SFA Regulated Activity — Advising on Corporate Finance¶

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Definition¶

Advising on corporate finance means giving advice to any person concerning compliance with or in respect of laws or regulatory requirements (including listing rules of a securities exchange) relating to, or making a recommendation to any person concerning, any arrangement, transaction, or matter relating to corporate finance. This definition is set out in Paragraph 4 of the Second Schedule to the Securities and Futures Act 2001 (SFA).

The term "corporate finance" is defined broadly to include any arrangement or transaction involving the securities of a corporation, including mergers and acquisitions, takeovers, initial public offerings, rights issues, share buy-backs, de-listings, schemes of arrangement, and any other corporate restructuring that involves or affects securities.

Scope of Activity¶

What Constitutes Advising on Corporate Finance¶

Mergers and Acquisitions (M&A): - Advising a bidder or target on the structuring, valuation, and execution of a takeover offer under the Singapore Code on Take-overs and Mergers - Advising on mandatory offer obligations (triggered when a person acquires 30% or more of voting shares) - Advising on voluntary conditional or unconditional offers - Preparing the independent financial adviser (IFA) opinion on the fairness and reasonableness of an offer to shareholders of the target - Advising on the whitewash procedure (waiver of mandatory offer obligation in connection with a share issue)

Initial Public Offerings (IPOs): - Advising the issuer on the structuring of an IPO (primary listing on SGX-ST Mainboard or Catalist) - Acting as issue manager — managing the IPO process, coordinating with the exchange, legal counsel, auditors, and other parties - Acting as underwriter — committing to subscribe for unsubscribed shares (note: this also involves dealing in securities under Paragraph 1) - Acting as placement agent — placing shares with institutional and qualified investors - Preparing or reviewing the prospectus for compliance with the SFA prospectus requirements (Part XIII, Division 1)

Rights Issues and Share Placements: - Advising on the structuring and pricing of rights issues, warrants, or convertible securities - Advising on compliance with SGX listing rules regarding share issues (e.g., general mandate limits, specific mandates, connected person transactions) - Advising on exemptions from prospectus requirements (small offers, institutional offers, personal offers)

Corporate Restructuring: - Advising on schemes of arrangement under Section 210 of the Companies Act - Advising on de-listings (voluntary withdrawal of listing from SGX) - Advising on share buy-back programmes and their regulatory implications - Advising on spin-offs, de-mergers, and intra-group restructuring

Interested Party Transactions (IPTs): - Advising on compliance with SGX Listing Rule Chapter 9 (interested person transactions) - Providing IFA opinions on the fairness of IPTs to minority shareholders - Advising on the general mandate for recurring IPTs

Listing compliance advisory: - Advising listed companies on ongoing compliance with SGX listing rules - Advising on disclosure obligations (material information, financial results, trading halts) - Advising on connected person and related party transaction requirements

What Does NOT Constitute Advising on Corporate Finance¶

Legal advice — Advice given by a law firm in its capacity as legal adviser to a party in a corporate finance transaction is not advising on corporate finance under the SFA. The legal profession is separately regulated.
Accounting and audit services — Audit opinions, accounting advice, and financial reporting services provided by accounting firms are not advising on corporate finance.
General business consulting — Strategic advice on business operations, management consulting, or organisational restructuring that does not involve securities is not advising on corporate finance.
Media and public relations — Preparing press releases, investor presentations, or public relations strategies in connection with a corporate finance transaction is not advising on corporate finance (though the content must comply with SFA disclosure requirements).
Valuation services alone — Providing a standalone valuation opinion (e.g., for accounting or tax purposes) without advising on a specific corporate finance transaction is generally not advising on corporate finance.

Independence Requirements¶

Independence is a cornerstone obligation for advisers on corporate finance, particularly for independent financial advisers (IFAs):

IFA Independence¶

When appointed as the IFA to advise shareholders on a transaction: - The IFA must be independent of the parties to the transaction (bidder, target, interested parties) - No material business relationship with the interested parties that could compromise objectivity - No financial interest in the outcome of the transaction (beyond the advisory fee) - The IFA must disclose any past, present, or potential relationships with the parties

Structural Independence¶

CMS licence holders advising on corporate finance must maintain: - Separation between the corporate finance advisory function and proprietary dealing/trading functions - Chinese walls between the corporate finance team and other business units (e.g., research, sales and trading) to prevent information leakage - Policies to manage personal account dealing by corporate finance professionals

For companies listed on Catalist (the sponsor-supervised board of SGX), the continuing sponsor must maintain independence: - The sponsor must not hold more than 5% of the issuer's shares - Key sponsor personnel must not be directors, officers, or significant shareholders of the issuer - The sponsor must have no material business relationship with the issuer that could compromise independence

Conflicts of Interest¶

Typical Conflicts¶

Corporate finance advisory involves numerous potential conflicts:

Multiple mandates — Acting for both the bidder and the target in the same transaction (prohibited)
Proprietary interests — The firm holding securities in a company on which it is advising (must be disclosed and managed)
Financing and advising — Providing both corporate finance advice and financing for the same transaction (permissible with disclosure and management)
Research coverage — The firm's research analysts covering a company on which the corporate finance team is advising (managed through Chinese walls)
Fee structures — Success-based fees that could incentivise advice that favours transaction completion over shareholder interests

Management Measures¶

Written conflict of interest policies and procedures
Disclosure of material conflicts to clients and, where applicable, to shareholders
Chinese walls between corporate finance, research, and trading
Restricted lists and watch lists for securities subject to non-public information
Independent review of conflicted transactions by compliance or a conflicts committee

CMFAS Examination Requirements¶

Mandatory Modules¶

Module	Title	Scope
M4	Rules and Regulations for Advising on Corporate Finance	SFA provisions on corporate finance advisory, Singapore Code on Take-overs and Mergers, SGX Listing Rules, prospectus requirements, IFA obligations, independence, conflicts
M6	Securities Products and Analysis	Securities products, financial analysis, valuation methodologies
M6A	Securities and Futures Product Knowledge	Updated version of M6

Note on CMFAS regime change (1 April 2024): M4, M6, and M6A were retired under SFA 04-N22. Current modules are RES-4 (Advising on Corporate Finance, replacing M4) and CM-EIP (Excluded Investment Products, replacing M6/M6A). Old M-series passes before 1 April 2024 are grandfathered.

Additional Knowledge Requirements¶

Representatives advising on corporate finance are expected to have in-depth knowledge of: - Singapore Code on Take-overs and Mergers (administered by the Securities Industry Council, SIC) - SGX Listing Rules (Mainboard and Catalist) - SFA Part XIII (prospectus requirements) - Companies Act provisions relevant to corporate restructuring - Financial valuation methodologies (DCF, comparable companies, precedent transactions, sum-of-the-parts) - Accounting standards (SFRS(I) / IFRS) relevant to transactions

Continuing Professional Development (CPD)¶

Minimum of 6 CPD hours per calendar year
Topics must include corporate finance regulatory developments, valuation, listing rules updates
Tracked by the employing CMS licence holder

Licensing Conditions for CMS Licence Holders¶

Base Capital Requirements¶

Category	Minimum Base Capital
Advising on corporate finance	S$500,000

Operational Requirements¶

Professional indemnity insurance: - CMS licence holders advising on corporate finance must maintain professional indemnity insurance with adequate coverage

Record keeping: - All advisory documents, opinions, valuations, client communications, and internal deliberations must be retained for a minimum of 5 years - Working papers supporting IFA opinions and valuations must be comprehensive and auditable

Due diligence obligations: - When acting as issue manager for an IPO, the CMS licence holder must conduct reasonable due diligence on the issuer's business, financial condition, and prospects - The due diligence must be sufficient to form a reasonable basis for the statements and opinions in the prospectus - Liability under Section 253 of the SFA for misleading prospectus statements

Key Business Conduct Obligations¶

Fair Dealing¶

Advice must be given in the client's best interests
Recommendations must be based on thorough analysis and supported by evidence
The adviser must not recommend a transaction primarily to generate fees

Confidentiality¶

Corporate finance transactions involve material non-public information (MNPI): - Strict confidentiality obligations apply to all MNPI received during the advisory engagement - Information barriers (Chinese walls) must prevent MNPI from reaching trading desks, research departments, or other business units - Insider trading prohibitions under Sections 218-219 of the SFA apply — no person in possession of MNPI may trade in the relevant securities

Disclosure Obligations¶

The CMS licence holder must ensure that all public disclosures (prospectuses, offer documents, IFA letters) are accurate, complete, and not misleading
Liability for defective disclosure under the SFA and, where applicable, the Securities Industry Council's rulings

Relevance to Regnify Form 3A¶

When an FI submits a Form 3A to appoint a representative for advising on corporate finance:

CMFAS results — Evidence of passing M4 and M6/M6A
Fit and proper — No disqualifying criminal record, regulatory sanctions, or bankruptcy
10-year employment history — Complete with gap explanations
Regulatory track record — All prior appointments, refusals, revocations, disciplinary actions
Educational qualifications — As prescribed by MAS
Reference checks — From most recent financial services employer
Relevant experience — MAS may consider the representative's depth of experience in corporate finance advisory, particularly for senior roles

The FI must confirm that the representative has the competency and integrity to advise on corporate finance transactions, and that appropriate supervision and compliance frameworks are in place to manage the significant conflicts of interest inherent in this activity.