Singapore Exchange (SGX) has outlined general rules governing publicly listed firms planning on launching an initial coin offering (ICO).
As explained in a column published November 15, any tokens launched through an ICO are not listed on the SGX, clarifying that the rules only govern the companies themselves, according to Tan Boon Gin, CEO of SGX’s regulatory subsidiary, SGX RegCo.
According to the issued guidelines, all listed firms aiming to launch an ICO are required to coordinate with SGX RegCo and provide a legal opinion from “reputable” firms explaining the tokens’ nature on top of an auditor’s opinion on how the ICO will be audited.
In addition, companies are also mandated to disclose certain information about the ICO, including the rationale behind the project, the potential risks associated with it, how the funds are to be expended, the know-your-customer (KYC) and anti-money laundering (AML) checks to be implemented, as well as the potential impact on shareholders’ rights.
Furthermore, companies are also required to submit financial statements to ensure that the crowdfunding projects are “properly” accounted for and that the potential risks are appropriately addressed.
Should the tokens be classified as securities based on the country’s Securities and Futures Act (SFA), startups will need to comply with a number of requirements, including completion of prospectus registration, as well as a series of licensing procedures. Depending on the nature of the offering, companies may also be required to establish a subsidiary.
Lastly, SGX RegCo also expects listed firms launching an ICO to equally look after the company’s best interest as well as that of its shareholders.
As Gin noted:
“The issuer’s board is ultimately responsible for maintaining a robust system of risk management and internal controls.”