Capital markets and structured investments

There are restrictions on offering and selling debt securities under Singapore law.

Unless certain exclusions or exemptions apply, it is unlawful to offer debt securities to the public in Singapore or to request that they are admitted to trading on a regulated market operating in Singapore unless an approved prospectus has been made available to the public.

The most common types of debt securities issued in Singapore are bonds or notes issued on a stand-alone basis or under a program.

Many different types of debt securities are offered in Singapore.

Some common forms include:

• debt securities characterized by the type of interest or payment such as fixed-rate securities, floating-rate securities, variable-rate securities, zero-coupon securities and high-yield bonds;
• guaranteed securities, subordinated securities, perpetual debt securities (ie debt securities that have no specified redemption date);
• asset-backed securities;
• derivative securities such as securities linked to the value of one or more reference asset including shares, commodities, interest rate, currency rate or index, and credit-linked notes;
• hybrid securities (securities with both debt and equity features);
• equity-linked securities such as convertible bonds (debt securities convertible into the equity of the issuer);
• exchangeable bonds (debt securities convertible into the equity of a third party);
• depositary receipts (a security issued by a depositary conferring on the holders beneficial ownership of certain underlying assets held by the depositary for the holders); and
• warrants (securities giving the holders the option to purchase the equity of the issuer or a related company).

There are additional requirements that would have to be met in order to offer debt securities to retail investors, including the preparation of prospectuses.

The Monetary Authority of Singapore has, however, recently introduced two new frameworks, namely the Bond Seasoning Framework and the Exempt Bond Issuer Framework which will enable retail investors to invest if certain criteria are satisfied.

All offers of securities require the preparation of a prospectus unless an exemption is available. Possible exemptions include the issue or transfer of securities for no consideration eg employee share option schemes, small personal offers where the total amount raised from such offers within any 12-month period does not exceed S$5 million or such other amounts as may be prescribed by the Monetary Authority of Singapore and an offer to no more than 50 persons within any period of 12 months and under certain conditions.

The Singapore Exchange (SGX) has two principal markets on which debt securities are traded:

• the SGX Mainboard; and
• the SGX Catalist.

Singapore does have an active private placement market and companies would have to comply with the rules of the Singapore Exchange Securities Trading Limited for such placements. Save for the foregoing, there are no specific regulations governing the same.

Issuing debt securities

Issuers are required to take responsibility for prospectuses, if applicable, for debt securities. Misleading statements in, or omissions from, any applicable offering document can give rise to both civil and criminal liability under Singapore law. Singapore has various investor protection statutory provisions relevant to liability for an inaccurate offering memorandum. There are also general fraud statutes and liability may also arise under common law through a civil action for deceit, negligent misstatement or misrepresentation.

Investing in debt securities

Debt security terms and conditions typically contain provisions which may permit their modification with the consent of a majority of the investors. If a trust deed is required, it will typically confer certain discretions on the trustee, which may be exercised without the consent of investors and without regard to the individual interests of particular investors. The conditions also provide for meetings of investors to consider matters affecting the investors interests. These provisions typically permit defined majorities to bind all investors including investors who did not attend and vote at the relevant meeting and investors who voted against the majority.