse the application on any of the grounds set out in section 86 (4), 87 (3) or 87A (10).
[16/2003]
(4) The Authority shall not refuse an application under subsection (1) without giving the applicant an opportunity to be heard.
[16/2003]
Deposit to be lodged in respect of capital markets services licence
91. —(1) The Authority may, in granting, renewing or varying a capital markets services licence, require the applicant to lodge with the Authority, at the time of its application and in such manner as the Authority may determine, a deposit of such amount in cash or in such other form as the Authority may prescribe in respect of that licence.
(2) The Authority may prescribe the circumstances and purposes for the use of the deposit.
[SIA, s. 34]
False statements in relation to application for grant, renewal or variation of licence
92. Any person who, in connection with an application for the grant, renewal or variation of a licence —
(a) without reasonable excuse, makes a statement which is false or misleading in a material particular; or
(b) without reasonable excuse, omits to state any matter or thing without which the application is misleading in a material respect,
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000.
[1/2005]
[SIA, s. 31; FTA, s. 18]
Notification of change of particulars
93. —(1) Where —
(a) the holder of a capital markets services licence ceases to carry on business in any of the regulated activities to which the licence relates;
(b) the holder of a representative’s licence ceases to act as a representative of the principal in relation to whom the representative’s licence was issued; or
(c) a change occurs in any matter particulars of which are required by section 94 to be entered in the register of licensed persons in relation to the licensed person,
the licensed person shall, not later than 14 days after the occurrence of the event, furnish particulars of the event to the Authority in the prescribed form and manner.
(2) Where a licensed person ceases to carry on, or ceases to act as a representative in carrying on, business in all the regulated activities to which the licence relates, it shall return the licence to the Authority within 14 days of the date of the cessation.
[16/2003]
[SIA, s. 36; FTA, s. 17]
Register of licensed persons
94. The Authority shall keep in such form as it thinks fit a register of licensed persons specifying —
(a) in relation to the holder of a capital markets services licence —
(i) its name;
(ii) the address of the principal place of business at which it carries on the business in respect of which the licence is held;
(iii) the regulated activity or activities to which its licence relates;
(iv) where the business is carried on under a name or style other than the name of the holder of the licence, the name or style under which the business is carried on; and
(v) such other information as may be prescribed;
(b) in relation to the holder of a representative’s licence —
(i) his name;
(ii) the name of his principal in relation to whom the licence was granted;
(iii) the regulated activity or activities to which his licence relates;
(iv) where the business of his principal is carried on under a name or style, other than the name of the principal, the name or style under which that business is carried on; and
(v) such other information as may be prescribed.
[SIA, s. 37; FTA, s. 19]
Lapsing, revocation and suspension of licence
95. —(1) A licence shall lapse —
(a) in the case of a holder of a capital markets services licence, if the holder is wound up or otherwise dissolved, whether in Singapore or elsewhere;
(b) in the case of a holder of a representative’s licence, if the representative dies; and
(c) in the event of such other occurrence or in such other circumstances as may be prescribed.
(2) The Authority may revoke a licence —
(a) in the case of a holder of a capital markets services licence, if —
(i) there exists a ground on which the Authority may refuse an application under section 86;
(ii) it fails or ceases to carry on the business in all the regulated activities for which it was licensed;
(iii) the Authority has reason to believe that the holder of the capital markets services licence, or any of its officers or employees, has not performed its duties efficiently, honestly or fairly;
(iv) the holder of the capital markets services licence contravenes any condition or restriction applicable in respect of its licence, any direction issued to it by the Authority under this Act, or any other provision in this Act;
(v) the Authority has reason to believe that the holder of the capital markets services licence is carrying on business in any regulated activity for which it was licensed in a manner that is contrary to the interests of the public; or
(vi) any information or document that is furnished by the holder of the capital markets services licence to the Authority is false or misleading; and
(b) in the case of a representative, if —
(i) there exists a ground on which the Authority may refuse an application under section 87 or 87A (as the case may be);
(ii) he fails or ceases to act as a representative in respect of all the regulated activities for which he was licensed;
(iii) the licence of his principal is revoked;
(iv) the Authority has reason to believe that he has not performed his duties efficiently, honestly or fairly;
(iva) the Authority has reason to believe that the representative is performing his functions in a manner that is contrary to the interests of the public;
(v) he contravenes any condition or restriction applicable in respect of his licence, any direction issued to him by the Authority under this Act or any other provision in this Act; or
(vi) any information or document that is furnished by the representative to the Authority is false or misleading.
[16/2003;1/2005]
(3) The Authority may, if it considers it desirable to do so —
(a) suspend a licence for a specific period instead of revoking it under subsection (2); and
(b) at any time extend or revoke the suspension.
(4) Subject to subsection (5), the Authority shall not revoke or suspend a licence under subsection (2) or (3) without giving the licensed person an opportunity to be heard.
(5) The Authority may revoke or suspend a licence without giving the licensed person an opportunity to be heard —
(a) in the case of a capital markets services licence, on any of the following grounds:
(i) the licensed person is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(ii) a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the licensed person;
(iii) the licensed person has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly; or
(b) in the case of a representative’s licence, on any of the following grounds:
(i) the licensed person is an undischarged bankrupt, whether in Singapore or elsewhere;
(ii) the licensed person has been convicted, whether in Singapore or elsewhere, of an offence —
(A) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(B) punishable with imprisonment for a term of 3 months or more.
[16/2003]
(6) Without prejudice to subsections (2) and (3), the Authority may, on any ground described in subsection (2), issue an order prohibiting the licensed person from performing one or more of the regulated activities to which its licence relates and the order may be permanent or for such period as may be determined by the Authority (referred to in this Division as a prohibition order).
(7) The Authority shall not issue an order under subsection (6) without giving the licensed person an opportunity to be heard.
(8) Where the Authority has revoked or suspended a capital markets services licence or issued a prohibition order to a holder of a capital markets services licence, that holder shall —
(a) in the case of a revocation of its licence, immediately inform all its representatives by notice in writing of such revocation and the representatives who are so informed shall cease to act as representatives of that holder;
(b) in the case of a suspension of its licence, immediately inform all its representatives by notice in writing of such suspension and the representatives who are so informed shall cease to act as representatives of that holder during the period of the suspension; and
(c) in the case of a prohibition order, immediately inform all its representatives who perform the regulated activity or activities to which the prohibition order relates, by notice in writing of such prohibition order and the representatives who are so informed shall cease to perform such regulated activity or activities during the period specified in the prohibition order.
(9) Any licensed person who —
(a) performs a regulated activity while its licence has lapsed or has been revoked or suspended, or in breach of a prohibition order; or
(b) contravenes subsection (8),
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction.
(10) A lapsing, revocation, suspension or expiry of a licence of a person or the issue of a prohibition order shall not operate so as to —
(a) avoid or affect any agreement, transaction or arrangement relating to the regulated activities entered into by such person, whether the agreement, transaction or arrangement was entered into before or after the revocation, suspension or lapsing of the licence or the issue of the prohibition order, as the case may be; or
(b) affect any right, obligation or liability arising under any such agreement, transaction or arrangement.
[SIA, s. 38; FTA, s. 20 and s. 22]
Approval of chief executive officer and director of holder of capital markets services licence
96. —(1) No holder of a capital markets services licence shall appoint a person as —
(a) its chief executive officer;
(b) its director where, upon appointment, the person resides or is to reside in Singapore, whether or not he is directly responsible for its business in Singapore or any part thereof; or
(c) its director where, upon appointment, the person is directly responsible for its business in Singapore or any part thereof, whether he resides or is to reside in Singapore or elsewhere,
unless it has obtained the approval of the Authority.
[16/2003]
(1A) Where a holder of a capital markets services licence has obtained the approval of the Authority to appoint a person as its chief executive officer or director under subsection (1), the person may be re-appointed as chief executive officer or director, as the case may be, of the holder immediately upon the expiry of the earlier term without the approval of the Authority.
[16/2003]
(2) Without prejudice to any other matter that the Authority may consider relevant, the Authority may, in determining whether to grant its approval under subsection (1), have regard to such criteria as may be prescribed or as may be specified in written directions.
(3) Subject to subsection (4), the Authority shall not refuse an application for approval under subsection (1) without giving the holder of the capital markets services licence an opportunity to be heard.
(4) The Authority may refuse an application for approval under subsection (1) on any of the following grounds without giving the holder of a capital markets services licence an opportunity to be heard:
(a) the person is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the person has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
[16/2003]
(5) Where the Authority refuses an application for approval under subsection (1), the Authority need not give the person who was proposed to be appointed an opportunity to be heard.
Removal of officer of holder of capital markets services licence
97. —(1) Where the Authority is satisfied that an officer of a holder of a capital markets services licence —
(a) has wilfully contravened or wilfully caused that holder to contravene this Act;
(b) has without reasonable excuse failed to enforce compliance with this Act;
(c) has failed to discharge the duties or functions of his office;
(d) is an undischarged bankrupt whether in Singapore or elsewhere;
(e) has had execution against him in respect of a judgment debt returned unsatisfied in whole or in part;
(f) has, whether in Singapore or elsewhere, entered into a compromise or scheme of arrangement with his creditors, being a compromise or scheme of arrangement that is still in operation; or
(g) has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly,
the Authority may, if it thinks it necessary in the interest of the public, or section of the public or for the protection of investors direct by notice in writing that holder to remove the officer from office or employment, and that holder shall comply with such notice notwithstanding the provisions of section 152 of the Companies Act (Cap. 50).
[1/2005]
(2) Without prejudice to any other matter that the Authority may consider relevant, the Authority shall, in determining whether an officer of a holder of a capital markets services licence has failed to discharge the duties or functions of his office for the purposes of subsection (1) (c), have regard to such criteria as may be prescribed or as may be specified in written directions.
(3) Subject to subsection (4), the Authority shall not direct a holder of a capital markets services licence to remove from office or employment an officer under this section without giving that holder an opportunity to be heard.
[1/2005]
(4) The Authority may direct a holder of a capital markets services licence to remove an officer from its office or employment under subsection (1) on any of the following grounds without giving the holder an opportunity to be heard:
(a) the officer is an undischarged bankrupt, whether in Singapore or elsewhere;
(b) the officer has been convicted, whether in Singapore or elsewhere, of an offence —
(i) involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
(ii) punishable with imprisonment for a term of 3 months or more.
[16/2003]
(5) Where the Authority directs a holder of a capital markets services licence to remove from office or employment an officer under subsection (1), the Authority need not give that officer an opportunity to be heard.
(6) No criminal or civil liability shall be incurred by —
(a) a holder of a capital markets services licence; or
(b) any person acting on behalf of the holder of a capital markets services licence,
in respect of anything done or omitted to be done with reasonable care and in good faith in the discharge or purported discharge of its obligations under this section.
Appeals
98. —(1) Subject to subsection (2), any person who is aggrieved by —
(a) the refusal of the Authority to grant, renew or vary a licence;
(b) the revocation or suspension of a licence by the Authority;
(c) the issue of a prohibition order by the Authority;
(d) the refusal of the Authority to grant an approval to a holder of a capital markets services licence to appoint a person as its chief executive officer or director; or
(e) the direction of the Authority to a holder of a capital markets services licence to remove an officer from office or employment,
may within 30 days after it is notified of the decision of the Authority, appeal to the Minister whose decision shall be final.
(2) An appeal under subsection (1) (d) or (e) may only be made by the holder of a capital markets services licence.
[SIA, s. 39; FTA, s. 23]
Division 2 — Exemptions
Exemptions from requirement to hold capital markets services licence
99. —(1) The following persons shall be exempted in respect of the following regulated activities from the requirement to hold a capital markets services licence to carry on business in such regulated activities:
(a) any bank licensed under the Banking Act (Cap. 19) in respect of any regulated activity;
(b) any merchant bank approved as a financial institution under the Monetary Authority of Singapore Act (Cap. 186) in respect of any regulated activity which it is approved to carry out under that Act;
(c) any finance company licensed under the Finance Companies Act (Cap. 108) in respect of any regulated activity that is not prohibited by that Act or for which an exemption from section 25 (2) of that Act has been granted;
(d) any company or society registered under the Insurance Act (Cap. 142) in respect of fund management for the purpose of carrying out insurance business;
(e) (Deleted by Act 1/2005)
(f) any securities exchange, futures exchange, recognised market operator or approved holding company in respect of any regulated activity that is solely incidental to its operation of a securities market or futures market or to its performance as an approved holding company, as the case may be;
(g) any designated clearing house in respect of any regulated activity that is solely incidental to its operation of a clearing facility; and
(h) such other person or class of persons in respect of any regulated activity as may be exempted by the Authority.
[16/2003;1/2005]
(2) (Deleted by Act 1/2005)
(3) (Deleted by Act 1/2005)
(4) The Authority may by regulations or by notice in writing impose such conditions or restrictions on an exempt person or its representative in relation to the conduct of the regulated activity or any related matter as the Authority thinks fit and the exempt person or its representative, as the case may be, shall comply with such conditions or restrictions.
(5) Any exempt person or representative of an exempt person, who contravenes any condition or restriction imposed under subsection (4) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 and, in the case of a continuing offence, to a further fine not exceeding $5,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
(6) The Authority may withdraw an exemption granted to any person under this section —
(a) if it contravenes any provision of this Act which is applicable to it or any condition or restriction imposed on it under subsection (4);
(b) if it contravenes any direction issued to it under section 101 (1); or
(c) if the Authority considers that it is carrying on business in a manner that is, in the opinion of the Authority, contrary to the public interest.
(7) Where the Authority withdraws an exemption granted to any person under this section, the Authority need not give the person an opportunity to be heard.
(8) A withdrawal under subsection (6) of an exemption granted to any person shall not operate so as to —
(a) avoid or affect any agreement, transaction or arrangement relating to the regulated activities entered into by the person, whether the agreement, transaction or arrangement was entered into before or after, the withdrawal of the exemption; or
(b) affect any right, obligation or liability arising under any such agreement, transaction or arrangement.
(9) A person that is aggrieved by a decision of the Authority made under subsection (6) may, within 30 days after it is notified of the decision of the Authority, appeal to the Minister whose decision shall be final.
Annual fees payable by exempt person and its representative
99A. —(1) Every exempt person and every representative of an exempt person shall pay to the Authority such annual fee in respect of each regulated activity as may be prescribed and in such manner as may be specified by the Authority.
[1/2005]
(2) Any annual fee paid by an exempt person or a representative of an exempt person to the Authority in respect of any regulated activity shall not be refunded or remitted if —
(a) in the case of the exempt person —
(i) its exemption is withdrawn; or
(ii) it fails or ceases to carry on business in that regulated activity,
during the period to which the annual fee relates; and
(b) in the case of a representative of the exempt person —
(i) his exemption is withdrawn; or
(ii) he fails or ceases to act as a representative in respect of that regulated activity,
during the period to which the annual fee relates.
[1/2005]
(3) Subject to subsection (2), the Authority may, where it considers appropriate, refund or remit the whole or part of any annual fee paid or payable to it.
[1/2005]
Division 3 — General
Power of Authority to make regulations
100. —(1) Without prejudice to section 341, the Authority may make regulations relating to the grant of a capital markets services licence or a representative’s licence, and requirements applicable to a licensed person, exempt person, representative of an exempt person or class of such persons.
(2) Regulations made under this section may provide —
(a) that a contravention of any specified provision thereof shall be an offence; and
(b) for penalties not exceeding a fine of $100,000 or imprisonment for a term not exceeding 12 months or both for each offence and, in the case of a continuing offence, a further penalty not exceeding a fine of 10% of the maximum fine prescribed for that offence for every day or part thereof during which the offence continues after conviction.
[16/2003]
Power of Authority to issue written directions
101. —(1) The Authority may, if it thinks it necessary or expedient in the public interest, issue written directions, either of a general or specific nature, to any licensed person, exempt person, representative of an exempt person, or class of such persons, to comply with such requirements as the Authority may specify in the written directions.
(2) Without prejudice to the generality of subsection (1), any written direction may be issued with respect to —
(a) the standards to be maintained by the person concerned in the conduct of his business;
(b) the type and frequency of submission of financial returns and other information to be submitted to the Authority; and
(c) the qualifications, experience and training of representatives,
and the person to whom such direction is issued shall comply with the direction.
[16/2003]
(3) Any person who contravenes any of the directions issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 and, in the case of a continuing offence, to a further fine of $5,000 for every day or part thereof during which the offence continues after conviction.
(4) For the avoidance of doubt, a direction issued under subsection (1) shall be deemed not to be subsidiary legislation.
[SIA, s. 21; E (DM) A, s. 14]
PART V
BOOKS, CUSTOMER ASSETS AND AUDIT
Division 1 — Books
Keeping of books and furnishing of returns
102. —(1) A holder of a capital markets services licence shall —
(a) keep, or cause to be kept, such books as will sufficiently explain the transactions and financial position of its business and enable true and fair profit and loss accounts and balance-sheets to be prepared from time to time; and
(b) keep, or cause to be kept, such books in such a manner as will enable them to be conveniently and properly audited.
(2) An entry in the books of a holder of a capital markets services licence required to be kept in accordance with this section shall be deemed to have been made by, or with the authority of, the holder.
(3) A holder of a capital markets services licence shall retain such books as may be required to be kept under this Act for a period of not less than 5 years.
(4) A holder of a capital markets services licence shall —
(a) furnish such returns and records in such form and manner as may be prescribed or as may be notified by the Authority in writing; and
(b) provide such information relating to its business as the Authority may require.
(5) The Authority may, without prejudice to section 341, make regulations in respect of all or any of the matters in this Division, including the keeping of such books, by a holder of a capital markets services licence, in such form and manner as the Authority may prescribe.
[SIA, s. 63 and s. 67; FTA, s. 34 (1)]
Penalties under this Division
103. A holder of a capital markets services licence which, without reasonable excuse, contravenes section 102 (1), (3) or (4) or any regulation made under section 102 (5), shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 and, in the case of a continuing offence, to a further fine not exceeding $5,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
[SIA, s. 57 (7); FTA, s. 25 (6)]
Division 2 — Customer Assets
Interpretation of this Division
103A. In this Division, unless the context otherwise requires, “money or other assets” means money received or retained by, or any other asset deposited with, a holder of a capital markets services licence in the course of its business for which it is liable to account to its customer, and any money or other assets accruing therefrom.
[16/2003]
Handling of customer assets
104. —(1) A holder of a capital markets services licence shall, to the extent that it receives money or other assets from or on account of a customer —
(a) do so on the basis that the money or other assets shall be applied solely for such purpose as may be agreed to by the customer, when or before it receives the money or other assets;
(b) pending such application, pay or deposit the money or other assets in such manner as may be prescribed; and
(c) record and maintain a separate book entry for each customer in accordance with the provisions of this Act in relation to that customer’s money or other assets.
[16/2003]
(2) The Authority may, without prejudice to section 341, make regulations in respect of all or any of the matters in this Division, including the handling of money or other assets by a holder of a capital markets services licence.
[SIA, s. 64; FTA, s. 37]
Non-availability of customer money and other assets for payment of debt
104A. Except as otherwise provided in this Part or the regulations made thereunder, all money or other assets received from or on account of customers or deposited in the manner prescribed under section 104 (1) (b) —
(a) shall not be available for payment of the debts of the holder of a capital markets services licence; and
(b) shall not be liable to be paid or taken in execution under an order or a process of any court.
[16/2003]
Penalties under this Division
105. Any holder of a capital markets services licence which, without reasonable excuse, contravenes section 104 (1) or any regulation made under section 104 (2), shall be guilty of an offence and shall be liable on conviction —
(a) where it is found to have committed the offence with intent to defraud, to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction; or
(b) in any other case, to a fine not exceeding $50,000 and, in the case of a continuing offence, to a further fine not exceeding $5,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
[SIA, s. 59, 65 (6) and (7)]
Division 3 — Audit
Appointment of auditors
106. A holder of a capital markets services licence shall appoint an auditor to audit its accounts and where, for any reason, the auditor ceases to act for such holder, the holder shall, as soon as practicable thereafter, appoint another auditor.
[SIA, s. 69 (1) (a); FTA, s. 26]
Lodgment of annual accounts, etc.
107. —(1) A holder of a capital markets services licence shall, in respect of each financial year —
(a) prepare a true and fair profit and loss account and a balance-sheet made up to the last day of the financial year; and
(b) lodge that account and balance-sheet with the Authority within 5 months, or such extension thereof permitted by the Authority under subsection (2), after the end of the financial year, together with an auditor’s report on the account and balance-sheet.
(2) Where an application for an extension of the period of 5 months specified in subsection (1) has been made by a holder of a capital markets services licence to the Authority and the Authority is satisfied that there is any special reason for requiring the extension, the Authority may extend that period by not more than 4 months, subject to such conditions or restrictions as the Authority may think fit to impose.
(3) Any holder of a capital markets services licence which contravenes subsection (1), shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $500 for every day or part thereof that the lodgment is late, subject to a maximum fine of $50,000.
(4) Any holder of a capital markets services licence which contravenes any condition imposed under subsection (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000.
(5) Notwithstanding any other provision of this Act or any other written law, the Authority may, if it is not satisfied with the performance of duties by an auditor appointed by a holder of a capital markets services licence —
(a) at any time direct the holder to remove the auditor; and
(b) direct the holder, as soon as practicable thereafter, to appoint another auditor,
and the holder shall comply with such direction.
[SIA, s. 69 (1) (b); FTA, s. 27]
Reports by auditor to Authority in certain cases
108. Where, in the performance of his duties as an auditor for a holder of a capital markets services licence, an auditor becomes aware of —
(a) any matter which, in his opinion, adversely affects or may adversely affect the financial position of the holder to a material extent;
(b) any matter which, in his opinion, constitutes or may constitute a contravention of any provision of this Act or an offence involving fraud or dishonesty; or
(c) any irregularity that has or may have a material effect upon the accounts, including any irregularity that may affect or jeopardise the moneys or other assets of any customer of the holder,
the auditor shall immediately thereafter send —
(i) a report in writing of the matter or irregularity to the Authority; and
(ii) where the holder is a member of a securities exchange or futures exchange, a copy of the report to the securities exchange or futures exchange, as the case may be.
[SIA, s. 70 (1); FTA, s. 28]
Power of Authority to appoint auditor
109. —(1) Where —
(a) a holder of a capital markets services licence fails to lodge an auditor’s report under section 107; or
(b) the Authority receives a report under section 108,
the Authority may, without prejudice to its powers under section 115, if it is satisfied that it is in the interests of the holder, the customers of the holder or the general public to do so, appoint in writing an auditor to examine and audit, either generally or in relation to any particular matter, the books of the holder.
(2) Where the Authority is of the opinion that the whole or any part of the costs and expenses of an auditor appointed by the Authority under subsection (1) should be borne by the holder of a capital markets services licence, the Authority may, in writing, direct the holder to pay a specified amount, being the whole or part of such costs and expenses, within such time and in such manner as may be specified in the direction.
(3) Where a holder of a capital markets services licence fails to comply with a direction under subsection (2), the amount specified in the direction may be sued for and recovered by the Authority as a civil debt.
(4) An auditor appointed under subsection (1) shall, on the conclusion of the examination and audit, submit a report to the Authority.
[FTA, s. 29]
Power of auditors appointed by Authority
110. —(1) An auditor appointed by the Authority under section 109 may, for the purpose of carrying out an examination and audit of the books of a holder of a capital markets services licence —
(a) examine, on oath or affirmation, any officer, employee or agent of the holder or any other auditor appointed under this Act in relation to those books;
(b) require any officer, employee or agent of the holder, or any other auditor appointed under this Act, to produce any of the books held by or on behalf of the holder relating to its business, and to make copies of or take extracts from, or retain possession of, such books for such period as is necessary to enable them to be inspected;
(c) require a securities exchange, futures exchange or designated clearing house to produce any of the books kept by it, or any information in its possession, relating to the business of the holder;
(d) employ such persons as he considers necessary to assist him in carrying out the examination and audit; and
(e) authorise in writing any person employed by him to do, in relation to the examination and audit, any act or thing that he could do as an auditor under this subsection, other than the examination of any person on oath or affirmation.
[1/2005]
(2) Any person who, without reasonable excuse, refuses or fails to answer any question put to him, or fails to comply with any request made to him, by an auditor appointed under section 109 or a person authorised under subsection (1) (e), shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 12 months or to both.
[SIA, s. 70 (4) and (5); FTA, s. 30]
Offence to destroy, conceal, alter, etc., books
111. —(1) Any person who, with intent to prevent, delay or obstruct the carrying out of any examination or audit under this Division —
(a) destroys, conceals or alters any book relating to the business of a holder of a capital markets services licence; or
(b) sends, or conspires with any other person to send, out of Singapore, any book or asset of any description belonging to, in the possession of or under the control of a holder of a capital markets services licence,
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding 2 years or to both.
(2) If, in any proceedings for an offence under subsection (1), it is proved that the person charged with the offence —
(a) destroyed, concealed or altered any book referred to in subsection (1) (a); or
(b) sent, or conspired to send, out of Singapore, any book or asset referred to in subsection (1) (b),
the onus of proving that, in so doing, he did not act with intent to prevent, delay or obstruct the carrying out of an examination and audit under this Division shall lie on him.
[SIA, s. 71; FTA, s. 31]
Safeguarding of books
112. —(1) A holder of a capital markets services licence shall take reasonable precautions —
(a) to prevent falsification of the books required to be kept by it under this Act; and
(b) to facilitate the discovery of any falsification of any such book.
(2) Any holder of a capital markets services licence who contravenes this section shall be guilty of an offence under this Act.
[SIA, s. 72]
Restriction on auditor’s and employee’s right to communicate certain matters
113. Except as may be necessary for the carrying into effect of the provisions of this Act or so far as may be required for the purposes of any legal proceedings, whether civil or criminal, an auditor appointed under section 109 or carrying out any duty imposed under section 115, and any employee of such an auditor, shall not disclose any information which may come to his knowledge or possession in the course of performing his duties as such auditor or employee, as the case may be, to any person other than —
(a) the Authority; and
(b) in the case of an employee of such auditor, the auditor.
[FTA, s. 32]
Exchanges, etc., may impose additional obligations on members
114. Nothing in this Division shall prevent a securities exchange, futures exchange or designated clearing house from imposing on its members any additional obligation or requirement which it thinks is necessary with respect to —
(a) the audit of accounts;
(b) the information to be given in reports by auditors; or
(c) the keeping of books.
[1/2005]
[SIA, s. 73; FTA, s. 33]
Additional powers of Authority in respect of auditors
115. —(1) The Authority may impose all or any of the following duties on an auditor of a holder of a capital markets services licence:
(a) a duty to submit to the Authority such additional information in relation to his audit as the Authority considers necessary;
(b) a duty to enlarge or extend the scope of his audit of the business and affairs of the holder;
(c) a duty to carry out any other examination or establish any procedure in any particular case;
(d) a duty to submit a report to the Authority on any of the matters referred to in paragraphs (b) and (c),
and the auditor shall carry out such additional duty or duties.
(2) A holder of a capital markets services licence shall remunerate the auditor in respect of the discharge of such additional duty or duties as the Authority may impose under subsection (1).
[SIA, s. 70 (3); FTA, s. 35]
Defamation
116. —(1) No auditor or employee of such auditor shall, in the absence of malice on his part, be liable to any action for defamation at the suit of any person in respect of —
(a) any statement made orally or in writing in the discharge of his duties under this Part; or
(b) the submission of any report to the Authority under section 108, 109 (4) or 115 (1) (d).
(2) Subsection (1) shall not restrict or otherwise affect any right, privilege or immunity that, apart from this section, the auditor or his employee has as a defendant in an action for defamation.
[FTA, s. 36]
PART VI
CONDUCT OF BUSINESS
Division 1 — General
Certain representations prohibited
117. —(1) The holder of a capital markets services licence shall not represent or imply or knowingly permit to be represented or implied in any manner to any person that the holder’s abilities or qualifications have in any respect been approved by the Authority.
(2) A statement that a person is holding a capital markets services licence to carry on business in any regulated activity is not a contravention of this section.
[SIA, s. 48]
Issue of contract notes
118. The holder of a capital markets services licence to deal in securities, trade in futures contracts or carry out leveraged foreign exchange trading shall, in respect of a sale or purchase of securities or futures contracts or a transaction connected with leveraged foreign exchange trading, after entering into the transaction —
(a) give to the other party to the transaction a contract note which contains such information as may be prescribed; or
(b) procure that such a contract note be given in its name.
[SIA, s. 49]
119. (Repealed by Act 1/2005)
Disclosure of certain interests in respect of underwriting agreement
120. —(1) Where —
(a) securities have been offered for subscription or purchase; and
(b) the holder of a capital markets services licence has subscribed for or purchased, or is or will or may be required to subscribe for or purchase, any of those securities under an underwriting or sub-underwriting agreement by reason that some or all of the securities have not been subscribed for or purchased,
the holder shall not, during the period of 90 days after the close of the offer referred to in paragraph (a) —
(i) make an offer to sell those securities otherwise than in the ordinary course of trading on a securities exchange or recognised market operator; or
(ii) make a recommendation, whether orally or in writing and whether expressly or by implication, with respect to those securities,
unless the offer or recommendation contains or is accompanied by a statement to the effect that the offer or recommendation relates to securities that the holder has acquired, or is or will or may be required to acquire, under an underwriting or sub-underwriting agreement by reason that some or all of the securities have not been subscribed for or purchased.
[1/2005]
(2) For the purpose of subsection (1), any reference to an offer shall be construed as including a reference to a statement, however expressed, that expressly or impliedly invites a person to whom it is made to offer to acquire securities.
[1/2005]
(3) Where the holder of a capital markets services licence sends to any person a written offer, written recommendation or written statement to which subsection (1) applies, the holder shall retain a copy of the written offer, recommendation or statement for a period of 5 years after the day the written offer, recommendation or statement is made.
[1/2005]
(4) The Authority may, if it is in the public interest, exempt any person or class of persons, or any securities or class of securities, from the application of this section.
[1/2005]
(5) The holder of a capital markets services licence which contravenes this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.
[1/2005]
[SIA, s. 50]
121. (Repealed by Act 1/2005)
Priority to customers’ orders
122. —(1) Except as permitted by subsection (2) —
(a) the holder of a capital markets services licence to deal in securities or trade in futures contracts when acting as principal or on behalf of a person associated with or connected to the holder; or
(b) a representative of such a holder when acting for his own account or on behalf of a person associated with or connected to the representative,
shall not enter into a transaction for the purchase or sale of securities or futures contracts that are permitted to be traded on the securities market of a securities exchange, the futures market of a futures exchange or the securities market or the futures market of a recognised market operator, as the case may be, if a customer of that holder or representative, who is not associated with or connected to the holder or representative, has instructed the holder or representative to purchase or sell, respectively, securities or futures contracts of the same class and he has not complied with the instruction.
[1/2005]
(2) Subsection (1) shall not apply to the holder of a capital markets services licence or a representative of such a holder —
(a) if his customer required the purchase or sale of securities or futures contracts on behalf of the customer to be effected only on specified conditions and he has been unable to purchase or sell the securities or futures contracts by reason of those conditions; or
(b) when carrying out the act referred to in subsection (1) under such other circumstances as may be prescribed by the Authority.
[1/2005]
(3) Any person who contravenes this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 3 years or to both.
[SIA, s. 54; FTA, s. 37A]
Power of Authority to make regulations
123. —(1) The Authority may make regulations in respect of the conduct of business in any regulated activity by the holder of a capital markets services licence or a representative of such a holder.
(2) Without affecting the generality of subsection (1), regulations made under this section may —
(a) specify requirements applicable to the holder of a capital markets services licence in relation to securities financing;
(aa) specify requirements and restrictions relating to the granting of unsecured advance, unsecured loan or unsecured credit facility by the holder of a capital markets services licence;
(b) prohibit the use of misleading or deceptive advertisements by or on behalf of the holder of a capital markets services licence, and impose conditions or restrictions for the use of advertisements by or on behalf of the holder;
(c) specify terms and conditions to be included in customer contracts and provide that the terms and conditions are, unless the Authority in relation to any particular term or condition otherwise directs, to be deemed to be of the essence of the customer contracts in which they are included, whether or not a different intention appears in the provisions of the customer contracts;
(d) specify information that the holder of a capital markets services licence is to provide to its customer on entering into a customer contract with the customer, and thereafter from time to time on request by the customer, concerning the business of the holder and the identity and status of any person acting on behalf of the holder with whom the customer may have contact;
(e) require the holder of a capital markets services licence, and a representative of such a holder, to ascertain, in relation to each customer of the holder, specified matters relating to his identity and his financial situation, investment experience and investment objectives relevant to the services to be provided by the holder, and specify the steps to be taken for this purpose;
(f) require the holder of a capital markets services licence, and a representative of such a holder, when providing information or advice concerning capital markets products to a customer of the holder, to ensure the suitability of the information or advice to be provided to the customer, and specify the steps to be taken for this purpose;
(g) require the holder of a capital markets services licence, and a representative of such a holder, to disclose to a customer of the holder the financial risks in relation to capital markets products that the holder or the representative recommends to the customer, and specify the steps to be taken for this purpose;
(h) require the holder of a capital markets services licence, and a representative of such a holder, to disclose to a customer of the holder any commission or advantage the holder or the representative, as the case may be, receives or is to receive from a third party in connection with any capital markets products which the holder or the representative recommends to the customer, and specify the steps to be taken for this purpose;
(i) prohibit the holder of a capital markets services licence and a representative of such a holder from effecting a transaction on behalf of a customer of the holder except in specified circumstances;
(j) specify the circumstances in which, and the conditions under which, the holder of a capital markets services licence, and a representative of such a holder, may use information relating to the affairs of the customer of the holder;
(k) require the holder of a capital markets services licence, and a representative of such a holder, to take steps to avoid cases of conflict between any of their interests and those of a customer of the holder, and specify the steps to be taken in the event of a potential or actual case of conflict;
(l) specify the circumstances in which the holder of a capital markets services licence may receive any property or service from another holder of a capital markets services licence in consideration of directing business to that other holder;
(m) specify the circumstances in which, and the conditions and restrictions under which, a representative of the holder of a capital markets services licence is permitted to deal or trade for his own account in securities or futures contracts;
(n) provide for any other matter relating to the practices and standards of conduct of the holder of a capital markets services licence and a representative of such a holder in carrying on business in any regulated activity; and
(o) provide that, subject to such conditions or restrictions as may be prescribed, all or specified provisions of this Part shall not apply to a specified class of holders of a capital markets services licences or their representatives, or to a specified class of capital markets products.
[1/2005]
(3) Regulations made under this section may provide that any customer contract entered into by the holder of a capital markets services licence with its customer otherwise than in compliance with any specified regulation is, notwithstanding anything in the contract, unenforceable at the option of the customer.
(4) Regulations made under this section may provide —
(a) that a contravention of any specified provision thereof shall be an offence; and
(b) for penalties not exceeding a fine of $100,000 or imprisonment for a term not exceeding 12 months or both for each offence and, in the case of a continuing offence, a further penalty not exceeding a fine of 10% of the maximum fine prescribed for that offence for every day or part thereof during which the offence continues after conviction.
[16/2003]
(5) In this section, “customer contract” means any contract or arrangement between the holder of a capital markets services licence and a customer of the holder which contains terms on which the holder is to provide services to, or effect transactions for, the customer.
[HK SF Bill, Clause 163]
Penalties under this Division
124. Any person who, without reasonable excuse, contravenes any of the provisions of this Division, shall be guilty of an offence and shall be liable on conviction, where no penalty is expressly provided, to a fine not exceeding $50,000 and, in the case of a continuing offence, to a further fine of $5,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Division 2 — Securities
Dealings as principal
125. —(1) Subject to subsection (4), the holder of a capital markets services licence to deal in securities shall not, as principal, enter into any transaction of sale or purchase of any securities with any customer who is not the holder of a capital markets services licence to deal in securities unless the holder first informs the customer that the holder is acting in the transaction as principal and not as agent.
[16/2003]
(2) The holder of a capital markets services licence to deal in securities which enters into a transaction of sale or purchase of securities, as principal, with a customer who is not the holder of a capital markets services licence to deal in securities shall state in the contract note that the holder is acting in the transaction as principal and not as agent.
[16/2003]
(3) (Deleted by Act 16/2003)
(4) Subsection (1) shall not apply to a transaction of sale or purchase of an odd lot of securities that is entered into by the holder of a capital markets services licence to deal in securities which is a member of a securities exchange or recognised market operator and specialises in transactions relating to odd lots of securities.
[1/2005]
(5) Where the holder of a capital markets services licence to deal in securities fails to comply with subsection (1) or (2) in respect of a contract for the sale of securities by the holder, the purchaser of the securities may, if he has not disposed of them, rescind the contract by a notice of rescission given in writing to the holder not later than 30 days after the receipt of the contract note.
(6) Where the holder of a capital markets services licence fails to comply with subsection (1) or (2) in respect of a contract for the purchase of securities by the holder, the vendor of the securities may, in like manner, rescind the contract.
(7) Nothing in subsection (5) or (6) shall affect any right that a person has apart from those subsections.
(8) Any person who contravenes any of the provisions of this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.
(9) For the purposes of this section —
(a) a reference to the holder of a capital markets services licence to deal in securities entering into a transaction of sale or purchase of securities as principal includes a reference to the holder entering into such a transaction on behalf of —
(i) a person associated with or connected to the holder;
(ii) a corporation in which the holder has a controlling interest; or
(iii) a corporation in which the holder’s interest and the interests of the directors of the holder together constitute a controlling interest; and
(b) a reference to securities is a reference to securities which are permitted to be traded on the securities market of —
(i) a securities exchange;
(ii) an overseas securities exchange; or
(iii) a recognised market operator.
[16/2003;1/2005]
[SIA, s. 52]
Division 3 — Futures Contracts and Leveraged Foreign Exchange Trading
Trading against customer
126. The holder of a capital markets services licence to trade in futures contracts shall not knowingly enter into a transaction to buy from or sell to its customer any futures contract for —
(a) the holder’s own account;
(b) an account of a person associated with or connected to it; or
(c) an account in which the holder has an interest,
except with the customer’s prior consent and in accordance with the business rules and practices of a futures exchange or recognised market operator.
[1/2005]
[FTA, s. 37B]
Cross-trading
127. The holder of a capital markets services licence to trade in futures contracts shall not knowingly fill or execute a customer’s order for the purchase or sale of a futures contract on a futures market by off-setting against the order or orders of any other person, without effecting such a purchase or sale either —
(a) on the trading floor or electronic futures trading system; or
(b) in accordance with the business rules and practices of a futures exchange or recognised market operator.
[1/2005]
[FTA, s. 37C]
Risk disclosure by certain persons
128. —(1) The holder of a capital markets services licence to trade in futures contracts or carry out leveraged foreign exchange trading shall not open a futures trading account or leveraged foreign exchange trading account for a customer unless he —
(a) furnishes the customer with a separate written risk disclosure document which shall be in such form and contain such information as the Authority may prescribe; and
(b) receives from the customer an acknowledgment signed and dated by the customer that he has received and understood the nature and contents of the risk disclosure document.
(2) The holder of a capital markets services licence for fund management shall not solicit or enter into an agreement with a prospective customer for the purpose of —
(a) managing the customer’s futures trading account or foreign exchange trading account; or
(b) guiding the customer’s futures trading account or foreign exchange trading account,
by means of a systematic programme that recommends specific transactions unless, at or before the time the holder engages in the solicitation or enters into the agreement (whichever is the earlier), the holder —
(i) delivers or causes to be delivered to the prospective customer a risk disclosure document in respect of that purpose which shall be in such form and contain such information as the Authority may prescribe; and
(ii) receives from the prospective customer an acknowledgment signed and dated by him that he has received and understood the nature and contents of the risk disclosure document.
(3) Subsection (2) shall not apply to collective investment schemes that are approved under Division 2 of Part XIII.
[FTA, s. 39]
Penalties under this Division
129. Any person who contravenes any provision of this Division shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 3 years or to both.
[FTA, s. 40]
PART VII
DISCLOSURE OF INTERESTS
Division 1 — Registers of Interests in Securities
Application of this Division
130. —(1) This Division shall apply to any relevant person.
(2) In this Division —
(a) “relevant person” means —
(i) a holder of a capital markets services licence to deal in securities and a representative of such a holder;
(ii) a holder of a capital markets services licence to advise on corporate finance and a representative of such a holder; or
(iii) a holder of a capital markets services licence for fund management and a representative of such a holder; and
(b) a reference to securities is a reference to securities which are listed for quotation, or quoted, on a securities exchange or recognised market operator.
[1/2005]
[SIA, s. 41]
Register of securities
131. —(1) A relevant person shall —
(a) maintain in the prescribed form a register of his interests in securities;
(b) enter in the register, within 7 days after the date that he acquires any interest in securities, particulars of the securities in which he has an interest and particulars of his interest in those securities; and
(c) retain that entry in an easily accessible form for a period of not less than 5 years after the date on which such entry is first made.
(2) Where there is a change (not being a prescribed change) in any interest in securities of a relevant person, he shall —
(a) enter in the register, within 7 days after the date of the change, particulars of the change including the date of the change and the circumstances by reason of which the change has occurred; and
(b) retain that entry in an easily accessible form for a period of not less than 5 years after the date on which such entry was first made.
[16/2003]
[SIA, s. 42]
Notice of particulars to Authority
132. —(1) A relevant person shall give notice to the Authority in the prescribed form of —
(a) the place at which he will keep the register of his interests in securities or, if the register is in electronic form, the place at which full access to the register may be gained; and
(b) such other particulars as may be prescribed.
(2) The notice under subsection (1) shall be given by the relevant person as part of his application for a licence under this Act.
(3) A person who ceases to be a relevant person shall, within 14 days of his so ceasing, notify the Authority.
(4) Any person who contravenes this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000.
[SIA, s. 43]
Place at which register is kept
133. —(1) A relevant person shall keep the register of his interests in securities —
(a) in the case of an individual, at his principal place of business; or
(b) in the case of a corporation, at any of its places of business.
(2) Where a register of interests in securities is kept in electronic form, a relevant person shall be deemed to be in compliance with subsection (1) if he ensures that full access to such register may be gained by the Authority at the place referred to in subsection (1) (a) or (b), as the case may be.
[SIA, s. 43A]
Defence to prosecution
134. —(1) Where a person is charged with an offence in respect of a contravention of section 131 or 132, it shall be a defence for the person to prove —
(a) that his contravention was due to his not being aware of a fact or occurrence the existence of which was necessary to constitute the offence; and
(b) that —
(i) he was not so aware on the date of the summons; or
(ii) he became so aware before the date of the summons and complied with the relevant section within 14 days after becoming so aware.
(2) For the purposes of subsection (1), a person shall, in the absence of proof to the contrary, be conclusively presumed to have been aware of a fact or occurrence at a particular time of which an employee or agent of the person, being an employee or agent having duties or acting in relation to his employer’s or principal’s interest or interests in the securities concerned, was aware at that time.
[SIA, s. 44]
Production of register
135. —(1) The Authority may require any relevant person to produce for its inspection the register of his interests in securities, and the Authority may make a copy of, or take extracts from, the register.
(2) Any relevant person who —
(a) fails to produce the register of his interests in securities for inspection by the Authority; or
(b) fails to allow the Authority to make a copy of, or take extracts from, the register,
shall be guilty of an offence.
[SIA, s. 45]
Extract of register
136. The Authority may supply a copy of an extract of a register obtained under section 135 to any person who, in the opinion of the Authority, should in the public interest be informed of the dealing in securities disclosed in the register.
[SIA, s. 47]
Division 2 — Disclosure by Substantial Shareholders
Duty of substantial shareholders to notify securities exchange
137. —(1) In the case of a company all or any of which shares are listed for quotation on a securities exchange, Division 4 of Part IV of the Companies Act (Cap. 50) (other than sections 86, 87, 88, 89 and 92) shall apply, with such modifications and qualifications as may be necessary, to a person who is a substantial shareholder as though references to the company to which notification should be given were references to the securities exchange, and such person shall comply with those provisions accordingly.
[1/2005]
(2) Any person who fails to comply with subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine of $2,500 for every day or part thereof during which the offence continues after conviction.
Division 3 — Disclosure by Substantial Unitholders
Duty of substantial unitholders to notify securities exchange
137A. —(1) In the case of a collective investment scheme that invests only in real estate and real estate-related assets specified by the Authority in the Code on Collective Investment Schemes all or any of which units are listed for quotation on a securities exchange, Division 4 of Part IV of the Companies Act (Cap. 50) (other than sections 79, 81, 86, 87, 88, 89 and 92) shall apply, with such modifications and qualifications as may be necessary, to a person who is a substantial unitholder as though —
(a) references to the company to which notification should be given were references to the securities exchange;
(b) references to shares in the company were references to units in the scheme;
(c) references to substantial shareholding were references to substantial unitholding; and
(d) references to a substantial shareholder were references to a substantial unitholder,
and such person shall comply with those provisions accordingly.
[1/2005]
(2) Any person who fails to comply with subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine of $2,500 for every day or part thereof during which the offence continues after conviction.
[1/2005]
Duty of substantial unitholders to notify trustee of collective investment scheme
137B. —(1) In the case of a collective investment scheme that invests only in real estate and real estate-related assets specified by the Authority in the Code on Collective Investment Schemes all or any of which units are listed for quotation on a securities exchange, Division 4 of Part IV of the Companies Act (other than sections 79 and 81) shall apply, with such modifications and qualifications as may be necessary, to a person who is a substantial unitholder as though —
(a) references to the company to which notification should be given were references to the trustee of the scheme;
(b) references to shares in the company were references to units in the scheme;
(c) references to substantial shareholding were references to substantial unitholding;
(d) references to a substantial shareholder were references to a substantial unitholder; and
(e) references to the Registrar were references to the Authority,
and such person shall comply with those provisions accordingly.
[1/2005]
(2) If a person to whom subsection (1) applies fails to comply with any of the provisions of Division 4 of Part IV of the Companies Act (other than sections 79 and 81), he shall be guilty of an offence and shall be liable on conviction to the same penalties as are prescribed under that Act for a failure to comply with such provision.
[1/2005]
PART VIII
SECURITIES INDUSTRY COUNCIL AND TAKE-OVER OFFERS
Securities Industry Council
138. —(1) The advisory body known as the Securities Industry Council referred to in section 14 of the repealed Securities Industry Act (Cap. 289, 1985 Ed.) shall continue in existence as if it had been established under this Act.
(2) The function of the Securities Industry Council shall, in addition to the functions conferred upon it under this Part, be to advise the Minister on all matters relating to the securities industry.
(3) The Securities Industry Council shall consist of such representatives of business, the Government and the Authority as the Minister may appoint and those representatives shall serve for such period or periods as the Minister may determine.
(4) The Securities Industry Council shall have the power, in the exercise of its functions, to enquire into any matter or thing related to the securities industry and may, for this purpose, summon any person to give evidence on oath or affirmation or produce any document or material necessary for the purpose of the enquiry.
(5) Nothing in subsection (4) shall compel the production by an advocate and solicitor of a document containing a privileged communication made by or to him in that capacity or authorise the taking of possession of any such document which is in his possession.
(6) An advocate and solicitor who refuses to produce the document referred to in subsection (5) shall nevertheless be obliged to give the name and address (if he knows them) of the person to whom or by or on behalf of whom the communication was made.
(7) The Authority may consult the Securities Industry Council for the proper and effective implementation of this Act.
(8) For the purposes of this Act, every member of the Securities Industry Council —
(a) shall be deemed to be a public servant within the meaning of the Penal Code (Cap. 224); and
(b) shall have, in case of any action or suit brought against him for any act done or omitted to be done in the execution of his duty under the provisions of this Act, the like protection and privileges as are by law given to a Judge in the execution of his office.
(9) The Securities Industry Council shall in the exercise of its functions have regard to the interest of the public, the protection of investors and the safeguarding of sources of information.
(10) Subject to the provisions of this Act, the Securities Industry Council may regulate its own procedure and shall not be bound by the rules of evidence.
[SIA, s. 14]
Take-over Code
139. —(1) This section and section 140 shall apply to and in relation to all natural persons, whether resident in Singapore or not and whether citizens of Singapore or not, and to all corporations or bodies unincorporate, whether incorporated or carrying on business in Singapore or not, and shall extend to acts done outside Singapore.
(2) For the more effective administration, supervision and control of take-over offers and matters connected therewith, the Authority shall, on the advice of the Securities Industry Council and under section 321, issue a code known as the Singapore Code on Take-overs and Mergers (referred to in this Act as the Take-over Code).
(3) For the avoidance of doubt, the Take-over Code shall be deemed not to be subsidiary legislation.
(4) The Take-over Code shall apply to a take-over offer and to matters connected therewith, and all parties concerned in a take-over offer or a matter connected therewith shall comply with its provisions.
(5) The Take-over Code shall be administered and enforced by the Securities Industry Council.
(6) The Authority may, on the advice of the Securities Industry Council, revise the Take-over Code by deleting, amending or adding to the provisions thereof.
(7) The Securities Industry Council may issue rulings on the interpretation of the general principles and rules in the Take-over Code and lay down the practice to be followed by parties concerned in a take-over offer or a matter connected therewith, and such rulings or practice shall be final.
(8) A failure of any party concerned in a take-over offer or a matter connected therewith to observe any of the provisions of the Take-over Code shall not of itself render that party liable to criminal proceedings but any such failure may, in any proceedings whether civil or criminal, be relied upon by any party to the proceedings as tending to establish or to negate any liability which is in question in the proceedings.
(9) Nothing in subsection (8) shall be construed as preventing the Securities Industry Council from invoking such sanctions (including public censure) as it may decide in relation to breaches of the Take-over Code by any party concerned in a take-over offer or a matter connected therewith.
(10) Where the Securities Industry Council has reason to believe that any party concerned in a take-over offer or a matter connected therewith, or any person advising on a take-over offer or a matter connected therewith, is in breach of the provisions of the Take-over Code or is otherwise believed to have committed acts of misconduct in relation to such take-over offer or matter, the Securities Industry Council shall have power to enquire into the suspected breach or misconduct.
(11) For the purpose of subsection (10), the Securities Industry Council may summon any person to give evidence on oath or affirmation, which it is hereby authorised to administer, or produce any document or material necessary for the purpose of the enquiry.
[Companies, s. 213]
Offences relating to take-over offers
140. —(1) A person who has no intention to make an offer in the nature of a take-over offer shall not give notice or publicly announce that he intends to make a take-over offer.
(2) A person shall not make a take-over offer or give notice or publicly announce that he intends to make a take-over offer if he has no reasonable or probable grounds for believing that he will be able to perform his obligations if the take-over offer is accepted or approved, as the case may be.
(3) Where a person contravenes subsection (1) or (2), the person and, where the person is a corporation, every officer of the corporation who is in default shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 7 years or to both.
[Companies, s. 213 (9)]
PART IX
SUPERVISION AND INVESTIGATION
Subdivision (1) — Powers of Authority to require disclosure of information about securities and futures contracts
Interpretation of this Subdivision
141. In this Subdivision, a reference to disclosing information includes, in relation to information that is contained in a document, a reference to producing the document.
[SIA, s. 10 (11)]
Acquisition and disposal of securities or futures contracts, etc.
142. —(1) The Authority may, where it considers it necessary for the protection of investors, require the holder of a capital markets services licence to deal in securities or trade in futures contracts, or an exempt person carrying on business in any of those activities, to disclose to the Authority, in relation to any acquisition or disposal of securities or futures contracts —
(a) the name of the person from or through whom or on whose behalf the securities or futures contracts were acquired; or
(b) the name of the person to or through whom or on whose behalf the securities or futures contracts were disposed of,
and the nature of the instructions given to the holder or exempt person in respect of the acquisition or disposal.
(2) The Authority may require a person who has acquired, held or disposed of securities or futures contracts to disclose to the Authority whether he acquired, held or disposed of those securities or futures contracts, as the case may be, as trustee for, or on behalf of, another person (whether or not as a nominee), and if so —
(a) the name of that other person; and
(b) the nature of any instructions given to the first-mentioned person in respect of the acquisition, holding or disposal.
(3) The Authority may require a securities exchange or futures exchange to disclose to the Authority, in relation to an acquisition or disposal of securities on the securities market of that securities exchange or futures contracts on the futures market of that futures exchange, the names of the members of that securities exchange or futures exchange who acted in the acquisition or disposal.
(4) The Authority may require a designated clearing house for a securities market or futures market to disclose to the Authority, in relation to any dealing in securities on that securities market or trading in futures contracts on that futures market, the names of the members of the designated clearing house who were concerned in any act or omission in relation to the dealing or trading.
[1/2005]
[SIA, s. 10 (1)-(3) modified]
Exercise of certain powers in relation to securities
143. —(1) This section shall apply where the Authority considers that —
(a) it may be necessary to prohibit dealing in securities of, or made available by, a corporation under section 32;
(b) a person may have contravened any of the provisions of Part XII in relation to securities of, or made available by, a corporation; or
(c) a person may have contravened any of the provisions of Division 4 of Part IV of the Companies Act (Cap. 50) or Division 2 of Part VII in relation to securities in a corporation.
[42/2005]
(2) The Authority may require an officer of a corporation referred to in subsection (1) to disclose to the Authority any information of which he is aware and which may have affected any dealing that has taken place, or which may affect any dealing that may take place, in securities of, or made available by, the corporation.
(3) Where the Authority believes on reasonable grounds that a person is capable of giving information concerning any of the following matters:
(a) any dealing in securities of, or made available by, a corporation referred to in subsection (1);
(b) any advice given, or any report or analysis issued or published concerning such securities, by the holder of a capital markets services licence to deal in securities, or a representative of such a holder;
(c) the financial position of any business carried on by a person who is or has been (either alone or together with another person or other persons) the holder of a capital markets services licence to deal in securities and who has dealt in or given advice or issued or published a report or an analysis concerning such securities;
(d) the financial position of any business carried on by a nominee controlled by a person referred to in paragraph (c) or jointly controlled by 2 or more persons at least one of whom is a person referred to in that paragraph; or
(e) an audit of, or any report of an auditor concerning, any book of the holder of a capital markets services licence to deal in securities, being a book relating to dealings in such securities,
the Authority may require the person to disclose to the Authority the information that the person has about that matter.
[SIA, s. 10 (4)]
Exercise of certain powers in relation to futures contracts
144. —(1) This section shall apply where the Authority considers that —
(a) it may be necessary to give a direction or take any action in relation to any trading in futures contracts under section 34; or
(b) a person may have contravened any of the provisions of Part XII in relation to futures contracts.
[42/2005]
(2) Where the Authority believes on reasonable grounds that a person is capable of giving information concerning any of the following matters:
(a) any trading in futures contracts;
(b) any advice given, or any report or analysis issued or published concerning such futures contracts, by the holder of a capital markets services licence to trade in futures contracts, or a representative of such a holder;
(c) the financial position of any business carried on by a person who is or has been (either alone or together with another person or other persons) the holder of a capital markets services licence to trade in futures contracts and has traded in or given advice or issued or published a report or an analysis concerning such futures contracts;
(d) the financial position of any business carried on by a nominee controlled by a person referred to in paragraph (c) or jointly controlled by 2 or more persons, at least one of whom is a person referred to in that paragraph; or
(e) an audit of, or any report of an auditor concerning, any book of the holder of a capital markets services licence to trade in futures contracts, being a book relating to trading in such futures contracts,
the Authority may require the person to disclose to the Authority the information that the person has about that matter.
[SIA, s. 10 (4) modified]
Self-incrimination
145. —(1) A person is not excused from disclosing information to the Authority, under a requirement made of him under section 142, 143 or 144, on the ground that the disclosure of the information might tend to incriminate him.
(2) Where a person claims, before making a statement disclosing information that he is required to disclose by a requirement made of him under section 142, 143 or 144, that the statement might tend to incriminate him, that statement —
(a) shall not be admissible in evidence against him in criminal proceedings other than proceedings under section 148; but
(b) shall be admissible in evidence for civil proceedings under Part XII.
[SIA, s. 5 (12) modified; HK SF Bill, Clause 180]
Savings for advocates and solicitors
146. —(1) Nothing in this Subdivision shall compel the disclosure by an advocate and solicitor of information containing a privileged communication made by or to him in that capacity.
[16/2003]
(2) An advocate and solicitor who refuses to disclose the information referred to in subsection (1) shall nevertheless be obliged to give the name and address (if he knows them) of the person to whom, or by or on behalf of whom, that privileged communication was made.
[SIA, s. 8]
Immunities
147. —(1) No civil or criminal proceedings, other than proceedings for an offence under section 148, shall lie against any person for disclosing any information to the Authority if he had done so in good faith in compliance with a requirement of the Authority under section 142, 143 or 144.
(2) Any person who complies with a requirement of the Authority under section 142, 143 or 144 shall not be treated as being in breach of any restriction upon the disclosure of information or thing imposed by any prescribed written law or any requirement imposed thereunder, any rule of law, any contract or any rule of professional conduct.
[SIA, s. 96F (modified)]
Offences
148. —(1) A person who, without reasonable excuse, refuses or fails to comply with a requirement of the Authority under section 142, 143 or 144 shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both and, in the case of a continuing offence, to a further fine not exceeding $5,000 for every day or part thereof during which the offence continues after conviction.
(2) A person who, in purported compliance with a requirement of the Authority under section 142, 143 or 144, discloses information, or makes a statement, that is false or misleading in a material particular shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.
(3) It is a defence to a prosecution for an offence under subsection (2) if the defendant proves that he believed on reasonable grounds that the information or statement was true and was not misleading.
[SIA, s. 10 (8), (9) and (10)]
Copies of or extracts from documents to be admitted in evidence
149. —(1) Subject to this section, a copy of or extract from a document produced under this Subdivision that is proved to be a true copy of the document or of the relevant part of the document is admissible in evidence as if it were the original document or the relevant part of the original document.
(2) For the purposes of subsection (1), evidence that a copy of or extract from a document is a true copy of the document or of a part of the document may be given by a person who has compared the copy or extract with the document or the relevant part of the document and may be given orally or by an affidavit sworn, or by a declaration made, before a person authorised to take affidavits or statutory declarations.
[SIA, s. 7]
Subdivision (2) — Inspection powers of Authority
Inspection by Authority
150. —(1) The Authority may inspect under conditions of secrecy, the books of an approved holding company, a securities exchange, a futures exchange, a recognised market operator, a person operating an exempt market, an exempt market operator, a designated clearing house, the holder of a capital markets services licence, an exempt person or a representative.
[1/2005]
(2) For the purpose of an inspection under this section —
(a) a person referred to in subsection (1) or any person in possession of the books, shall produce such books to the Authority and give such information and facilities as may be required by the Authority; and
(b) a person referred to in subsection (1) shall procure that any person who is in possession of such books produce the books to the Authority and give such information and facilities as may be required by the Authority.
(3) The Authority may —
(a) make copies of, or take possession of, any of the books;
(b) use, or permit the use of, any of the books for the purposes of any proceedings under this Act; and
(c) retain possession of any of the books for so long as is necessary —
(i) for the purposes of exercising a power conferred by this section (other than subsection (5));
(ii) for a decision to be made about whether or not any proceedings under this Act to which the books concerned would be relevant should be instituted; or
(iii) for such proceedings to be instituted and carried on.
(4) No person shall be entitled, as against the Authority, to claim a lien on any of the books, but such a lien is not otherwise prejudiced.
(5) While the books are in the possession of the Authority, the Authority —
(a) shall permit another person to inspect at all reasonable times such of the books (if any) as the other person would be entitled to inspect if they were not in the Authority’s possession; and
(b) may permit another person to inspect any of the books.
(6) The Authority may require a person who produced any of the books to the Authority to explain to the best of his knowledge and belief any matter about the compilation of the books or to which the books relate.
(7) Any person who fails, without reasonable excuse, to comply with subsection (2) or a requirement of the Authority under subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.
(8) Sections 146 and 147 shall, with the necessary modifications, apply in relation to the production of any book or disclosure of any information to the Authority under this section.
(9) Section 149 shall, with the necessary modifications, apply in relation to a copy of, or extract from, a book inspected under this section.
[SIA, s. 12 modified; FTA, s. 48 modified; ASIC 1989, s. 37]
Division 2 — Power of Minister to Appoint Inspector for Investigating Dealings in Securities, etc.
Power of Minister to appoint inspectors
151. —(1) Notwithstanding anything in this Act, the Minister may, if he thinks it in the public interest to do so, appoint any person as an inspector to investigate any matter concerning dealing in securities, trading in futures contracts or leveraged foreign exchange trading.
(2) An inspector appointed under subsection (1) shall have all the powers conferred upon an inspector under Part IX of the Companies Act (Cap. 50) and that Part shall, with the necessary modifications, apply to such investigation.
(3) Any inspector appointed under subsection (1) shall report the results of his investigation to the Minister and the Minister may, if he thinks it in the public interest to do so, cause the report to be printed and published.
[SIA, s. 112]
Division 3 — Investigative Powers of Authority
Subdivision (1) — General
Investigation by Authority
152. —(1) The Authority may conduct such investigation as it considers necessary or expedient for any of the following purposes:
(a) to exercise any of its powers or to perform any of its functions and duties under this Act;
(b) to ensure compliance with this Act or any written direction issued under this Act; or
(c) to investigate an alleged or suspected contravention of any provision of this Act or any written direction issued under this Act.
(2) The Authority may exercise any of its powers under this Division for the purposes of conducting an investigation under subsection (1) notwithstanding the provisions of any prescribed written law or any requirement imposed thereunder or any rule of law.
(3) A requirement imposed by the Authority in the exercise of its powers under this Division shall have effect notwithstanding any obligations as to secrecy or other restrictions upon the disclosure of information imposed by any prescribed written law or any requirement imposed thereunder, any rule of law, any contract or any rule of professional conduct.
(4) Any person who complies with a requirement imposed by the Authority in the exercise of its powers under this Division shall not be treated as being in breach of any restriction upon the disclosure of information or thing imposed by any prescribed written law or any requirement imposed thereunder, any rule of law, any contract or any rule of professional conduct.
(5) No civil or criminal action, other than proceedings for an offence under section 162 or 168, shall lie against any person —
(a) for giving assistance to the Authority, including answering questions, if he had given the assistance or answered the questions in good faith in compliance with a requirement imposed under this Division;
(b) for providing information or producing books to the Authority if he had provided the information or produced the books in good faith in compliance with a requirement imposed by the Authority under this Division; or
(c) for doing or omitting to do any act, if he had done or omitted to do the act in good faith and as a result of complying with a requirement imposed by the Authority under this Division.
(6) In this section, “requirement imposed by the Authority” includes a requirement imposed by an investigator under Subdivision (2).
Self-incrimination and savings for advocates and solicitors
153. —(1) A person is not excused from disclosing information to the Authority or, as the case may be, an investigator under Subdivision (2), under a requirement made of him under any provision of this Division on the ground that the disclosure of the information might tend to incriminate him.
(2) Where a person claims, before making a statement disclosing information that he is required to under any provision of this Division to the Authority or, as the case may be, an investigator under Subdivision (2), that the statement might tend to incriminate him, that statement —
(a) shall not be admissible in evidence against him in criminal proceedings other than proceedings under this section; but
(b) shall, for the avoidance of doubt, be admissible in evidence in civil proceedings under Part XII.
(3) Nothing in this Division shall —
(a) compel an advocate and solicitor to disclose or produce a privileged communication, or a document or other material containing a privileged communication, made by or to him in that capacity; or
(b) authorise the taking of any such document or other material which is in his possession.
[16/2003]
(4) An advocate and solicitor who refuses to disclose the information or produce the document or other material referred to in subsection (3) shall nevertheless be obliged to give the name and address (if he knows them) of the person to whom, or by or on behalf of whom, that privileged communication was made.
[SIA, s. 96D (6) modified; HK SF Bill, Clause 180]
Subdivision (2) — Examination of persons
Requirement to appear for examination
154. —(1) For the purpose of an investigation under this Division, the Authority may, in writing, require a person —
(a) to give to the Authority all reasonable assistance in connection with the investigation; and
(b) to appear before an officer of the Authority duly authorised by the Authority for examination on oath and to answer questions.
(2) A requirement in writing imposed under subsection (1) shall state the general nature of the matter referred to in subsection (1).
[ASIC 1989, s. 19 modified]
Proceedings at examination
155. The provisions of this Subdivision shall apply where, pursuant to a requirement made under section 154 for the purposes of an investigation under this Division, a person (referred to in this Subdivision as the examinee) appears before another person (referred to in this Subdivision as the investigator) for examination.
[ASIC 1989, s. 20]
Requirements made of examinee
156. —(1) The investigator may examine the examinee on oath or affirmation and may, for that purpose, administer an oath or affirmation to the examinee.
(2) The oath or affirmation to be taken or made by the examinee for the purposes of the examination is an oath or affirmation that the statements that the examinee will make are true.
(3) The investigator may require the examinee to answer a question that is put to the examinee at the examination and is relevant to a matter that the Authority is investigating, or is to investigate, under this Division.
[ASIC 1989, s. 21]
Examination to take place in private
157. —(1) The examination shall take place in private and the investigator may give directions as to who may be present during the examination or part thereof.
(2) A person shall not be present at the examination unless he is —
(a) the investigator or the examinee;
(b) a person approved by the Authority; or
(c) entitled to be present by virtue of a direction under subsection (1).
[ASIC 1989, s. 22]
Record of examination
158. —(1) The investigator may, and shall if the examinee so requests, cause a record to be made of statements made at the examination.
(2) If a record made under subsection (1) is in writing or is reduced to writing —
(a) the investigator may require the examinee to read the record, or to have it read to him, and may require him to sign it; and
(b) the investigator shall, if requested in writing by the examinee to give to the examinee a copy of the written record, comply with the request without charge but subject to such conditions as the investigator may impose.
[ASIC 1989, s. 24]
Giving copies of record to other persons
159. —(1) The Authority may give a copy of a written record of the examination, or such a copy together with a copy of any related book, to an advocate and solicitor acting on behalf of a person who is carrying on, or is contemplating in good faith, a proceeding in respect of a matter to which the examination relates.
(2) If the Authority gives a copy to a person under subsection (1), the person, or any other person who has possession, custody or control of the copy or a copy of it, shall not, except in connection with preparing, beginning or carrying on, or in the course of, any proceedings —
(a) use the copy or a copy of it; or
(b) publish, or communicate to a person, the copy, a copy of it, or any part of the copy’s contents.
(3) The Authority may, subject to such conditions or restrictions as it may impose, give to a person a copy of a written record of the examination, or such a copy together with a copy of any related book.
[ASIC 1989, s. 25]
Copies given subject to conditions
160. If a copy of a written record or a book is given to a person under section 158 (2) or 159 (3) subject to conditions or restrictions imposed by the Authority, the person, and any other person who has possession, custody or control of the copy or a copy of it, shall comply with the conditions.
[ASIC 1989, s. 26]
Record to accompany report
161. If —
(a) in the Authority’s opinion, a statement made at an examination is relevant to any other investigation conducted under this Division;
(b) a record of the statement was made under section 158; and
(c) a report about the other investigation is prepared under section 151 (3),
a copy of the record shall accompany the report to be submitted to the Minister under section 151 (3).
Offences under this Subdivision
162. —(1) A person who, without reasonable excuse, refuses or fails to comply with section 154 or 156 (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.
[1/2005]
(2) A person who, without reasonable excuse —
(a) refuses or fails to take an oath or make an affirmation when required to do so by an investigator examining him under this Subdivision;
(b) refuses or fails to comply with a requirement of an investigator under section 158 (2) (a); or
(c) refuses or fails to comply with section 159 (2) or 160,
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months or to both.
(3) A person who, in purported compliance with the provisions of this Subdivision, or in the course of examination of the person, furnishes information or makes a statement that is false or misleading in a material particular shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.
(4) It shall be a defence to a prosecution for an offence under subsection (3) if the defendant proves that he believed on reasonable grounds that the information or statement was true and was not misleading.
(5) A person who, without reasonable excuse, obstructs or hinders the Authority or another person in the exercise of any power under this Subdivision shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.
[1/2005]
[SIA, s. 6; ASIC 1989, s. 63-67]
Subdivision (3) — Powers to obtain information
Power of Authority to order production of books
163. For the purpose of an investigation under this Division, the Authority may, in writing, require any person at a specified time and place to provide information or produce books relating to any matter under investigation, and such person shall comply with that requirement.
Application for warrant to seize books not produced
164. —(1) Where the Authority has reasonable grounds to suspect that there is, on any particular premises, any book the production of which has been required under section 163, and —
(a) which has not been produced in compliance with that requirement; or
(b) which the Authority has reasonable grounds to believe will not be produced in compliance with that requirement,
the Authority may apply to a Magistrate for the issue of a warrant to search the premises for such book.
(2) Whenever it appears to a Magistrate, upon an application made under subsection (1), and after such enquiry as he may think necessary, that there are reasonable grounds for suspecting that there is, on particular premises, any book the production of which has been required under section 163, and —
(a) which has not been produced in compliance with that requirement; or
(b) which the Magistrate has reasonable grounds to suspect will not be produced in compliance with that requirement,
the Magistrate may issue a warrant authorising the Authority or any person named therein, with or without assistance —
(i) to enter and search the premises and to break open and search anything, whether a fixture or not, in the premises; and
(ii) to take possession of, or secure against interference, any book that appears to be a book the production of which was so required.
(3) The powers conferred under subsections (1) and (2) are in addition to, and not in derogation of, any other powers conferred by any other written law or rule of law.
(4) In this section, “premises” includes any structure, building, aircraft, vehicle or vessel.
[SIA, s. 5 (9) to (11) modified]
Powers where books are produced or seized
165. —(1) This section shall apply where —
(a) books are produced to the Authority under a requirement made under section 163;
(b) under a warrant issued under section 164, the Authority or a person named therein —
(i) takes possession of books; or
(ii) secures books against interference; or
(c) under a previous application of subsection (6), books are delivered into the possession of the Authority or a person authorised by it.
(2) If subsection (1) (a) applies, the Authority may take possession of any of the books.
(3) The Authority or, where applicable, a person referred to in subsection (1) (b) may —
(a) inspect, and may make copies of, or take extracts from, any of the books;
(b) use, or permit the use of, any of the books for the purposes of any proceedings; and
(c) retain possession of any of the books for so long as is necessary —
(i) for the purposes of exercising a power conferred by this section (other than subsection (5));
(ii) for a decision to be made about whether or not any proceedings to which the books concerned would be relevant should be instituted; or
(iii) for such proceedings to be instituted and carried on.
(4) No person shall be entitled, as against the Authority or, where applicable, a person referred to in subsection (1) (b) to claim a lien on any of the books, but such a lien is not otherwise prejudiced.
(5) While the books are in the possession of the Authority or, where applicable, the person referred to in subsection (1) (b), the Authority or person —
(a) shall permit another person to inspect at all reasonable times such of the books (if any) as the second-mentioned person would be entitled to inspect if they were not in possession of the Authority or the first-mentioned person; and
(b) may permit any other person to inspect any of the books.
(6) Unless subsection (1) (b) (ii) applies, a person referred to in subsection (1) (b) may deliver any of the books into the possession of the Authority or of a person authorised by the Authority to receive them.
(7) Where subsection (1) (a) or (b) applies, the Authority, a person referred to in subsection (1) (b) or a person into whose possession the books are delivered under subsection (6), may require —
(a) if subsection (1) (a) applies, a person who so produced any of the books; or
(b) in any other case, a person who was a party to the compilation of any of the books,
to explain to the best of his knowledge and belief any matter about the compilation of any of the books or to which any of the books relate.
[SIA, s. 5 (6) (a); ASIC 1989, s. 37 modified]
Powers where books not produced
166. Where a person fails to comply with a requirement imposed by the Authority under section 163 to produce any book, the Authority may require the person to state, to the best of his knowledge and belief —
(a) the place where such book may be found; and
(b) the person who last had possession, custody or control of such book and the place where that person may be found.
[SIA, s. 5 (6) (b); ASIC 1989, s. 38]
Copies of or extracts from books to be admitted in evidence
167. —(1) Subject to this section, a copy of or extract from a book referred to in this Subdivision that is proved to be a true copy of the book or of the relevant part of the book is admissible in evidence as if it were the original book or the relevant part of the original book.
(2) For the purposes of subsection (1), evidence that a copy of or extract from a book is a true copy of the book or of a part of the book may be given by a person who has compared the copy or extract with the book or the relevant part of the book and may be given orally or by an affidavit sworn, or by a declaration made, before a person authorised to take affidavits or statutory declarations.
[1/2005]
[SIA, s. 7]
Offences under this Part
168. —(1) A person who, without reasonable excuse, refuses or fails to comply with any requirement imposed under section 163, 165 (7) or 166 shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.
[1/2005]
(2) A person who, in purported compliance with a requirement under this Subdivision, furnishes information or makes a statement that is false or misleading in a material particular shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.
(3) It shall be a defence to a prosecution for an offence under subsection (2) if the defendant proves that he believed on reasonable grounds that the information or statement was true and not misleading.
(4) Any person, who conceals, destroys, mutilates or alters any book relating to a matter that the Authority is investigating or about to investigate under this Division or who, where such a book is within the territory of Singapore, takes or sends the book out of Singapore, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding 2 years or to both.
(5) A person who, without reasonable excuse, obstructs or hinders the Authority in the exercise of any power under this Subdivision, or obstructs or hinders a person who is executing a warrant issued under section 164, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.
[1/2005]
(6) The occupier or the person in charge of the premises that a person enters under a warrant issued under section 164 who fails to provide to that person all reasonable facilities and assistance for the effective exercise of his powers under the warrant shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months or to both.
[SIA, s. 6 modified; ASIC 1989, s. 63-67]
PART X
ASSISTANCE TO FOREIGN REGULATORY AUTHORITIES
Interpretation of this Part
169. In this Part, unless the context otherwise requires —
"enforce" means enforce through criminal, civil or administrative proceedings;
"enforcement" means the taking of any action to enforce a law or regulatory requirement against a specified person, being a law or regulatory requirement that relates to the securities or futures industry of the foreign country of the regulatory authority concerned;
"foreign country" means a country or territory other than Singapore;
"investigation" means an investigation to determine if a specified person has contravened or is contravening a law or regulatory requirement, being a law or regulatory requirement that relates to the securities or futures industry of the foreign country of the regulatory authority concerned;
"material" includes any information, book, document or other record in any form whatsoever, and any container or article relating thereto;
"regulatory authority" , in relation to a foreign country, means an authority of the foreign country exercising any function that corresponds to a regulatory function of the Authority under this Act;
"supervision" , in relation to a regulatory authority, means the taking of any action for or in connection with the supervision of —
(a) a person operating a securities market or futures market, an intermediary or any other person regulated by the regulatory authority; or
(b) the issuance of or trading in securities, or the trading in futures contracts in the foreign country of the regulatory authority.
[SIA, s. 96A; FTA, s. 49Q]
Conditions for provision of assistance
170. —(1) The Authority may provide the assistance referred to in section 172 to a regulatory authority of a foreign country if the Authority is satisfied that all of the following conditions are fulfilled:
(a) the request by the regulatory authority for assistance is received by the Authority on or after 6th March 2000;
(b) the assistance is intended to enable the regulatory authority, or any other authority of the foreign country, to carry out the supervision, investigation or enforcement;
(c) the contravention of the law or regulatory requirement to which the request relates took place on or after 6th March 2000;
(d) the regulatory authority has given a written undertaking that any material or copy thereof obtained pursuant to its request shall not be used for any purpose other than a purpose that is specified in the request and approved by the Authority;
(e) the regulatory authority has given a written undertaking not to disclose to a third party (other than a designated third party of the foreign country in accordance with paragraph (f)) any material received pursuant to the request unless the regulatory authority is compelled to do so by the law or a court of the foreign country;
(f) the regulatory authority has given a written undertaking to obtain the prior consent of the Authority before disclosing any material received pursuant to the request to a designated third party, and to make such disclosure only in accordance with such conditions as may be imposed by the Authority;
(g) the material requested for is of sufficient importance to the carrying out of the supervision, investigation or enforcement to which the request relates and cannot reasonably be obtained by any other means;
(h) the matter to which the request relates is of sufficient gravity; and
(i) the rendering of assistance will not be contrary to the public interest or the interest of the investing public.
(2) For the purposes of subsection (1) (e) and (f), “designated third party”, in relation to a foreign country, means —
(a) any person or body responsible for supervising the regulatory authority in question;
(b) any authority of the foreign country responsible for carrying out the supervision, investigation or enforcement in question; or
(c) any authority of the foreign country exercising a function that corresponds to a regulatory function of the Authority under this Act.
[SIA, s. 96B; FTA, s. 49R]
Other factors to consider for provision of assistance
171. In deciding whether to grant a request for assistance referred to in section 172 from a regulatory authority of a foreign country, the Authority may also have regard to the following:
(a) whether the act or omission that is alleged to constitute the contravention of the law or regulatory requirement to which the request relates would, if it had occurred in Singapore, have constituted an offence under this Act;
(b) whether the regulatory authority has given or is willing to give an undertaking to the Authority to comply with a future request by the Authority to the regulatory authority for similar assistance; and
(c) whether the regulatory authority has given or is willing to give an undertaking to the Authority to contribute towards the costs of providing the assistance that the regulatory authority has requested for.
[SIA, s. 96C; FTA, s. 49S]
Assistance that may be rendered
172. —(1) Notwithstanding the provisions of any prescribed written law or any requirement imposed thereunder or any rule of law, the Authority or any person authorised by the Authority may, in relation to a request by a regulatory authority of a foreign country for assistance —
(a) transmit to the regulatory authority any material in the possession of the Authority that is requested by the regulatory authority or a copy thereof;
(b) order any person to furnish to the Authority any material that is requested by the regulatory authority or a copy thereof, and transmit the material or copy to the regulatory authority;
(c) order any person to transmit directly to the regulatory authority any material that is requested by the regulatory authority or a copy thereof;
(d) order any person to make an oral statement to the Authority on any information requested by the regulatory authority, record such statement, and transmit the recorded statement to the regulatory authority; or
(e) request any Ministry, Government department or statutory authority to furnish to the Authority any material that is requested by the regulatory authority or a copy thereof, and transmit the material or copy to the regulatory authority.
(2) The assistance referred to in subsection (1) (c) may only be rendered if the material sought is to enable the regulatory authority to carry out investigation or enforcement.
(3) An order under subsection (1) (b), (c) or (d) shall have effect notwithstanding any obligations as to secrecy or other restrictions upon the disclosure of information imposed by any prescribed written law or any requirement imposed thereunder, any rule of law, any contract or any rule of professional conduct.
(4) Nothing in this section shall compel an advocate and solicitor —
(a) to furnish or transmit any material or copy thereof that contains; or
(b) to disclose,
a privileged communication made by or to him in that capacity.
(5) An advocate and solicitor who refuses to furnish or transmit any material or copy thereof that contains, or to disclose, any privileged communication shall nevertheless be obliged to give the name and address (if he knows them) of the person to whom, or by or on behalf of whom, the privileged communication was made.
(6) A person is not excused from making an oral statement pursuant to an order made under subsection (1) (d) on the ground that the statement might tend to incriminate him but, where the person claims before making the statement that the statement might tend to incriminate him, that statement —
(a) shall not be admissible in evidence against him in criminal proceedings other than proceedings for an offence under section 173; but
(b) shall be admissible in evidence in civil proceedings under Part XII.
[SIA, s. 96D; FTA, s. 49T]
Offences under this Part
173. Any person who —
(a) without reasonable excuse refuses or fails to comply with an order under section 172 (1) (b), (c) or (d);
(b) in purported compliance with an order under section 172 (1) (b) or (c), furnishes to the Authority or transmits to a regulatory authority any material or copy thereof known to the person to be false or misleading in a material particular; or
(c) in purported compliance with an order made under section 172 (1) (d), makes a statement to the Authority that is false or misleading in a material particular,
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 2 years or to both.
[SIA, s. 96E; FTA, s. 49U]
Immunities
174. —(1) No civil or criminal proceedings, other than proceedings for an offence under section 173, shall lie against any person for —
(a) furnishing to the Authority or transmitting any material or copy thereof to the Authority or a regulatory authority of a foreign country if he had furnished or transmitted that material or copy in good faith in compliance with an order made under section 172 (1) (b) or (c);
(b) making a statement to the Authority in good faith and in compliance with an order made under section 172 (1) (d); or
(c) doing or omitting to do any act, if he had done or omitted to do the act in good faith and as a result of complying with such an order.
(2) Any person who complies with an order referred to in subsection (1) (a) or (b) shall not be treated as being in breach of any restriction upon the disclosure of information or thing imposed by any prescribed written law or any requirement imposed thereunder, any rule of law, any contract or any rule of professional conduct.
[SIA, s. 96F; FTA, s. 49V]
PART XI
INVESTOR COMPENSATION SCHEME
Interpretation of this Part
175. In this Part, “member”, in relation to a securities exchange or futures exchange, means a person who —
(a) holds membership of any class or description of the securities exchange or futures exchange, whether or not he holds any share in the share capital of such exchange; and
(b) is licensed by the Authority to carry on the business of dealing in securities or trading in futures contracts, as the case may be.
[SIA, s. 74; FTA, s. 49A]
Establishment of fidelity fund
176. —(1) Each securities exchange and each futures exchange shall establish, keep and administer a fidelity fund (referred to in this Part as a fidelity fund or fund).
(2) The assets of the fidelity fund of a securities exchange or futures exchange shall —
(a) be the property of the exchange;
(b) be kept separate from all other property of the exchange; and
(c) be held in trust for the purposes set out in this Part.
[SIA, s. 75; FTA, s. 49AA]
Moneys constituting fidelity fund
177. The fidelity fund of a securities exchange or futures exchange shall consist of —
(a) all moneys paid to the exchange by its members in accordance with this Part;
(b) all moneys paid to the fund by the exchange;
(c) all interest and profits from time to time accruing from the investment of the fund;
(d) all moneys recovered by or on behalf of the exchange in the exercise of any right of action conferred by this Part;
(e) all moneys paid by an insurer pursuant to a contract of insurance or indemnity entered into by the exchange under section 194; and
(f) all other moneys lawfully paid into the fund.
[SIA, s. 76; FTA, s. 49B]
Fund to be kept in separate bank account
178. All moneys forming part of a fidelity fund shall, pending the investment or application thereof in accordance with this Part, be kept in a separate bank account in Singapore.
[SIA, s. 77; FTA, s. 49C]
Payments out of fidelity fund
179. Subject to this Part, there shall be paid out of the fidelity fund of a securities exchange or futures exchange as required and in such order as the exchange considers proper —
(a) the amount of all claims, including costs, allowed by the exchange or established against the exchange under this Part;
(b) all legal and other expenses incurred in investigating or defending claims made under this Part or incurred in relation to the fund or in the exercise by the exchange of the rights, powers and authorities vested in it by this Part in relation to the fund;
(c) all premiums payable in respect of contracts of insurance or indemnity entered into by the exchange under section 194;
(d) all expenses incurred or involved in the administration of the fund, including the salaries and wages of persons employed by the exchange in relation thereto; and
(e) all other moneys payable out of the fund in accordance with this Act.
[SIA, s. 78; FTA, s. 49D]
Accounts of fund
180. —(1) A securities exchange or futures exchange shall establish and keep proper accounts of its fidelity fund and shall, within 5 months from the last day of each financial year of that exchange, cause a balance-sheet in respect of such accounts to be made out as at the last day of that financial year.
(2) The securities exchange or futures exchange shall appoint an auditor to audit the accounts of the fidelity fund.
(3) The auditor appointed by the securities exchange or futures exchange shall —
(a) regularly and fully audit the accounts of the fidelity fund; and
(b) audit each balance-sheet and cause it to be laid before the exchange not later than 3 months after the balance-sheet was made out.
[SIA, s. 79; FTA, s. 49E]
Fidelity fund to consist of amount of $20 million, etc.
181. The fidelity fund of a securities exchange or futures exchange shall consist of an amount of not less than —
(a) $20 million; or
(b) such other amount as the Authority may, by order published in the Gazette, specify in substitution of the amount specified under paragraph (a),
to be paid to the credit of the fund on the approval of the exchange under this Act or at any time after its approval as determined by the Authority.
[SIA, s. 81; FTA, s. 49F]
Provisions if fund is reduced below minimum amount
182. If the fidelity fund of a securities exchange or futures exchange is reduced below the minimum amount referred to in section 181, the exchange shall take steps to make up the deficiency —
(a) by transferring an amount that is equal to the deficiency from other funds of the exchange to the fidelity fund; and
(b) in the event that there are insufficient funds to transfer under paragraph (a), by requiring each member of the exchange to contribute to the fund such amount as the exchange may determine.
[SIA, s. 82; FTA, s. 49G]
Levy to meet liabilities
183. —(1) If at any time a fidelity fund is not sufficient to satisfy the liabilities that are then ascertained of a securities exchange or futures exchange in relation thereto, the securities exchange or futures exchange —
(a) may impose on every member a levy of such amount as it thinks fit; or
(b) if ordered by the Authority, shall impose a levy of such amount which shall in the aggregate be equivalent to the amount so specified in the order.
(2) The amount of such levy shall be paid within the time and in the manner specified by the securities exchange or futures exchange either generally or in relation to any particular case.
(3) No member of a securities exchange or futures exchange shall be required to pay by way of levy under this section more than $300,000 in the aggregate in any particular case.
[SIA, s. 83]
Power of securities exchange or futures exchange to make advances to fund
184. —(1) A securities exchange or futures exchange may, out of its general funds, give or advance any sum of money to its fidelity fund on such terms as it thinks fit.
(2) Any sum of money advanced by a securities exchange or futures exchange under subsection (1) may be repaid out of the fidelity fund to the general funds of the securities exchange or futures exchange, as the case may be.
[SIA, s. 84]
Investment of fund
185. Any moneys in a fidelity fund that are not immediately required for any purpose referred to in this Part may be invested by a securities exchange or futures exchange in any manner in which trustees are for the time being authorised by law to invest trust funds.
[SIA, s. 85; FTA, s. 49H]
Application of fund
186. —(1) Subject to this Part, a fidelity fund shall be held and applied for the purpose of compensating any person (other than an accredited investor) who suffers pecuniary loss because of a defalcation committed —
(a) in the course of, or in connection with, a dealing in securities, or the trading of a futures contract;
(b) by a member of a securities exchange or futures exchange or by any agent of such member; and
(c) in relation to any money or other property which, after the establishment of the fidelity fund was entrusted to or received —
(i) by that member or by any of its agents for or on behalf of any other person; or
(ii) by that member either as the sole trustee or as trustee with any other person or persons, or by any of its agents as trustee or for or on behalf of the trustees of that money or property.
(2) Subject to this Part, the fidelity fund shall be applied for the purpose of paying to the Official Assignee or a trustee in bankruptcy within the meaning of the Bankruptcy Act (Cap. 20) an amount not greater than the amount that the Official Assignee or the trustee in bankruptcy, as the case may be, certifies is required in order to make up or reduce the total deficiency arising because the available assets of a bankrupt, who is a member of a securities exchange or futures exchange, are insufficient to satisfy any debts arising from dealings in securities or trading in futures contracts that have been proved in the bankruptcy by creditors of the bankrupt member.
(3) Subsection (2) shall apply in the case of a member of a securities exchange or futures exchange who has made a voluntary arrangement with his creditors under Part V of the Bankruptcy Act in like manner as that subsection applies in the case of a member who has become bankrupt.
(4) For the purposes of subsection (3) —
(a) a reference to a trustee in bankruptcy in subsection (2) shall be deemed to be a reference to a nominee within the meaning of Part V of the Bankruptcy Act;
(b) a reference to debts proved in bankruptcy in subsection (2) shall be deemed to be a reference to debts provable in relation to a voluntary arrangement within the meaning of Part V of the Bankruptcy Act; and
(c) a reference to the bankrupt in subsection (2) shall be deemed to be a reference to the person who made the voluntary arrangement under Part V of the Bankruptcy Act.
(5) Subject to this Part, the fidelity fund shall be applied for the purpose of paying to a liquidator of a member of a securities exchange or futures exchange that is being wound up an amount not greater than the amount that the liquidator certifies is required to make up or reduce the total deficiency arising because the available assets of the member are insufficient to satisfy any debts arising from dealings in securities or trading in futures contracts that have been proved in the liquidation of the member.
(6) Where a claim has been made for compensation in respect of a pecuniary loss under subsection (1), no claim for a payment under subsection (2) or (5) shall be made in respect of the same pecuniary loss.
(7) Where a claim has been made for a payment in respect of a deficiency referred to in subsection (2), no claim for compensation under subsection (1) or for a payment under subsection (5) shall be made in respect of the same deficiency.
(8) Where a claim has been made for a payment in respect of a deficiency referred to in subsection (5), no claim for compensation under subsection (1) or for a payment under subsection (2) shall be made in respect of the same deficiency.
(9) Moneys paid under subsection (2) or (5) may only be applied by the Official Assignee, a trustee in bankruptcy, a nominee or a liquidator, as the case may be, for the purpose of satisfying debts arising from dealings in securities or trading in futures contracts, and for no other purpose.
(10) Subject to the provisions of this section, the amount or the sum of the amounts that may be paid out of the fidelity fund under this Part for the purpose of —
(a) compensating pecuniary loss under subsection (1); or
(b) making a payment under subsection (2) or (5),
shall not, in respect of each member, exceed the prescribed amount*.
* Prescribed amount shall be $2 million for the purposes of section 186 (10) — see G.N. No. S 367/2005.
(11) Subject to the provisions of this section —
(a) the amount that may be paid out of the fidelity fund to each claimant under subsection (1) in relation to each member; or
(b) the amount that the Official Assignee, a trustee in bankruptcy, a nominee or a liquidator may pay to each creditor of a member from any amount paid to the Official Assignee, trustee in bankruptcy, nominee or liquidator, as the case may be, under subsection (2) or (5),
shall not exceed the prescribed amount**.
** Prescribed amount shall be $50,000 for the purposes of section 186 (11) — see G.N. No. S 367/2005.
(12) For the purposes of subsections (10) and (11), any amount paid out of the fidelity fund shall, to the extent to which the fund is subsequently reimbursed therefor, be disregarded.
(13) In this section, “agent”, in relation to a member of a securities exchange or futures exchange —
(a) means a person who is a director, an officer, an employee or a representative of the member; and
(b) includes a person who has been, but at the time of any defalcation in question has ceased to be, a director, an officer, an employee or a representative of the member if, at the time of the defalcation, the person claiming compensation has reasonable grounds for believing that person to be a director, an officer, an employee or a representative of the member.
(14) Nothing in this Part shall be construed as to allow a person to claim compensation against the fidelity fund of a futures exchange if —
(a) the person has suffered pecuniary loss because of a defalcation committed by a member of the exchange or by any agent of the member; and
(b) such defalcation is in respect of moneys deposited by that person with the member or moneys belonging to that person held by that member, in connection with the trading of a contract which is not a futures contract that is cleared or to be cleared by a designated clearing house or a futures exchange in Singapore.
[1/2005]
[SIA, s. 86; FTA, s. 49I]
Claims against fund
187. —(1) Subject to this Part, every person who suffers pecuniary loss referred to in section 186 shall be entitled to claim compensation out of the fidelity fund and to take proceedings in the High Court under this Act against a securities exchange or futures exchange to establish such claim.
(2) A person shall not have any claim against the fidelity fund in respect of a defalcation in respect of money or other property which prior to the commission of the defalcation had, in the due course of the administration of a trust, ceased to be under the sole control of the director or directors of the member of a securities exchange or futures exchange.
(3) Subject to this Part, the amount which any claimant shall be entitled to claim as compensation out of a fidelity fund shall be the amount of the actual pecuniary loss suffered by him (including the reasonable costs of and disbursements incidental to the making and proof of his claim) less the amount or value of all moneys or other benefits received or receivable by him from any source other than the fund in reduction of the loss.
[SIA, s. 87; FTA, s. 49J]
Notice calling for claims against fund
188. —(1) A securities exchange or futures exchange may cause to be published in a daily newspaper published and circulating generally in Singapore a notice, in or to the effect of the form prescribed, specifying a date, not being earlier than 3 months after the date of publication, on or before which claims for compensation out of the fidelity fund, in relation to the person specified in the notice, may be made.
(2) A claim for compensation out of a fidelity fund in respect of a defalcation shall be made in writing to the securities exchange or futures exchange, as the case may be —
(a) where a notice under subsection (1) has been published, on or before the date specified in the notice; or
(b) where no such notice has been published, within 6 months after the claimant became aware of the defalcation.
(3) Any claim which is not made in accordance with subsection (2) shall be barred unless the securities exchange or futures exchange otherwise allows.
(4) No action for damages shall lie against a securities exchange or futures exchange or against any member or employee of the securities exchange or futures exchange by reason of any notice published in good faith and without malice for the purposes of this section.
[SIA, s. 88; FTA, s. 49K]
Power of securities exchange or futures exchange to settle claims
189. —(1) A securities exchange or futures exchange may, subject to this Part, allow and settle any proper claim for compensation out of a fidelity fund at any time after the commission of the defalcation in respect of which the claim arose.
(2) Subject to subsection (3), a person shall not commence proceedings under this Part against a securities exchange or futures exchange without the consent of the securities exchange or futures exchange, as the case may be, unless —
(a) the securities exchange or futures exchange has disallowed his claim; and
(b) the claimant has exhausted all relevant rights of action and other legal remedies for the recovery of the money or other property, in respect of which the defalcation was committed, available against a member of the securities exchange or futures exchange in relation to whom or to which the claim arose and all other persons liable in respect of the loss suffered by the claimant.
(3) A person who has been refused consent to commence proceedings under this Part by a securities exchange or futures exchange under subsection (2) may apply for leave to a Judge of the High Court in chambers who may make such order in the matter as he thinks fit.
(4) A securities exchange or futures exchange shall, after disallowing (whether wholly or in part) any claim for compensation out of a fidelity fund, serve notice of such disallowance in the prescribed form on the claimant or his solicitor.
(5) No proceedings against a securities exchange or futures exchange in respect of a claim which has been disallowed by the exchange shall be commenced after the expiration of 3 months after service of notice of disallowance under subsection (4).
(6) In any proceedings brought to establish a claim —
(a) evidence of any admission or confession by, or other evidence which would be admissible against, the member of a securities exchange or futures exchange or other person by whom it is alleged a defalcation was committed, shall be admissible to prove the commission of the defalcation, notwithstanding that the member or other person is not the defendant in or a party to those proceedings; and
(b) all defences which would have been available to that member or person shall be available to the securities exchange or futures exchange.
(7) A securities exchange or futures exchange or, where proceedings are brought to establish a claim, the High Court, if satisfied that the defalcation on which the claim is founded was actually committed, may allow the claim and act accordingly, notwithstanding that the person who committed the defalcation has not been convicted or prosecuted therefor or that the evidence on which the securities exchange or futures exchange or the High Court, as the case may be, acts would not be sufficient to establish the guilt of that person upon a criminal trial in respect of the defalcation.
[SIA, s. 89; FTA, s. 49L]
Power of securities exchange or futures exchange to require production of evidence
190. —(1) A securities exchange or futures exchange may require any person to produce and deliver any contract note, document or statement of evidence necessary to support any claim made, or necessary for the purpose either of exercising its rights against a member of a securities exchange or futures exchange or the directors of that member or any other person concerned, or of enabling criminal proceedings to be taken against any person in respect of a defalcation.
(2) Where a person who is required under subsection (1) to produce or deliver any contract note, document or statement of evidence fails to do so, the securities exchange or futures exchange may disallow any claim by him under this Part.
[SIA, s. 91; FTA, s. 49M]
Subrogation of securities exchange or futures exchange to rights, etc., of claimant upon payment from fund
191. On payment out of a fidelity fund of any moneys in respect of any claim under this Part, the securities exchange or futures exchange shall be subrogated to the extent of such payment to all the rights and remedies of the claimant in relation to the loss suffered by him by reason of the defalcation on which the claim was based.
[SIA, s. 92; FTA, s. 49N]
Payment of claims only from fund
192. No moneys or other property belonging to a securities exchange or futures exchange, other than the fidelity fund, shall be available for the payment of any claim under this Part, whether the claim is allowed by the securities exchange or futures exchange or is made the subject of an order of the High Court.
[SIA, s. 93; FTA, s. 49O]
Provision where fund insufficient to meet claims or where claims exceed total amount payable
193. —(1) Where the amount at credit in a fidelity fund is insufficient to pay the whole amount of all claims against it which have been allowed or in respect of which orders of the High Court have been made, then the amount at credit in the fund shall, subject to subsection (2), be apportioned between the claimants in such manner as the securities exchange or futures exchange thinks equitable, and such claim shall, so far as it then remains unpaid, be charged against future receipts of the fund and paid out of the fund when moneys are available therein.
(2) Where the aggregate of all claims which have been allowed or in respect of which orders of the High Court have been made in relation to a defalcation by or in connection with a member of a securities exchange or futures exchange exceeds the total amount which may, pursuant to section 186 (10), be paid under this Part in respect of that member, then such total amount shall be apportioned between the claimants in such manner as the securities exchange or futures exchange thinks equitable.
(3) Upon payment out of the fidelity fund of such total amount in accordance with the apportionment of all such claims under subsection (2), any order relating thereto and all other claims against the fund which may thereafter arise or be made in respect of that defalcation by or in connection with that member shall be absolutely discharged.
[SIA, s. 94; FTA, s. 49P]
Power of securities exchange or futures exchange to enter into contracts of insurance
194. —(1) A securities exchange or futures exchange may in its discretion, enter into any contract with any person or body of persons, corporate or unincorporate, carrying on fidelity insurance business in Singapore whereby the securities exchange or futures exchange will be insured or indemnified to the extent and in the manner provided by such contract against liability in respect of claims under this Part.
(2) Any contract under subsection (1) may be entered into in relation to members generally, or in relation to any particular member or members named therein, or in relation to members generally with the exclusion of any particular member or members named therein.
(3) No action shall lie against a securities exchange or futures exchange or against any member or employee of a securities exchange or futures exchange for injury alleged to have been suffered by any other member by reason of the publication in good faith of a statement that any contract entered into under this section does or does not apply with respect to it.
[SIA, s. 95]
Application of insurance moneys
195. No claimant against a fidelity fund shall have any right of action against any person or body of persons with whom a contract of insurance or indemnity is made under this Part in respect of such contract, or have any right or claim with respect to any moneys paid by the insurer in accordance with any such contract.
[SIA, s. 96]
PART XII
MARKET CONDUCT
Division 1 — Prohibited Conduct — Securities
Application of this Division
196. This Division shall apply to —
(a) acts occurring within Singapore in relation to —
(i) securities of any corporation, whether formed or carrying on business in Singapore or elsewhere;
(ia) securities of any business trust; or
(ii) securities listed for quotation or quoted on a securities market in Singapore or elsewhere; and
(b) acts occurring outside Singapore, in relation to —
(i) securities of a corporation that is formed or carrying on business in Singapore;
(ia) securities of a business trust, the trustee of which is formed in Singapore or carries on business on behalf of the business trust in Singapore; or
(ii) securities listed for quotation or quoted on a securities market in Singapore.
[1/2005]
[Malaysia SIA, s. 88C]
Interpretation of this Division
196A. In this Division —
"debenture" has the same meaning as in section 2 and, in relation to a business trust, means any debenture issued by the trustee of the business trust in its capacity as trustee of the business trust;
"securities" —
(a) in relation to a corporation, for the purposes of sections 196 (a) (i) and (b) (i), 198, 202 and 203, means —
(i) debentures, stocks or shares issued or proposed to be issued by a corporation;
(ii) any right, option or derivative in respect of any such debentures, stocks or shares; or
(iii) any right under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —
(A) the value or price of any such debentures, stocks or shares;
(B) the value or price of any group of any such debentures, stocks or shares; or
(C) an index of any such debentures, stocks or shares,
but does not include —
(AA) futures contracts;
(BB) bills of exchange;
(CC) promissory notes; or
(DD) certificates of deposit issued by a bank or finance company;
(b) in relation to a business trust, for the purposes of sections 196 (a) (ia) and (b) (ia), 198, 202 and 203, means —
(i) units in a business trust;
(ii) derivatives of units in a business trust;
(iii) debentures of a business trust; or
(iv) any right, option or derivative in respect of any such debentures,
but does not include —
(A) futures contracts;
(B) bills of exchange; or
(C) promissory notes; and
(c) in any other case, has the same meaning as in section 2.
[1/2005]
False trading and market rigging transactions
197. —(1) No person shall create, or do anything that is intended or likely to create a false or misleading appearance —
(a) of active trading in any securities on a securities market; or
(b) with respect to the market for, or the price of, such securities.
(2) No person shall, by means of any purchase or sale of any securities that do not involve a change in the beneficial ownership of those securities, or by any fictitious transaction or device, maintain, inflate, depress, or cause fluctuations in, the market price of any securities.
(3) Without prejudice to the generality of subsection (1), a person who —
(a) effects, takes part in, is concerned in or carries out, directly or indirectly, any transaction of purchase or sale of any securities, being a transaction that does not involve any change in the beneficial ownership of the securities;
(b) makes or causes to be made an offer to sell any securities at a specified price where he has made or caused to be made or proposes to make or to cause to be made, or knows that a person associated with him has made or caused to be made or proposes to make or to cause to be made, an offer to purchase the same number, or substantially the same number, of securities at a price that is substantially the same as the first-mentioned price; or
(c) makes or causes to be made an offer to purchase any securities at a specified price where he has made or caused to be made or proposes to make or to cause to be made, or knows that a person associated with him has made or caused to be made or proposes to make or to cause to be made, an offer to sell the same number, or substantially the same number, of securities at a price that is substantially the same as the first-mentioned price,
shall be deemed to have created a false or misleading appearance of active trading in securities on a securities market.
(4) In any proceedings against a person for a contravention of subsection (1) because of an act referred to in subsection (3), it is a defence if the defendant establishes that the purpose or purposes for which he did the act was not, or did not include, the purpose of creating a false or misleading appearance of active trading in securities on a securities market.
(5) For the purposes of this section, a purchase or sale of securities does not involve a change in the beneficial ownership if a person who had an interest in the securities before the purchase or sale, or a person associated with the first-mentioned person in relation to those securities, has an interest in the securities after the purchase or sale.
(6) In any proceedings against a person for a contravention of subsection (2) in relation to a purchase or sale of securities that did not involve a change in the beneficial ownership of those securities, it is a defence if the defendant establishes that the purpose or purposes for which he purchased or sold the securities was not, or did not include, the purpose of creating a false or misleading appearance with respect to the market for, or the price of, securities.
(7) The reference in subsection (3) (a) to a transaction of purchase or sale of securities includes —
(a) a reference to the making of an offer to purchase or sell securities; and
(b) a reference to the making of an invitation, however expressed, that expressly or impliedly invites a person to offer to purchase or sell securities.
[SIA, s. 97; Aust. Corporations 2001, s. 998]
Securities market manipulation
198. —(1) No person shall effect, take part in, be concerned in or carry out, directly or indirectly, 2 or more transactions in securities of a corporation, being transactions that have, or are likely to have, the effect of raising, lowering, maintaining or stabilising the price of securities of the corporation on a securities market, with intent to induce other persons to subscribe for, purchase or sell securities of the corporation or of a related corporation.
(1A) No person shall effect, take part in, be concerned in or carry out, directly or indirectly, 2 or more transactions in securities of a business trust, being transactions that have, or are likely to have, the effect of raising, lowering, maintaining or stabilising the price of securities of the business trust on a securities market, with intent to induce other persons to subscribe for, purchase or sell securities of the business trust.
[1/2005]
(2) A reference in subsection (1) or (1A) to transactions in securities of a corporation or securities of a business trust, as the case may be, includes —
(a) a reference to the making of an offer to purchase or sell such securities of the corporation or such securities of the business trust, as the case may be; and
(b) a reference to the making of an invitation, however expressed, that directly or indirectly invites a person to offer to purchase or sell such securities of the corporation or such securities of the business trust, as the case may be.
[1/2005]
[SIA, s. 98]
False or misleading statements, etc.
199. No person shall make a statement, or disseminate information, that is false or misleading in a material particular and is likely —
(a) to induce other persons to subscribe for securities;
(b) to induce the sale or purchase of securities by other persons; or
(c) to have the effect of raising, lowering, maintaining or stabilising the market price of securities,
if, when he makes the statement or disseminates the information —
(i) he does not care whether the statement or information is true or false; or
(ii) he knows or ought reasonably to have known that the statement or information is false or misleading in a material particular.
[SIA, s. 99; Aust. Corporations 2001, s. 999]
Fraudulently inducing persons to deal in securities
200. —(1) No person shall —
(a) by making or publishing any statement, promise or forecast that he knows or ought reasonably to have known to be misleading, false or deceptive;
(b) by any dishonest concealment of material facts;
(c) by the reckless making or publishing of any statement, promise or forecast that is misleading, false or deceptive; or
(d) by recording or storing in, or by means of, any mechanical, electronic or other device information that he knows to be false or misleading in a material particular,
induce or attempt to induce another person to deal in securities.
(2) In any proceedings against a person for a contravention of subsection (1) constituted by recording or storing information as mentioned in subsection (1) (d), it is a defence if it is established that, at the time when the defendant so recorded or stored the information, he had no reasonable grounds for expecting that the information would be available to any other person.
(3) In any proceedings against a person for a contravention of subsection (1), the opinion of any registered or public accountant as to the financial position of any company at any time or during any period in respect of which he has made an audit or examination of the affairs of the company according to recognised audit practice shall be admissible, for any party to the proceedings, as evidence of the financial position of the company at that time or during that period, notwithstanding that the opinion is based in whole or in part on book-entries, documents or vouchers or on written or verbal statements by other persons.
[SIA, s. 100; Companies, s. 404 (4)]
Employment of manipulative and deceptive devices
201. No person shall, directly or indirectly, in connection with the subscription, purchase or sale of any securities —
(a) employ any device, scheme or artifice to defraud;
(b) engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception, upon any person;
(c) make any statement he knows to be false in a material particular; or
(d) omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
[SIA, s.102]
Dissemination of information about illegal transactions
202. No person shall circulate or disseminate, or authorise or be concerned in the circulation or dissemination of, any statement or information to the effect that the price of any securities of a corporation or any securities of a business trust will, or is likely, to rise or fall or be maintained by reason of any transaction entered into or to be entered into or other act or thing done or to be done in relation to securities of that corporation, or of a corporation that is related to that corporation, or securities of that business trust, as the case may be, which to his knowledge, was entered into or done in contravention of section 197, 198, 199, 200 or 201 or if entered into or done would be in contravention of section 197, 198, 199, 200 or 201 if —
(a) the person, or a person associated with the person, has entered into or purports to enter into any such transaction or has done or purports to do any such act or thing; or
(b) the person, or a person associated with the person, has received, or expects to receive, directly or indirectly, any consideration or benefit for circulating or disseminating, or authorising or being concerned in the circulation or dissemination, the statement or information.
[1/2005]
[SIA, s. 101]
Continuous disclosure
203. —(1) This section shall apply to —
(a) an entity the securities of which are listed for quotation on a securities exchange;
(b) a trustee of a business trust, where the securities of the business trust are listed for quotation on a securities exchange; or
(c) a responsible person of a collective investment scheme, where the units of the collective investment scheme are listed for quotation on a securities exchange,
if the entity, trustee or responsible person is required by the securities exchange under the listing rules or any other requirement of the securities exchange to notify the securities exchange of information on specified events or matters as they occur or arise for the purpose of the securities exchange making that information available to a securities market operated by the securities exchange.
[1/2005]
(2) The persons specified in subsection (1) (a), (b) or (c) shall not intentionally, recklessly or negligently fail to notify the securities exchange of such information as is required to be disclosed by the securities exchange under the listing rules or any other requirement of the securities exchange.
[1/2005]
(3) Notwithstanding section 204, a contravention of subsection (2) shall not be an offence unless the failure to notify is intentional or reckless.
[Aust. Corporations 2001, s. 1001A]
Penalties under this Division
204. —(1) Any person who contravenes any of the provisions of this Division shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 7 years or to both.
(2) No proceedings shall be instituted against a person for an offence in respect of a contravention of this Division after a court has made an order against him for the payment of a civil penalty under section 232 in respect of the contravention.
[SIA, s. 104]
Division 2 — Prohibited Conduct — Futures Contracts, Leveraged Foreign Exchange Trading
Application of this Division
205. This Division shall apply to —
(a) acts occurring within Singapore, in relation to —
(i) futures contracts, whether traded on a futures market in Singapore or elsewhere; or
(ii) foreign exchange in connection with leveraged foreign exchange trading, whether in Singapore or elsewhere; and
(b) acts occurring outside Singapore, in relation to —
(i) futures contracts traded on a futures market in Singapore;
(ii) foreign exchange in connection with leveraged foreign exchange trading in Singapore; or
(iii) foreign exchange in connection with leveraged foreign exchange trading that is accessible from Singapore.
False trading
206. No person shall create, or do anything that is intended or likely to create, a false or misleading appearance of active trading in any futures contract on a futures market or in connection with leveraged foreign exchange trading, or a false or misleading appearance with respect to the market for, or the price of futures contracts on a futures market or foreign exchange in connection with leveraged foreign exchange trading.
[FTA, s. 50]
Bucketing
207. —(1) No person shall knowingly execute, or hold himself out as having executed, an order for the purchase or sale of a futures contract on a futures market, without having effected a bona fide purchase or sale of the futures contract in accordance with the business rules and practices of the futures market.
(2) No person shall knowingly execute, or hold himself out as having executed, an order to make a purchase or sale of foreign exchange in connection with leveraged foreign exchange trading, without having effected a bona fide purchase or sale in accordance with the order.
[FTA, s. 51]
Manipulation of price of futures contract and cornering
208. No person shall, directly or indirectly —
(a) manipulate or attempt to manipulate the price of a futures contract that may be dealt in on a futures market, or of any commodity which is the subject of such futures contract; or
(b) corner, or attempt to corner, any commodity which is the subject of a futures contract.
[FTA, s. 53]
Fraudulently inducing persons to trade in futures contracts
209. —(1) No person shall —
(a) by making or publishing any statement, promise or forecast that he knows or ought reasonably to have known to be false, misleading or deceptive;
(b) by any dishonest concealment of material facts;
(c) by the reckless making or publishing of any statement, promise or forecast that is false, misleading or deceptive; or
(d) by recording or storing in, or by means of, any mechanical, electronic or other device information that he knows to be false or misleading in a material particular,
induce or attempt to induce another person to trade in a futures contract or engage in leveraged foreign exchange trading.
(2) In any proceedings against a person for a contravention of subsection (1) constituted by recording or storing information as mentioned in subsection (1) (d), it is a defence if it is established that, at the time when the defendant so recorded or stored the information, he had no reasonable grounds for expecting that the information would be available to any other person.
[FTA, s. 55]
Employment of fraudulent or deceptive devices, etc.
210. No person shall, directly or indirectly, in connection with any transaction involving trading in a futures contract or leveraged foreign exchange trading —
(a) employ any device, scheme or artifice to defraud;
(b) engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception, upon any person;
(c) make any false statement of a material fact; or
(d) omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
[FTA, s. 54]
Dissemination of information about illegal transactions
211. No person shall circulate, disseminate, or authorise, or be concerned in the circulation or dissemination of, any statement or information to the effect that the price of a class of futures contracts or foreign exchange in connection with leveraged foreign exchange trading will, or is likely to, rise or fall or be maintained because of the market operations of one or more persons which, to his knowledge, are conducted in contravention of section 206, 207, 208, 209 or 210 if —
(a) the person, or a person associated with the person, has conducted such market operations; or
(b) the person, or a person associated with the person, has received, or expects to receive, directly or indirectly, any consideration or benefit for circulating or disseminating, or authorising or being concerned in the circulation or dissemination, the statement or information.
[FTA, s. 52]
Penalties under this Division
212. —(1) Any person who contravenes any of the provisions of this Division shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 7 years or to both.
(2) No proceedings shall be instituted against a person for an offence in respect of a contravention of this Division after a court has made an order against him for the payment of a civil penalty under section 232 for the contravention.
[FTA, s. 56]
Division 3 — Insider Trading
Application of this Division
213. This Division shall apply to —
(a) acts occurring within Singapore, in relation to —
(i) securities of any corporation, whether formed or carrying on business in Singapore or elsewhere;
(ia) securities of any business trust;
(ii) securities listed for quotation or quoted on a securities market in Singapore or elsewhere; or
(iii) securities traded on a futures market in Singapore or elsewhere; and
(b) acts occurring outside Singapore, in relation to —
(i) securities of a corporation that is formed or carries on business in Singapore;
(ia) securities of a business trust, the trustee of which is formed in Singapore or carries on business on behalf of the business trust in Singapore;
(ii) securities listed for quotation or quoted on a securities market in Singapore; or
(iii) securities traded on a futures market in Singapore.
[1/2005]
[Malaysia SIA, s. 89P]
Interpretation of this Division
214. In this Division —
"debenture" has the same meaning as in section 2 and, in relation to a business trust, means a debenture issued by the trustee of the business trust in its capacity as trustee of the business trust;
"financial performance" , in relation to a business trust, means the performance of the business relating to the trust property of the business trust which is managed and operated by the trustee of the business trust;
"information" includes —
(a) matters of supposition and other matters that are insufficiently definite to warrant being made known to the public;
(b) matters relating to the intentions, or the likely intentions, of a person;
(c) matters relating to negotiations or proposals with respect to —
(i) commercial dealings;
(ii) dealing in securities; or
(iii) trading in futures contract;
(d) information relating to the financial performance of a corporation or business trust, or otherwise;
(e) information that a person proposes to enter into, or had previously entered into one or more transactions or agreements in relation to securities or has prepared or proposes to issue a statement relating to such securities; and
(f) matters relating to the future;
"purchase" , in relation to securities, includes, in the case of an option contract under which a party acquires an option or right from another party, acquiring the option or right under the contract, or taking an assignment of the option or right, whether or not on another’s behalf;
"securities" means —
(a) in relation to a corporation, for the purposes of sections 213 (a) (i) and (b) (i) and 218 —
(i) debentures, stocks or shares issued or proposed to be issued by a corporation;
(ii) any right, option or derivative in respect of any such debentures, stocks or shares;
(iii) any right under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —
(A) the value or price of any such debentures, stocks or shares;
(B) the value or price of any group of any such debentures, stocks or shares; or
(C) an index of any such debentures, stocks or shares; or
(iv) a futures contract only if the commodity which is the subject of the futures contract is a share or stock of a corporation;
(b) in relation to a business trust, for the purposes of sections 213 (a) (ia) and (b) (ia) and 218 (1A) and (4A) —
(i) units in a business trust;
(ii) derivatives of units in a business trust;
(iii) debentures of a business trust; or
(iv) any right, option or derivative in respect of any such debentures; and
(c) in any other case —
(i) debentures or stocks issued or proposed to be issued by a government;
(ii) debentures, stocks or shares issued or proposed to be issued by a corporation or body unincorporate;
(iii) any right, option or derivative in respect of any such debentures, stocks or shares;
(iv) any unit in a collective investment scheme;
(v) any unit, or derivative of a unit, in a business trust;
(vi) any right under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —
(A) the value or price of any such debentures, stocks, shares, units in a collective investment scheme or units in a business trust;
(B) the value or price of any group of any such debentures, stocks, shares, units in a collective investment scheme or units in a business trust; or
(C) an index of any such debentures, stocks, shares, units in a collective investment scheme or units in a business trust; or
(vii) a futures contract only if the commodity which is the subject of the futures contract is a share or share index, or stock or stock index,
but does not include —
(AA) bills of exchange;
(BB) promissory notes; or
(CC) certificates of deposit issued by a bank or finance company;
"sell" , in relation to securities, includes, in the case of an option contract under which a party acquires an option or right from another party —
(a) grant or assign the option or right; or
(b) take, or cause to be taken, such action as releases the option or right,
whether or not on another’s behalf;
"trust property" has the same meaning as in section 2 of the Business Trusts Act (Cap. 31A).
[1/2005]
[SIA, s. 2; Malaysia SIA, s. 89]
Information generally available
215. For the purposes of this Division, information is generally available if —
(a) it consists of readily observable matter;
(b) without limiting the generality of paragraph (a) —
(i) it has been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in securities of a kind whose price or value might be affected by the information; and
(ii) since it was so made known, a reasonable period for it to be disseminated among such persons has elapsed; or
(c) it consists of deductions, conclusions or inferences made or drawn from either or both of the following:
(i) information referred to in paragraph (a);
(ii) information made known as referred to in paragraph (b) (i).
[Aust. Corporations 2001, s. 1002B]
Material effect on price or value of securities
216. For the purposes of this Division, a reasonable person would be taken to expect information to have a material effect on the price or value of securities if the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, buy or sell the first-mentioned securities.
[Aust. Corporations 2001, s. 1002C]
Trading and procuring trading in securities
217. —(1) For the purposes of this Division, trading in securities that is ordinarily permitted on the securities market or futures market shall be taken to be permitted on that securities market or futures market even though trading in any such securities on that securities market or futures market is suspended.
(2) For the purposes of this Division but without limiting the meaning that the expression “procure” has apart from this section, if a person incites, induces, or encourages an act or omission by another person, the first-mentioned person is taken to procure the act or omission by the other person.
[Aust. Corporations 2001, s. 1002D]
Prohibited conduct by connected person in possession of inside information
218. —(1) Subject to this Division, where —
(a) a person who is connected to a corporation possesses information concerning that corporation that is not generally available but, if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of securities of that corporation; and
(b) the connected person knows or ought reasonably to know that —
(i) the information is not generally available; and
(ii) if it were generally available, it might have a material effect on the price or value of those securities of that corporation,
subsections (2), (3), (4), (5) and (6) shall apply.
[1/2005]
(1A) Subject to this Division, where —
(a) a person who is connected to any corporation, where such corporation —
(i) in relation to a business trust, acts as its trustee or manages or operates the business trust; or
(ii) in relation to a collective investment scheme that invests only in real estate and real estate-related assets specified by the Authority in the Code on Collective Investment Schemes and all or any units of which are listed on a securities exchange, is the trustee or manager of the scheme,
possesses information concerning that corporation, business trust or scheme, as the case may be, that is not generally available but, if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of securities of that corporation, of securities of that business trust or of units in that scheme, as the case may be; and
(b) the connected person knows or ought reasonably to know that —
(i) the information is not generally available; and
(ii) if it were generally available, it might have a material effect on the price or value of those securities of that corporation, of those securities of that business trust or of those units in that scheme, as the case may be,
subsections (2), (3), (4A), (5) and (6) shall apply.
[1/2005]
(2) The connected person must not (whether as principal or agent) —
(a) subscribe for, purchase or sell, or enter into an agreement to subscribe for, purchase or sell, any such securities referred to in subsection (1) or (1A), as the case may be; or
(b) procure another person to subscribe for, purchase or sell, or to enter into an agreement to subscribe for, purchase or sell, any such securities referred to in subsection (1) or (1A), as the case may be.
[1/2005]
(3) Where trading in the securities referred to in subsection (1) or (1A) is permitted on the securities market of a securities exchange or futures market of a futures exchange, the connected person must not, directly or indirectly, communicate the information, or cause the information to be communicated, to another person if the connected person knows, or ought reasonably to know, that the other person would or would be likely to —
(a) subscribe for, purchase or sell, or enter into an agreement to subscribe for, purchase or sell, any such securities; or
(b) procure a third person to subscribe for, purchase or sell, or to enter into an agreement to subscribe for, purchase or sell, any such securities.
[1/2005]
(4) In any proceedings for a contravention of subsection (2) or (3) against a person connected to a corporation referred to in subsection (1), where the prosecution or plaintiff proves that the connected person was at the material time —
(a) in possession of information concerning the corporation to which he was connected; and
(b) the information was not generally available,
it shall be presumed, until the contrary is proved, that the connected person knew at the material time that —
(i) the information was not generally available; and
(ii) if the information were generally available, it might have a material effect on the price or value of securities of that corporation.
[1/2005]
(4A) In any proceedings for a contravention of subsection (2) or (3) against a person connected to a corporation which —
(a) in relation to a business trust, acts as its trustee or manages or operates the business trust; or
(b) in relation to a collective investment scheme, is the trustee or manager of the scheme,
as the case may be, referred to in subsection (1A), where the prosecution or plaintiff proves that the connected person was at the material time —
(i) in possession of information concerning the corporation, business trust or scheme, as the case may be; and
(ii) the information was not generally available,
it shall be presumed, until the contrary is proved, that the connected person knew at the material time that —
(A) the information was not generally available; and
(B) if the information were generally available, it might have a material effect on the price or value of securities of that corporation, of securities of that business trust or of units in the scheme, as the case may be.
[1/2005]
(5) In this Division —
(a) “connected person” means a person referred to in subsection (1) or (1A) who is connected to a corporation; and
(b) a person is connected to a corporation if —
(i) he is an officer of that corporation or of a related corporation;
(ii) he is a substantial shareholder within the meaning of Division 4 of Part IV of the Companies Act (Cap. 50) in that corporation or in a related corporation; or
(iii) he occupies a position that may reasonably be expected to give him access to information of a kind to which this section applies by virtue of —
(A) any professional or business relationship existing between himself (or his employer or a corporation of which he is an officer) and that corporation or a related corporation; or
(B) being an officer of a substantial shareholder within the meaning of Division 4 of Part IV of the Companies Act in that corporation or in a related corporation.
[1/2005]
(6) In subsection (5), “officer”, in relation to a corporation, includes —
(a) a director, secretary or employee of the corporation;
(b) a receiver, or receiver and manager, of property of the corporation;
(c) a judicial manager of the corporation;
(d) a liquidator of the corporation; and
(e) a trustee or other person administering a compromise or arrangement made between the corporation and another person.
Prohibited conduct by other persons in possession of inside information
219. —(1) Subject to this Division, where —
(a) a person who is not a connected person referred to in section 218 (referred to in this section as the insider) possesses information that is not generally available but, if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of securities; and
(b) the insider knows that —
(i) the information is not generally available; and
(ii) if it were generally available, it might have a material effect on the price or value of those securities,
subsections (2) and (3) shall apply.
(2) The insider must not (whether as principal or agent) —
(a) subscribe for, purchase or sell, or enter into an agreement to subscribe for, purchase or sell, any such securities; or
(b) procure another person to subscribe for, purchase or sell, or to enter into an agreement to subscribe for, purchase or sell, any such securities.
(3) Where trading in the securities referred to in subsection (1) is permitted on the securities market of a securities exchange or futures market of a futures exchange, the insider must not, directly or indirectly, communicate the information, or cause the information to be communicated, to another person if the insider knows, or ought reasonably to know, that the other person would or would be likely to —
(a) subscribe for, purchase or sell, or enter into an agreement to subscribe for, purchase or sell, any such securities; or
(b) procure a third person to subscribe for, purchase or sell, or to enter into an agreement to subscribe for, purchase or sell, any such securities.
[Aust. Corporations 2001, s. 1002G]
Not necessary to prove intention to use
220. —(1) For the avoidance of doubt, in any proceedings against a person for a contravention of section 218 or 219, it is not necessary for the prosecution or plaintiff to prove that the accused person or defendant intended to use the information referred to in section 218 (1) (a) or (1A) (a) or 219 (1) (a) in contravention of section 218 or 219, as the case may be.
[1/2005]
(2) In any proceedings against a person for a contravention of section 218 or 219, it is not necessary for the prosecution or plaintiff to prove the absence of facts or circumstances which if they existed would, by virtue of sections 222 to 230 or any regulations made under section 341, preclude the act from constituting a contravention of section 218 or 219, as the case may be.
[Malaysia SIA, s. 89F]
Penalties under this Division
221. —(1) A person who contravenes section 218 or 219, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 7 years or to both.
(2) No proceedings shall be instituted against a person for an offence in respect of a contravention of section 218 or 219 after a court has made an order against him for the payment of a civil penalty under section 232 in respect of that contravention.
[SIA, s.104]
Exception for redemption of units in collective investment scheme
222. Sections 218 (2) and 219 (2) shall not apply in respect of the redemption of units in a collective investment scheme by a trustee or manager under a trust deed relating to that collective investment scheme in accordance with a buy-back covenant contained or deemed to be contained in the trust deed at a price that is required by the trust deed to be calculated, so far as is reasonably practicable, by reference to the underlying value of the assets less —
(a) any liabilities of that collective investment scheme to which the units relates; and
(b) any reasonable charge for purchasing the units.
[1/2005]
[Malaysia SIA, s. 89N]
Exception for underwriters
223. —(1) Sections 218 (2) and 219 (2) shall not apply in respect of —
(a) subscribing for, or purchasing, securities under an underwriting agreement or a sub-underwriting agreement;
(b) entering into an agreement referred to in paragraph (a); or
(c) selling securities subscribed for, or purchased, under an agreement referred to in paragraph (a).
[1/2005]
(2) Sections 218 (3) and 219 (3) shall not apply in respect of the communication of information in relation to securities —
(a) to a person solely for the purpose of procuring the person to enter into an underwriting agreement in relation to any such securities; or
(b) by a person who may be required under an underwriting agreement to subscribe for, or purchase, any such securities if the communication is made to another person solely for the purpose of procuring the other person to do either or both of the following:
(i) enter into a sub-underwriting agreement in relation to any such securities;
(ii) subscribe for, or purchase, any such securities.
[1/2005]
[Aust. Corporations 2001, s. 1002J]
Exception for purchase pursuant to legal requirement
224. —(1) Sections 218 (2) and 219 (2) shall not apply in respect of the purchase of securities pursuant to a requirement imposed by the Government, a statutory body or any regulatory authority, or any requirement imposed under any written law or order of court.
[16/2003]
(2) Sections 218 (2) and 219 (2) shall not apply in respect of the sale of securities pursuant to any requirement imposed by the Government or any requirement imposed under any written law or order of court.
[16/2003]
[Aust. Corporations 2001, s. 1002K]
Exception for information communicated pursuant to legal requirement
225. Sections 218 (3) and 219 (3) shall not apply in respect of the communication of information pursuant to a requirement imposed by the Government, a statutory body or any regulatory authority, or any requirement imposed under any written law or order of court.
[Aust. Corporations 2001, s. 1002L]
Attribution of knowledge within corporations
226. —(1) For the purposes of this Division —
(a) a corporation is taken to possess any information which an officer of the corporation possesses and which came into his possession in the course of the performance of duties as such an officer; and
(b) if an officer of a corporation knows or ought reasonably to know any matter or thing because he is an officer of the corporation, it is to be presumed, until the contrary is proved, that the corporation knows or ought reasonably to know that matter or thing.
(2) A corporation does not contravene section 218 (2) or 219 (2) by entering into a transaction or agreement at any time merely because of information in the possession of an officer of the corporation if —
(a) the decision to enter into the transaction or agreement was taken on its behalf by a person other than that officer;
(b) it had in operation at that time arrangements that could reasonably be expected to ensure that the information was not communicated to the person who made the decision and that no advice with respect to the transaction or agreement was given to that person by a person in possession of the information; and
(c) the information was not so communicated and no such advice was so given.
[Malaysia SIA, s. 89G]
Attribution of knowledge within partnerships and limited liability partnerships
227. —(1) For the purposes of this Division —
(a) a partner of a partnership or a limited liability partnership (as the case may be) is taken to possess any information —
(i) which another partner of the partnership or limited liability partnership (as the case may be) possesses and which came into such other partner’s possession in his capacity as a partner of the partnership or limited liability partnership (as the case may be); or
(ii) which an employee of the partnership or a manager of a limited liability partnership (as the case may be) possesses and which came into the possession of such an employee or manager in the course of the performance of his duties as such an employee or manager; and
(b) if a partner or employee of a partnership or a partner, manager or employee of a limited liability partnership (as the case may be) knows or ought reasonably to know any matter or thing in his capacity as such a partner, manager or employee, it is to be presumed that every partner of the partnership or limited liability partnership (as the case may be) knows or ought reasonably to know that matter or thing.
[5/2005]
(2) The partners of a partnership or limited liability partnership (as the case may be) do not contravene section 218 (2) or 219 (2) by entering into a transaction or agreement at any time merely because one or more (but not all) of the partners, or a manager or managers, or an employee or employees, of the partnership or limited liability partnership (as the case may be) are in actual possession of information if —
(a) the decision to enter into the transaction or agreement was taken on behalf of the partnership or limited liability partnership by any one or more of the following persons:
(i) a partner who is taken to have possessed the information merely because another partner, or a manager or employee, of the partnership or limited liability partnership, was in possession of the information;
(ii) an employee of the partnership or limited liability partnership or a manager of the limited liability partnership who was not in possession of the information;
(b) the partnership or limited liability partnership had in operation at that time arrangements that could reasonably be expected to ensure that the information was not communicated to the person or persons who made the decision and that no advice with respect to the transaction or agreement was given to that person or any of those persons by a person in possession of the information; and
(c) the information was not so communicated and no such advice was so given.
[5/2005]
(3) A partner of a partnership or limited liability partnership (as the case may be) does not contravene section 218 (2) or 219 (2) by entering into a transaction or agreement otherwise than on behalf of the partnership or limited liability partnership merely because he is taken to possess information that is in the possession of another partner, a manager or an employee of the partnership.
[5/2005]
[Malaysia SIA, s. 89H]
Exception for knowledge of person’s own intentions or activities
228. An individual does not contravene section 218 (2) or 219 (2) by entering into a transaction or agreement in relation to securities merely because he is aware that he proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to those securities.
[Aust. Corporations 2001, s. 1002P]
Exception for corporations and its officers, etc.
229. —(1) A corporation does not contravene section 218 (2) or 219 (2) by entering into a transaction or agreement in relation to securities merely because it is aware that it proposes to enter into or has previously entered into, one or more transactions or agreements in relation to those securities.
(2) Subject to subsection (3), a corporation does not contravene section 218 (2) or 219 (2) by entering into a transaction or agreement in relation to securities merely because an officer of the corporation is aware that the corporation proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to those securities.
(3) Subsection (2) shall not apply unless the officer of the corporation mentioned in that subsection became aware of the matters referred to in that subsection in the course of the performance of duties as such an officer.
(4) Subject to subsection (5), a person does not contravene section 218 (2) or 219 (2) by entering into a transaction or agreement on behalf of a corporation in relation to securities merely because he is aware that the corporation proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to those securities.
(5) Subsection (4) shall not apply unless the person became aware of the matters referred to in that subsection in the course of the performance of duties as an officer of the corporation or in the course of acting as an agent of the corporation.
[Malaysia SIA, s. 89K]
Unsolicited transactions by holder of capital markets services licence and representatives
230. —(1) The holder of a capital markets services licence to deal in securities or trade in futures contracts, or a representative of such a holder does not contravene section 218 (2) or 219 (2) by subscribing for, purchasing or selling, or entering into an agreement to subscribe for, purchase or sell, securities that are traded on the stock market or futures market if —
(a) the licensed person entered into the transaction or agreement concerned on behalf of another person (referred to in this section as the principal) under a specific instruction by the principal to enter into that transaction or agreement which was not solicited by the licensed person;
(b) the licensed person has not given any advice to the principal in relation to the transaction or agreement or otherwise sought to procure the principal’s instructions to enter into the transaction or agreement; and
(c) the principal is not an associate of the licensed person.
(2) Nothing in this section shall affect the application of section 218 (2) or 219 (2) in relation to the principal.
[Malaysia SIA, s. 89M]
Parity of information defences
231. —(1) In any proceedings against a person for a contravention of section 218 (2) or 219 (2) because the person entered into, or procured another person to enter into, a transaction or agreement at a time when certain information was in the first-mentioned person’s possession, it is a defence if the court is satisfied that —
(a) the information came into the first-mentioned person’s possession solely as a result of the information having been made known as referred to in section 215 (b) (i); or
(b) the other party to the transaction or agreement knew, or ought reasonably to have known, of the information before entering into the transaction or agreement.
(2) In an action against a person for a contravention of section 218 (3) or 219 (3) because the person communicated information, or caused information to be communicated, to another person, it is a defence if the court is satisfied that —
(a) the information came into the first-mentioned person’s possession solely as a result of the information having been made known as referred in section 215 (b) (i); or
(b) the other person knew, or ought reasonably to have known, of the information before the information was communicated.
[Aust. Corporations 2001, s. 1002T]
Division 4 — Civil Liability
Civil penalty
232. —(1) Whenever it appears to the Authority that any person has contravened any provision in this Part, the Authority may, with the consent of the Public Prosecutor, bring an action in a court against him to seek an order for a civil penalty in respect of that contravention.
(2) If the court is satisfied on a balance of probabilities that the person has contravened a provision in this Part which resulted in his gaining a profit or avoiding a loss, the court may make an order against him for the payment of a civil penalty of a sum —
(a) not exceeding 3 times —
(i) the amount of the profit that the person gained; or
(ii) the amount of the loss that he avoided,
as a result of the contravention; or
(b) equal to $50,000 if the person is not a corporation, or $100,000 if the person is a corporation,
whichever is the greater.
(3) If the court is satisfied on a balance of probabilities that the person has contravened a provision in this Part which did not result in his gaining a profit or avoiding a loss, the court may make an order against him for the payment of a civil penalty of a sum not less than $50,000 and not more than $2 million.
(4) Notwithstanding subsections (2) and (3), the court may make an order against a person against whom an action has been brought under this section if the Authority, with the consent of the Public Prosecutor, has agreed to allow the person to consent to the order with or without admission of a contravention of a provision in this Part and the order may be made on such terms as may be agreed between the Authority and the defendant.
(5) Nothing in this section shall be construed to prevent the Authority from entering into an agreement with any person to pay, with or without admission of liability, a civil penalty within the limits referred to in subsection (2) or (3) for a contravention of any provision in this Part.
(6) A civil penalty imposed under this section shall be payable to the Authority.
(7) If the person fails to pay the civil penalty imposed on him within the time specified in the court order referred to in subsection (4) or specified under the agreement referred to in subsection (5), the Authority may recover the civil penalty as though the civil penalty were a judgment debt due to the Authority.
[1/2005]
(8) Any defence that is available to a person who is prosecuted for a contravention of any provision in this Part, shall also be available to a defendant to an action under this section in respect of that contravention.
[SIA, s.104A]
Action under section 232 not to commence, etc., in certain situations
233. —(1) An action under section 232 shall not be commenced after the expiration of 6 years from the date of the contravention of any of the provisions in this Part.
(2) An action under section 232 shall not be commenced if the person has been convicted or acquitted in criminal proceedings for the contravention of any of the provisions in this Part, except where he has been acquitted on the ground of the withdrawal of the charge against him.
(3) An action under section 232 shall be stayed after criminal proceedings have been commenced against the person for the contravention of any of the provisions in this Part, and may thereafter be continued only if —
(a) that person has been discharged in respect of that contravention and the discharge does not amount to an acquittal; or
(b) the charge against him in respect of that contravention has been withdrawn.
[SIA, s. 104B]
Civil liability
234. —(1) A person who has acted in contravention of any of the provisions in this Part which resulted in his gaining a profit or avoiding a loss (referred to in this section and sections 235 and 236 as the contravening person) shall, whether or not he had been convicted or had a civil penalty imposed on him in respect of that contravention, be liable to pay compensation to any person (referred to in this section and sections 235 and 236 as the claimant) who —
(a) contemporaneously with the contravention, had subscribed for, purchased or sold securities, or entered into futures contract, or contracts or arrangements in connection with leveraged foreign exchange trading, of the same description; and
(b) had suffered loss by reason of the difference between —
(i) the price at which the securities, futures contracts, or contracts in connection with leveraged foreign exchange trading were dealt in or traded contemporaneously with the contravention; and
(ii) the price at which the securities, futures contracts or contracts in connection with leveraged foreign exchange trading would have been likely to have been so dealt in or traded at the time of the contemporaneous dealing or trading if the contravention had not occurred.
(2) The amount of compensation that the contravening person is liable to pay to the claimant is the amount of the loss suffered by the claimant, up to the maximum recoverable amount.
(3) Any defence that is available to a person who is prosecuted for a contravention of any provision in this Part, shall also be available to a defendant to an action under this section in respect of the contravention.
(4) An action under this section shall not be commenced after the expiration of 6 years from the date of completion of the contemporaneous dealing or trading in which the loss occurred.
(5) In determining whether a dealing in securities, trading in futures contracts, or leveraged foreign exchange trading took place contemporaneously with the contravention under subsection (1), the court shall take into account the following matters:
(a) the volume of securities, futures contracts, or contracts in connection with leveraged foreign exchange trading of the same description dealt in or traded between the date and time of the contravention and the date and time of the dealing in securities, trading in futures contracts, or leveraged foreign exchange trading;
(b) the date and time the contravention, if it was effected by a transaction or transactions involving the subscription for securities, purchase or sale of securities, trading in futures contracts or leveraged foreign exchange trading, was cleared and settled;
(c) whether the dealing in securities, trading in futures contracts, or leveraged foreign exchange trading took place before or after the contravention;
(d) in the case of a contravention under section 203, 218 or 219, whether the dealing in securities took place before or after the information to which the contravention relates became generally known;
(e) such other factors and developments, whether in Singapore or elsewhere, as the court may consider relevant.
(6) In this section and section 236, “maximum recoverable amount”, in respect of each contravention by a contravening person means —
(a) the amount of the profit that the contravening person gained; or
(b) the amount of the loss that he avoided,
as a result of the contravention, after deducting all amounts of compensation that the contravening person had previously been ordered by a court to pay to other claimants under this section in respect of the same contravention.
[SIA, s. 104C]
Action under section 234 not to commence, etc., in certain situations
235. —(1) Except with the leave of court, no action under section 234 may be brought against the contravening person in respect of a contravention of any of the provisions in this Part which resulted in his gaining a profit or avoiding a loss after the commencement of —
(a) criminal proceedings under this Part against the contravening person for the same contravention; or
(b) an action under section 232 against the contravening person for the same contravention.
(2) Any action under section 234 against the contravening person in respect of a contravention of any of the provisions in this Part which resulted in his gaining a profit or avoiding a loss, being an action that is pending on the date of commencement of —
(a) criminal proceedings under this Part against the contravening person for the same contravention; or
(b) an action under section 232 against the contravening person for the same contravention,
shall be stayed, and may not thereafter be continued except with the leave of court.
(3) Leave under subsection (1) or (2) may not be granted if a date has been fixed by a court under section 236 (1) for the filing of claims, and in that event the claimant to the proposed action or the action that has been stayed, as the case may be, shall comply with such directions relating to the filing and proof of his claim under section 236 as that court may issue in his case.
[SIA, s. 104D]
Civil liability in event of conviction, etc.
236. —(1) Notwithstanding section 234, where the contravening person —
(a) has been convicted of an offence under this Part; or
(b) has an order for the payment of a civil penalty made against him under section 232, other than a consent order made with or without admission of contravention under section 232 (4),
in respect of the contravention of any of the provisions in this Part which resulted in his gaining a profit or avoiding a loss, the court which convicted him or made the order against him (referred to in this section as the relevant court) may, after the conviction or the order imposing the civil penalty has been made final, fix a date on or before which all claimants have to file and prove their claims for compensation in respect of that contravention.
(2) For the purposes of subsection (1), the relevant court shall not fix a date that is earlier than 3 months from the date the conviction or the order imposing the civil penalty, as the case may be, has been made final.
(3) The relevant court may, after the expiry of the date fixed under subsection (1), make an order against the contravening person to pay to each claimant who has filed and proven his claim for compensation an amount —
(a) equal to the amount of compensation which that claimant has proven to the satisfaction of the court that he would have been entitled to if he had brought an action under section 234 against the contravening person himself; or
(b) equal to the pro-rated portion of the maximum recoverable amount, calculated according to the relationship which the amount referred to in paragraph (a) bears to all amounts proved to the court,
whichever is the lesser.
(4) For the purposes of this section, a conviction is made final if —
(a) the conviction is upheld on appeal, revision or otherwise;
(b) the conviction is not subject to further appeal;
(c) no notice of appeal against the conviction is lodged within the time prescribed by section 247 of the Criminal Procedure Code (Cap. 68); or
(d) any appeal against the conviction is withdrawn.
(5) For the purposes of this section, an order imposing a civil penalty is made final if —
(a) the order is not set aside on appeal or revision or is varied only as to the amount of the civil penalty to be imposed;
(b) the order is not subject to further appeal;
(c) no notice of appeal against the imposition of the penalty is lodged within the time prescribed by Rules of Court (Cap. 322, R 5) made under section 238; or
(d) any appeal against the imposition of the penalty is withdrawn.
[SIA, s. 104E]
Jurisdiction of District Court
237. A District Court shall have jurisdiction to hear and determine any action under section 232, 234 or 236 regardless of the monetary amount.
[SIA, s. 104F]
Rules of Court
238. —(1) Rules of Court (Cap. 322, R 5) may be made —
(a) to regulate and prescribe the procedure and practice to be followed in respect of proceedings under sections 232, 234 and 236; and
(b) to provide for costs and fees of such proceedings, and for regulating any matter relating to the costs of such proceedings.
(2) Without prejudice to the generality of subsection (1), Rules of Court may, in relation to proceedings under section 236 —
(a) provide for the advertisement of a notice for the filing and proof of claims under that section;
(b) prescribe the procedure for the filing, proof and hearing of those claims; and
(c) provide for the payment of the costs and fees of an action that has been stayed under section 235 (2).
[SIA, s. 104G]
PART XIII
OFFERS OF INVESTMENTS
Division 1 — Shares and Debentures
Subdivision (1) — Interpretation
Preliminary provisions
239. —(1) In this Division —
"borrowing entity" means an entity that is or will be under a liability (whether or not such liability is present or future) to repay any money received by it in response to an invitation to subscribe for or purchase debentures of the entity;
"chief executive officer" , in relation to a corporation, means any person, by whatever name called, who is in the direct employment of, or acting for or by arrangement with, the corporation, and who is principally responsible for the management and conduct of the business of the corporation;
"control" , in relation to an entity, means the capacity of a person to determine the outcome of decisions on the financial and operating policies of the entity, having regard to —
(a) the influence which the person can, in practice, exert on the entity (as opposed to the rights which the person can exercise in the entity); and
(b) any practice or pattern of behaviour of the person affecting the financial or operating policies of the entity (even if such practice or pattern of behaviour involves a breach of an agreement or a breach of trust),
but does not include any capacity of a person to influence decisions on the financial and operating policies of the entity if such influence is required by law or under any contract or order of court to be exercised for the benefit of other persons;
"debenture" includes debenture stock, bonds, notes and any other debt securities issued by a corporation or any other entity, whether or not constituting a charge on the assets of the issuer but does not include —
(a) a cheque, letter of credit, order for the payment of money or bill of exchange;
(b) subject to the regulations made under this Act, a promissory note having a face value of not less than $100,000 and having a maturity period of not more than 12 months; or
(c) for the purposes of the application of this definition to a provision of this Act in respect of which any regulations made thereunder provide that the word “debenture” does not include a prescribed document or a document included in a prescribed class of documents, that document or a document included in that class of documents, as the case may be;
"debenture issuance programme" means any scheme or arrangement by an entity for the issue of debentures or units of debentures where only part of the maximum amount or aggregate number of debentures or units of debentures under the programme is offered initially and a further tranche or tranches may be offered subsequently;
"expert" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50);
"guarantor entity" , in relation to a borrowing entity, means an entity that has guaranteed or has agreed to guarantee the repayment of any money received or to be received by the borrowing entity in response to an invitation to subscribe for or purchase debentures of the borrowing entity;
"immediate family" , in relation to an individual, means the individual’s spouse, son, adopted son, step-son, daughter, adopted daughter, step-daughter, father, step-father, mother, step-mother, brother, step-brother, sister or step-sister;
"issuer" , in relation to an offer of securities, means the entity that issued or will be issuing the securities being offered;
"minimum subscription" , in relation to any securities offered for subscription, means the amount stated in the prospectus relating to the offer as the minimum amount which must be raised by the issue of the securities so offered, failing which no securities will be allotted or issued;
"preliminary document" means a document which has been lodged with the Authority and is issued for the purpose of determining the appropriate issue or sale price of, and the number of, securities to be issued or sold and which contains the information required to be included in a prospectus under section 243, except for such information as may be prescribed by the Authority;
"profile statement" means a profile statement referred to in section 240 (4);
"promoter" , in relation to a prospectus issued by or in connection with an entity, means a promoter of the entity who was a party to the preparation of the prospectus or of any relevant portion thereof, but does not include any person by reason only of his acting in a professional capacity;
"prospectus" means any prospectus, notice, circular, material, advertisement, publication or other document used to make an offer of securities, and includes any document deemed to be a prospectus under section 257, but does not include —
(a) a profile statement; or
(b) any material, advertisement or publication which is authorised by section 251 (other than subsection (5));
"recognised securities exchange" means a corporation which has been declared by the Authority, by order published in the Gazette, to be a recognised securities exchange for the purposes of this Division;
"related party" means —
(a) in relation to an entity —
(i) a director or an equivalent person of the entity;
(ii) the chief executive officer or equivalent person of the entity;
(iii) a person who controls the entity;
(iv) a related corporation;
(v) any other entity controlled by it;
(vi) any other entity controlled by the person referred to in sub-paragraph (iii); and
(vii) a related party of any individual referred to in sub-paragraph (i), (ii) or (iii); and
(b) in relation to an individual —
(i) his immediate family;
(ii) a trustee of any trust of which the individual or any member of the individual’s immediate family is —
(A) a beneficiary; or
(B) where the trust is a discretionary trust, a discretionary object,
when the trustee acts in that capacity; and
(iii) any corporation in which he and his immediate family (whether directly or indirectly) have interests in voting shares of an aggregate of not less than 30% of the total votes attached to all voting shares;
"replacement document" means a replacement prospectus or a replacement profile statement referred to in section 241 (1), as the case may be;
"securities" means debentures or units of debentures of an entity, or shares or units of shares of a corporation;
"statutory meeting" has the same meaning as in section 4 (1) of the Companies Act (Cap. 50);
"supplementary document" means a supplementary prospectus or a supplementary profile statement referred to in section 241 (1), as the case may be;
"underlying entity" , in relation to an offer of units of shares or debentures, means the entity the shares or debentures of which are the subject of the offer;
"unit" , in relation to a share or debenture, means any right or interest, whether legal or equitable, in the share or debenture, by whatever name called, and includes any option to acquire any such right or interest in the share or debenture.
[16/2003; 31/2004;1/2005]
(2) For the purposes of this Division, a statement shall be deemed to be included in a prospectus or profile statement if it is contained in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith.
(3) For the purposes of this Division —
(a) any invitation to a person to deposit money with or to lend money to an entity shall be deemed to be an offer of debentures of the entity; and
(b) any document that is issued or intended or required to be issued by an entity acknowledging or evidencing or constituting an acknowledgment of the indebtedness of the entity in respect of any money that is or may be deposited with or lent to the entity in response to such an invitation shall be deemed to be a debenture.
[1/2005]
(3A) Notwithstanding subsection (3) —
(a) any invitation to a person by a prescribed entity to make a deposit with the prescribed entity is not an offer of debentures; and
(b) the following documents issued or intended or required to be issued by a prescribed entity are not debentures:
(i) any certificate of deposit;
(ii) any other document acknowledging or evidencing or constituting an acknowledgment of the indebtedness of the prescribed entity in respect of any deposit that is or may be made with the prescribed entity.
[1/2005]
(4) In subsections (3A) and (5) —
"deposit" has the same meaning as in section 4B (4) of the Banking Act (Cap. 19);
"prescribed entity" means —
(a) any bank licensed under the Banking Act; or
(b) any entity or any entity of a class which has been declared by the Authority, by order published in the Gazette, to be a prescribed entity for the purposes of this subsection.
[1/2005]
(5) The Authority may, by notice in writing —
(a) impose such conditions or restrictions on a prescribed entity as it thinks fit; and
(b) at any time vary or revoke any condition or restriction so imposed,
and the prescribed entity shall comply with every such condition or restriction imposed on it by the Authority that has not been revoked by the Authority.
[1/2005]
(5A) Any person who contravenes any condition or restriction imposed under subsection (5) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 and, in the case of a continuing offence, to a further fine not exceeding $5,000 for every day or part thereof during which the offence continues after conviction.
[1/2005]
(6) For the purposes of this Division, a person makes an offer of any securities if, and only if, as principal —
(a) he makes (either personally or by an agent) an offer to any person in Singapore which upon acceptance would give rise to a contract for the issue or sale of those securities by him or another person with whom he has made arrangements for that issue or sale; or
(b) he invites (either personally or by an agent) any person in Singapore to make an offer which upon acceptance would give rise to a contract for the issue or sale of those securities by him or another person with whom he has made arrangements for that issue or sale.
[1/2005]
(7) In subsection (6), “sale” includes any disposal for valuable consideration.
[1/2005]
(8) This Division applies only in relation to offers of securities made on or after the commencement of this Division.
[1/2005]
[Companies, s. 4]
Authority may disapply this Division to certain offers
239A. Notwithstanding any provision to the contrary in this Division, where —
(a) an offer of securities is one to which (but for this section) both this Division and Division 2 apply; and
(b) the Authority has by order published in the Gazette declared that this Division shall not apply to that offer or a class of offers to which that offer belongs,
then this Division shall not apply to that offer.
[1/2005]
Subdivision (2) — Prospectus requirements
Requirement for prospectus and profile statement, where relevant
240. —(1) No person shall make an offer of securities unless the offer —
(a) is made in or accompanied by a prospectus in respect of the offer —
(i) that is prepared in accordance with section 243;
(ii) a copy of which, being one that has been signed in accordance with subsection (4A), is lodged with the Authority; and
(iii) that is registered by the Authority; and
(b) complies with such requirements as may be prescribed by the Authority.
[16/2003; | |
