Close

Minimum Trading Price $0.20: How will it affect you?

MINIMUM TRADING PRICE REQUIREMENT
Since 2 Mar 2015, companies on the Mainboard of SGX are required to comply with the Minimum Trading Price (MTP) requirement. This initiative is aimed at improving the quality of the Singapore stock market; making shares less susceptible to speculation and market manipulation. The companies must maintain a minimum share price of S$0.20. If you have stocks in your CDP that are trading at less than $0.20 (typically penny stocks), you may be affected by the MTP requirement. The new rule is applicable to stocks listed on SGX's Mainboard (including Reits and Trusts). It does not apply to Catalist listed companies.
To begin with, companies will have a 12-month "transition" period (from 2 Mar 2015) to undertake remedial measures to meet the MTP requirement (thereafter, they could be placed on a watch-list, with 36 month to exit from the watch-list). Remedial measures may include: share consolidation, transfer to Catalist or to restructure. The most straightfoward way is to consolidate shares.
What is a Share Consolidation?
Theoretical example: If you are an investor holding 500,000 shares in a company trading at a price of S$0.05, and the company decides to undertake a share consolidation of 10:1 to meet the MTP requirement, you will own 50,000 shares priced theoretically at $0.50 after the share consolidation action.
How will I know if my shares will be consolidated?
The company will notify you via mail regarding the consolidation of your shares. Do take note of the consolidation date, as the consolidation will result in a new quantity of shares in your CDP account. Once your shares are consolidated, you will be able to trade it.
To find out more about the MTP Requirement via the SGX website (Minimum Trading Price), click here.
Labels:
loading..