Statute Details
- Title: Securities and Futures (Offers of Investments) (Exemption for Depositary Receipts) Regulations 2023
- Act Code: SFA2001-S2-2023
- Legislative Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act 2001
- Enacting Power: Section 337(1) of the Securities and Futures Act 2001
- Citation: SL 2/2023
- Commencement: 9 January 2023
- Status: Current version as at 27 Mar 2026
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Amendment Noted in Timeline: Amended by S 124/2025 with effect from 25 Feb 2025
What Is This Legislation About?
The Securities and Futures (Offers of Investments) (Exemption for Depositary Receipts) Regulations 2023 (“DR Exemption Regulations”) create a targeted regulatory exemption within Singapore’s securities offering framework for certain offers of depositary receipts. In practical terms, the Regulations allow qualifying depositary receipt offers to bypass specific procedural or substantive requirements that would otherwise apply under the Securities and Futures Act 2001 (“SFA”).
Singapore’s securities law generally regulates offers of investments to protect investors and ensure market integrity. However, depositary receipts are a common cross-border financing and trading instrument: they represent beneficial ownership interests in underlying securities (such as shares or business trust units) held by a depositary or issuer. Because depositary receipts can be structured and traded in ways that mirror the underlying securities—often on recognised exchanges—the law recognises that imposing the full set of offering rules may be unnecessary where the underlying securities are already publicly available and subject to market oversight.
The DR Exemption Regulations therefore focus on a narrow set of depositary receipt scenarios. They define what counts as a “depositary receipt” for the purposes of the exemption, identify what qualifies as “underlying securities,” and then set out conditions under which the exemption applies. The result is a compliance pathway for issuers, depositary receipt arrangers, and offerors who want to list or trade depositary receipts in Singapore (or otherwise make offers) without triggering certain provisions of the SFA’s offering regime.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the short title and confirms that the Regulations came into operation on 9 January 2023. For practitioners, this matters when assessing whether an offer made on or after that date can rely on the exemption, and when determining which version of the Regulations applies to a given transaction timeline.
2. Definitions (Section 2)
Section 2 is central because the exemption is only available if the instrument and the transaction fit precisely within the defined concepts.
(a) “Depositary receipt”
A “depositary receipt” is defined as an instrument that confers or represents a beneficial ownership interest in underlying securities. This definition is broad in concept (it covers instruments that represent beneficial ownership), but the Regulations then narrow it through additional conditions in Section 2(2).
(b) “Rights issue depositary receipt”
A “rights issue depositary receipt” is a depositary receipt offered in connection with a rights issue undertaken by either:
- the issuer of the underlying securities; or
- where the underlying securities are instruments listed on the Stock Exchange of Thailand as Non‑Voting Depository Receipts, the issuer of the shares to which those instruments relate.
Additionally, it must be offered to any existing holder of a depositary receipt where the underlying securities:
- have been previously issued by the issuer of the underlying securities; and
- are listed for quotation on a specified exchange.
This definition is important because the exemption treats rights issue depositary receipts as a distinct category, and the “specified exchange” concept is used throughout the Regulations.
(c) “Specified exchange”
“Specified exchange” includes:
- a corporation declared by the Authority to be a recognised securities exchange under the Securities and Futures (Recognised Securities Exchange) Order 2018;
- the Stock Exchange of Thailand; and
- the Indonesia Stock Exchange.
The inclusion of Thailand and Indonesia exchanges signals the Regulations’ cross-border orientation, likely reflecting common DR programmes involving those markets.
(d) “Underlying securities”
“Underlying securities” are limited to:
- shares;
- units of a business trust; or
- any instrument listed for quotation on the Stock Exchange of Thailand as a Non‑Voting Depository Receipt.
This limitation is a gatekeeping feature: if the underlying asset class falls outside these categories, the exemption may not be available.
(e) Conditions for beneficial ownership representation (Section 2(2))
Section 2(2) provides that an instrument confers or represents a beneficial ownership interest only if all of the following apply:
- Fixed ratio: each instrument is issued in respect of a specified number of underlying securities.
- Underlying held by issuer: the issuer of the instrument holds, directly or indirectly, the underlying securities for the holder of the instrument (whether or not under a trust or contractual arrangement).
- Exchange right: the holder has the right to exchange the instrument for the underlying securities on the instrument’s terms.
- Economic entitlement: the holder is entitled to receive all or substantially all interest, dividends, distributions, and other financial benefits related to the underlying securities (cash or otherwise).
- No encumbrance: the issuer undertakes not to pledge or create any lien/encumbrance over the underlying securities it holds, even if the holder does not control voting rights (if any).
For legal advisers, these conditions are often the most heavily negotiated and documented elements of a DR programme. They require careful review of the depositary agreement, custody arrangements, exchange mechanics, dividend/distribution flows, and restrictions on encumbrances.
3. The exemption itself (Section 3)
Section 3 is the operative provision. It states that Subdivisions (2) and (3) of Division 1 of Part 13 of the SFA (other than section 257) do not apply to an offer of securities that is an offer of depositary receipts where three conditions are met.
Condition (a): Listing/quotation on an approved exchange
The depositary receipts must be or will be listed for quotation or quoted on an approved exchange. This requirement ties the exemption to ongoing market visibility and exchange oversight.
Condition (b): No DR issuance agreement with the underlying issuer (with a Thailand-specific exception)
The depositary receipts must not be issued or proposed to be issued pursuant to any agreement between:
- the issuer of the depositary receipts and the issuer of the underlying securities; or
- in the case where underlying securities are Thailand Non‑Voting Depository Receipts, the issuer of the depositary receipts and the issuer of the shares to which those instruments relate.
This is a structural limitation. It suggests that the exemption is intended for depositary receipt arrangements that are not directly contractually linked to the underlying issuer in a way that could circumvent the SFA’s offering controls.
Condition (c): For non-rights issue depositary receipts, underlying securities must already be issued and listed
If the depositary receipts are not rights issue depositary receipts, then all underlying securities must have been previously issued and must be listed for quotation on a specified exchange.
In effect, the exemption is more readily available for depositary receipts representing already-existing, publicly listed underlying securities (subject to the other conditions). For rights issue depositary receipts, the definition already contemplates a rights issue context, and the “previously issued” requirement is addressed through the definition’s structure rather than through Condition (c).
How Is This Legislation Structured?
The Regulations are concise and structured as follows:
- Section 1: Citation and commencement (9 January 2023).
- Section 2: Definitions, including key terms such as “depositary receipt,” “rights issue depositary receipt,” “specified exchange,” and “underlying securities,” plus detailed conditions for when an instrument represents beneficial ownership.
- Section 3: Exemption—identifies which SFA provisions are disapplied and sets out the three conditions for the exemption to apply.
Notably, the Regulations do not create a standalone offering regime; instead, they operate by disapplying specified SFA provisions for qualifying depositary receipt offers.
Who Does This Legislation Apply To?
The exemption applies to offers of securities that are offers of depositary receipts meeting the statutory definitions and conditions. In practice, this will typically involve:
- issuers or arrangers of depositary receipt programmes;
- depositaries or custodians that hold underlying securities for the benefit of receipt holders;
- offerors and intermediaries involved in listing or quotation of depositary receipts on approved exchanges; and
- legal teams advising on cross-border DR structures where underlying securities are shares, business trust units, or specified Thailand instruments.
Importantly, the exemption is not automatic. It is contingent on the instrument’s legal and economic features (beneficial ownership conditions) and on transaction structure (particularly the “no agreement with the underlying issuer” requirement and the listing/quotation and underlying securities conditions). If any element fails, the disapplication in Section 3 will not apply, and the relevant SFA offering provisions may need to be complied with.
Why Is This Legislation Important?
The DR Exemption Regulations matter because they provide a transaction-specific compliance shortcut for depositary receipt offers that meet defined criteria. For practitioners, the value is not merely theoretical: DR programmes often involve complex cross-border custody, exchange rights, and dividend/distribution mechanics. By codifying what counts as a beneficial ownership instrument and when certain SFA offering provisions can be disapplied, the Regulations reduce uncertainty and help structure deals to fit within a clear statutory framework.
From an enforcement and risk perspective, the Regulations also reflect a policy balance. The exemption is limited to depositary receipts that are sufficiently “economically aligned” with the underlying securities (exchangeability, entitlement to distributions, and restrictions on encumbrances). At the same time, it restricts arrangements that are too closely tied to the underlying issuer through agreements, which could otherwise undermine the protective purpose of the SFA’s offering requirements.
Practically, lawyers advising on DR listings should treat Section 2(2) and Section 3 as the two main workstreams:
- Section 2(2): confirm the instrument’s legal rights and economic entitlements, including exchange rights and dividend/distribution pass-through.
- Section 3: confirm the listing/quotation status, the absence of disqualifying agreements with the underlying issuer, and—where relevant—the “previously issued and listed” requirement for non-rights issue DRs.
These are the provisions most likely to determine whether the exemption is available and whether the offer can proceed without additional SFA offering compliance steps.
Related Legislation
- Securities and Futures Act 2001 (including Part 13, Division 1, Subdivisions (2) and (3), and section 257 as expressly excluded)
- Futures Act 2001 (listed in metadata; relevant context for Singapore’s broader financial regulatory framework)
- Securities and Futures (Recognised Securities Exchange) Order 2018 (for the definition of “specified exchange” via recognised securities exchanges)
Source Documents
This article provides an overview of the Securities and Futures (Offers of Investments) (Exemption for Depositary Receipts) Regulations 2023 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.