Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2008
- Act / Instrument Code: SFA2001-S359-2008
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289), section 337(1)
- Commencement: 11 July 2008
- Legislative Status: Current version (as at 27 Mar 2026)
- Key Provisions: Section 2 (definitions); Section 3 (exemption and conditions)
- Regulatory Focus: Exemption from specified market conduct provisions for stabilising actions in relation to a defined preference share offer
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2008 (“Stabilising Exemption Regulations”) create a targeted regulatory carve-out that permits certain “stabilising action” in connection with a specific preference share offer. In plain terms, the Regulations recognise that market stabilisation—typically undertaken by a stabilising manager to support orderly trading after an issuance—can be legitimate, provided it is conducted within strict boundaries designed to prevent manipulation and misleading pricing.
Under the Securities and Futures Act (“SFA”), certain market conduct rules generally restrict conduct that could distort market prices. However, stabilisation practices are often necessary in capital markets to reduce volatility immediately after listing or issuance. This instrument therefore exempts stabilising action from selected statutory provisions, but only when the stabilising manager and/or its dealers comply with detailed conditions relating to size limits, timing, disclosure, price integrity, and record-keeping.
Importantly, the exemption is not generic. The Regulations define the relevant “preference shares” very specifically as Series B non-cumulative perpetual preferred securities issued in July 2008 by SMFG Preferred Capital USD 3 Limited for a principal amount of up to US$3,000,000,000. This makes the Regulations effectively an offer-specific stabilisation regime.
What Are the Key Provisions?
1. Definitions that control the scope
Section 2 sets out key terms that determine when the exemption can be relied upon. The definitions include:
- “stabilising action”: an action taken in Singapore or elsewhere by the stabilising manager (or a dealer on its behalf) to buy (or offer or agree to buy) preference shares to stabilise or maintain their market price.
- “stabilising manager”: Goldman Sachs International or any of its related corporations.
- “offer” and “offer document”: the offer for subscription or purchase of the preference shares in conjunction with listing on a securities exchange, and the documents inviting offers.
- “over-allotment”: allotment or sale in excess of the number available under the offer.
- “offer price”: the price after deducting concession, commission, brokerage, transaction fee or levy.
- “closing date”: the date of issue of the preference shares (as used for timing of announcements).
These definitions matter because the exemption is conditioned on compliance with the defined offer mechanics and the stabilising manager’s conduct.
2. The exemption from specified SFA provisions
Section 3(1) provides the core legal effect: Sections 197, 198, 218(2) and 219(2) of the SFA do not apply to stabilising action taken in respect of the defined preference share offer, provided paragraphs (3) to (14) are complied with.
While the extract does not reproduce the content of those SFA sections, the practical significance is clear: the Regulations remove legal exposure that would otherwise arise if stabilising purchases or related orders were treated as prohibited market conduct. The exemption is therefore conditional and procedural—if conditions are not met, the stabilising manager may fall back into the general prohibitions.
3. Eligibility conditions: size, disclosure, and announcement
Section 3(2) specifies when stabilising action is “in respect of an offer” that qualifies for the exemption. Five main eligibility requirements appear in the extract:
- Minimum offer value: the total value of preference shares offered (based on the offer price) must be not less than $25 million (or equivalent in foreign currency).
- Stabilisation purchase cap: the stabilising manager’s purchases for stabilising action must not exceed 20% of the total number of preference shares offered prior to any over-allotment (if applicable).
- Offer document disclosure: the offer document must state that stabilising action may be taken; the maximum period during which it may be taken; details of any over-allotment option; and the maximum number of shares the stabilising manager may buy (capped at the 20% limit).
- Exchange announcement disclosure: a public announcement must be made through the relevant securities exchange on the business day immediately following the closing date, containing the same key information as in the offer document.
- Cash terms and fixed price: the offer must be on cash terms and made (or to be made) at a specific price payable in any currency.
For practitioners, these are not merely “best practice” items. They are conditions that determine whether the exemption is available at all. In particular, the disclosure requirements create an evidential trail that can be used to demonstrate that investors were informed of stabilisation mechanics and limits.
4. Conduct conditions: price integrity, timing, and order restrictions
Section 3(3) requires the stabilising manager to maintain a “reasonable satisfaction” standard regarding price integrity. Specifically, the stabilising manager must:
- take stabilising action only after being reasonably satisfied that the price is not false or misleading; and
- continue stabilising action only after being reasonably satisfied that the price has not become false or misleading other than by reason of stabilising action.
This is a key compliance concept: it links stabilisation to ongoing monitoring of whether the market price remains reliable and non-misleading.
Section 3(4) imposes a strict precondition on timing: no stabilising action may be taken before the date of the earliest public announcement of the offer that states the offer price through the relevant securities exchange.
Section 3(5) then limits the maximum stabilisation period. Stabilising action must not be taken after the earlier of:
- expiry of 30 calendar days from the date of commencement of trading; or
- expiry of 60 calendar days from the date of the earliest public announcement stating the offer price; or
- the date on which the stabilising manager has bought the maximum number of shares it is permitted to buy under the offer document.
This creates a “whichever comes first” framework that practitioners should treat as a hard stop.
Section 3(6) restricts selling: the stabilising manager must not effect or cause to be effected any sell order of the preference shares prior to the date of commencement of each stabilising action or during the permitted stabilisation period. However, Section 3(7) provides a narrow carve-out: it does not prohibit the stabilising manager or an associate (as a dealer) from executing sell orders for persons who are not associates of the issuer, or selling on behalf of the issuer as part of the offer (including underwriting commitments). This balances stabilisation with the need to allow ordinary dealing and underwriting-related sales.
5. Record-keeping and inspection
Section 3(8) requires the stabilising manager to keep a register in the form required by the listing exchange and to record particulars of each stabilising purchase transaction, including price, quantity, and dealer name, before the end of the day of the transaction.
Section 3(9) and (10) (as far as shown in the extract) address inspection logistics. If the register is kept in Singapore, it must be made available for inspection by the Authority or the securities exchange within the time stipulated. If kept outside Singapore, it must be capable of being brought into Singapore and made available within the stipulated time, or otherwise made available through mechanisms required by the Authority or exchange. These provisions are designed to ensure regulatory oversight even where records are maintained abroad.
Note on the extract
The provided text is truncated after Section 3(10)(b). In a full review, practitioners should obtain the complete version to confirm any additional requirements in paragraphs (10) onward (for example, further operational details, reporting obligations, or additional limitations). The compliance analysis should be based on the complete instrument text.
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Section 1 (Citation and commencement): provides the short title and the commencement date (11 July 2008).
- Section 2 (Definitions): sets out the key terms used to determine the exemption’s scope, including stabilising action, stabilising manager, offer, offer document, and the specific definition of the preference shares.
- Section 3 (Exemption): contains the substantive exemption and its conditions, including eligibility criteria, disclosure and announcement requirements, conduct limitations (price integrity, timing, and order restrictions), and record-keeping/inspection obligations.
Because the instrument is essentially a single exemption section with detailed conditions, practitioners should focus their review on Section 3 and treat each paragraph as a compliance checklist.
Who Does This Legislation Apply To?
The exemption is directed at the stabilising manager (Goldman Sachs International and related corporations) and dealers acting on its behalf. While the Regulations define “dealer” broadly to include foreign-regulated entities, the exemption’s legal benefit is tied to stabilising action undertaken by the stabilising manager (or its authorised dealers) in relation to the defined preference share offer.
It applies to stabilising action taken in Singapore or elsewhere, but only when the stabilising action is “in respect of” the qualifying offer and all conditions in Section 3 are satisfied. Issuers and investors are indirectly affected through the disclosure and announcement requirements imposed on the offer documentation and exchange announcements.
Why Is This Legislation Important?
For market participants, the Regulations provide a legally workable pathway to conduct stabilisation without breaching general market conduct prohibitions. Stabilising purchases can influence short-term price behaviour and liquidity, and without a clear exemption, stabilising managers would face uncertainty about whether their actions could be characterised as prohibited conduct under the SFA.
From a compliance perspective, the Regulations are significant because they convert stabilisation into a regulated, auditable activity. The combination of (i) a quantitative cap (20% of shares offered), (ii) a defined time window (30/60 days or until the cap is reached), (iii) mandatory disclosure in the offer document and exchange announcement, and (iv) record-keeping and inspection requirements creates a structured framework that regulators can verify.
Practically, lawyers advising stabilising managers should treat the instrument as a checklist for transaction planning: confirm the offer value threshold, ensure the offer document and exchange announcement contain the required stabilisation statements and limits, implement internal controls to prevent stabilising action before the offer price announcement, monitor ongoing price integrity, restrict sell orders during the stabilisation window (subject to the narrow exceptions), and ensure daily transaction recording and regulatory access to the register.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly the provisions referenced in the exemption: Sections 197, 198, 218(2) and 219(2); and the regulation-making power in section 337(1).
- Futures Act (as referenced in the statute metadata timeline context).
- Stabilising Act (as referenced in the statute metadata timeline context).
- Legislation timeline / instrument history (for version control and amendment tracking).
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Preference Shares) (No. 2) Regulations 2008 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.