Statute Details
- Title: Securities and Futures (Offers of Investments) (Exemption for Depositary Receipts) Regulations 2023
- Act Code: SFA2001-S2-2023
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act 2001
- Enacting Power: Section 337(1) of the Securities and Futures Act 2001
- Commencement: 9 January 2023
- Making Date: 2 January 2023
- Current Status (as provided): Current version as at 27 Mar 2026
- Key Provisions: Section 1 (Citation and commencement), Section 2 (Definitions), Section 3 (Exemption)
- Amendment Noted in Timeline: Amended by S 124/2025 with effect from 25/02/2025 (as indicated in the extract)
What Is This Legislation About?
The Securities and Futures (Offers of Investments) (Exemption for Depositary Receipts) Regulations 2023 (“DR Exemption Regulations”) create a targeted exemption from certain offer-related requirements under the Securities and Futures Act 2001 (“SFA”). In practical terms, the Regulations recognise that depositary receipts (“DRs”)—financial instruments that represent beneficial ownership in underlying securities—often function as a market access and trading wrapper for investors. Where DRs are listed and structured in a particular way, the law allows certain statutory “offer” provisions to be disapplied.
The Regulations are not a general relaxation of securities regulation. Instead, they are carefully bounded. They apply only to offers of securities that are offers of depositary receipts meeting specified conditions, including listing/quotation on an approved or specified exchange and restrictions on how the DRs are issued (notably, they must not be issued under certain agreements between the DR issuer and the underlying issuer). The Regulations also distinguish “rights issue depositary receipts” from other DRs, reflecting different issuance mechanics.
For practitioners, the key takeaway is that the DR Exemption Regulations provide a compliance pathway for DR offerings in Singapore that would otherwise trigger the application of particular subdivisions of Division 1 of Part 13 of the SFA (other than section 257). The exemption reduces regulatory friction for DR issuances that are already subject to market listing and investor-protection safeguards through exchange listing and the DR’s economic linkage to underlying securities.
What Are the Key Provisions?
Section 1: Citation and commencement. This is a standard provision confirming the name of the Regulations and that they come into operation on 9 January 2023. For legal work, this matters when assessing whether an offering falls under the regime at the relevant time.
Section 2: Definitions. The Regulations contain definitions that are central to determining whether a particular instrument qualifies as a “depositary receipt” and whether the DR is a “rights issue depositary receipt.” The definition of “depositary receipt” is functional: it is an instrument that “confers or represents a beneficial ownership interest” in underlying securities. This is important because the exemption is not limited to a particular brand name or form; it turns on economic substance.
The Regulations define “underlying securities” to include shares, units of a business trust, and any instrument listed for quotation on the Stock Exchange of Thailand as Non‑Voting Depository Receipts. This is a strong indicator that the Regulations were designed with cross-border DR structures in mind, particularly those linked to Thailand’s market infrastructure.
The term “specified exchange” is also defined. It includes (i) a corporation declared by the Authority to be a recognised securities exchange under the Securities and Futures (Recognised Securities Exchange) Order 2018; (ii) the Stock Exchange of Thailand; and (iii) the Indonesia Stock Exchange. This definition matters because listing/quotation on a “specified exchange” is a condition for the exemption.
Section 2(2): When does an instrument confer/represent beneficial ownership? This is one of the most legally significant parts of the Regulations. The Regulations clarify that an instrument confers or represents beneficial ownership only if all of the following conditions are met:
- Fixed ratio: each instrument is issued in respect of a specified number of underlying securities.
- Underlying securities 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, or other distributions relating to the underlying securities, and other financial benefits, in 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 counsel, these requirements are effectively a “qualification checklist.” If any element is missing—particularly the exchange right, the economic pass-through, or the prohibition on encumbrance—the instrument may fail to qualify as a “depositary receipt” for exemption purposes, even if it is marketed as such.
Section 2: “rights issue depositary receipt”. The Regulations define a “rights issue depositary receipt” as a DR offered in connection with a rights issue undertaken by either (i) the issuer of underlying securities, or (ii) where the underlying securities are Thailand Non‑Voting Depository Receipts, the issuer of the shares to which those instruments relate. It must also be offered to any existing holder of a depositary receipt where the underlying securities were previously issued and are listed for quotation on a specified exchange. This definition is relevant because Section 3 treats rights issue DRs differently from other DRs in the exemption conditions.
Section 3: The exemption. The core operative provision 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 all of the following conditions are satisfied:
- Listing/quotation: the depositary receipts are or will be listed for quotation or quoted on an approved exchange.
- No specified agreement between DR issuer and underlying issuer: the depositary receipts are not 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, for Thailand Non‑Voting Depository Receipts, the issuer of the shares to which those instruments relate).
- Condition for non-rights issue DRs: for DRs that are not rights issue depositary receipts, all underlying securities of the DRs must have been previously issued and are listed for quotation on a specified exchange.
From a practitioner’s perspective, the exemption is best understood as a combination of (i) market listing requirements, (ii) structural independence from the underlying issuer (no qualifying agreement), and (iii) pre-existing underlying securities for non-rights issue DRs. These conditions aim to ensure that the DR offering is sufficiently “covered” by exchange listing and that the DR structure does not circumvent the SFA’s offer framework through tightly integrated arrangements.
It is also notable that the exemption does not disapply section 257. While the extract does not reproduce section 257’s content, the drafting indicates that Parliament/MA S intended to preserve at least some statutory safeguards even where the DR exemption applies.
How Is This Legislation Structured?
The Regulations are short and comprise:
- Section 1 (Citation and commencement): identifies the Regulations and the date they take effect.
- Section 2 (Definitions): defines “depositary receipt,” “rights issue depositary receipt,” “specified exchange,” and “underlying securities,” and sets out the detailed criteria for when an instrument qualifies as conferring/representing beneficial ownership.
- Section 3 (Exemption): provides the operative exemption from specified subdivisions of Division 1 of Part 13 of the SFA, subject to the listing, agreement, and underlying securities conditions.
There are no additional Parts or lengthy schedules in the extract, which suggests the Regulations are designed to be applied as a discrete “gatekeeping” instrument for DR offerings.
Who Does This Legislation Apply To?
The Regulations apply to offers of securities in Singapore that are offers of depositary receipts. In practice, this typically involves the DR issuer, the offering entity, and any parties arranging the offer and listing. The exemption is not framed as a licensing regime; rather, it is a statutory carve-out that affects whether certain SFA offer provisions apply.
Because the exemption depends on objective conditions—such as whether the DRs are listed on an approved exchange, whether the DRs are issued under (or not under) specified agreements, and whether underlying securities are previously issued and listed—its applicability is determined by the structure of the transaction and documentation (including the existence or absence of qualifying agreements between DR issuer and underlying issuer).
Why Is This Legislation Important?
Depositary receipts are widely used to provide investors with exposure to foreign or underlying securities while enabling trading on a local or alternative exchange. Without exemptions, DR offerings could trigger Singapore’s “offer of investments” compliance requirements even where the DRs are already subject to exchange listing rules and investor disclosure regimes. These Regulations reduce that duplication by disapplying certain SFA offer provisions where the DR offering meets defined safeguards.
For legal practitioners, the Regulations are important because they turn on precise structural features. The definition of “depositary receipt” is not merely descriptive; it is conditional. In particular, the requirement that the holder can exchange the DR for underlying securities, and that the holder receives substantially all distributions, are often points of negotiation in DR programmes. Similarly, the prohibition on pledging or creating liens/encumbrances over underlying securities held by the instrument issuer is a risk-control feature that must be reflected in custody and programme documentation.
From an enforcement and compliance standpoint, the exemption’s conditions—especially the “no agreement” requirement—are designed to prevent DR arrangements from being used as a regulatory workaround where the underlying issuer effectively controls the DR issuance through contractual arrangements. Practitioners should therefore conduct a document review to confirm whether any agreement exists between the DR issuer and the underlying issuer (or, for Thailand Non‑Voting Depository Receipts, between the DR issuer and the relevant share issuer). If such an agreement exists, the exemption may fail, and the offer could become subject to the relevant SFA provisions that the exemption would otherwise disapply.
Finally, the Regulations’ treatment of “rights issue depositary receipts” signals that rights offerings have distinct investor-protection considerations. Rights issues are typically time-bound and entitlement-based; the Regulations therefore define a special category and incorporate it into the exemption framework. Counsel should map the offering mechanics (rights entitlement, eligibility, and exchange listing) to the definition to determine whether the DR is a “rights issue depositary receipt” and how that affects compliance.
Related Legislation
- Securities and Futures Act 2001 (SFA): In particular, Division 1 of Part 13 and section 257 (as referenced in the exemption provision).
- Futures Act 2001: Listed in the metadata as related legislation (though the extract indicates the authorising Act is the SFA).
- Securities and Futures (Recognised Securities Exchange) Order 2018: Used to identify “recognised securities exchange” for the definition of “specified exchange”.
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.