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 (SFA 2001), section 337(1)
- Enacting Formula Date: Made on 2 January 2023
- Commencement: 9 January 2023
- Status / Version: Current version as at 27 Mar 2026
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Amendments Noted in Timeline: Amended by S 124/2025 with effect from 25/02/2025 (noted in the definition of “specified exchange”)
What Is This Legislation About?
The Securities and Futures (Offers of Investments) (Exemption for Depositary Receipts) Regulations 2023 (“DR Exemption Regulations”) are made under the Securities and Futures Act 2001 (“SFA”). In plain terms, they create a targeted regulatory exemption for certain offers of securities in the form of depositary receipts (“DRs”). The exemption is designed to prevent duplicative or unnecessary application of specific prospectus and offer-related requirements when DRs are traded on recognised/approved exchanges and represent beneficial interests in already-issued underlying securities.
The SFA contains a framework governing offers of investments and the circumstances in which exemptions apply. The DR Exemption Regulations focus on offers that are “offers of depositary receipts” and carve out those offers from particular subdivisions of Division 1 of Part 13 of the SFA (other than section 257). The practical effect is that, for qualifying DR offers, certain statutory requirements that would otherwise apply to offers of securities do not apply.
From a market perspective, depositary receipts are instruments that allow investors to hold an interest in underlying securities (such as shares or units) while trading the DRs on a different exchange. This is common where the underlying securities are listed on one market but DRs are listed on another. The Regulations therefore aim to facilitate cross-border and multi-exchange trading, while still maintaining investor protection through conditions such as exchange listing and the “beneficial ownership” characteristics of the DR.
What Are the Key Provisions?
Section 1: Citation and commencement provides the short title and the commencement date. The Regulations are cited as the “Securities and Futures (Offers of Investments) (Exemption for Depositary Receipts) Regulations 2023” and come into operation on 9 January 2023. For practitioners, this matters when assessing whether an offer was made before or after the exemption regime took effect.
Section 2: Definitions is the core interpretive section. It defines “depositary receipt”, “rights issue depositary receipt”, “specified exchange”, and “underlying securities”, and it also sets out a detailed test for when an instrument “confers or represents a beneficial ownership interest” in underlying securities.
“Depositary receipt” is defined as an instrument that confers or represents a beneficial ownership interest in underlying securities. This definition is broad in concept but is narrowed by the subsequent beneficial ownership test in section 2(2).
“Rights issue depositary receipt” captures a particular category of DR offered in connection with a rights issue. The definition is structured around two elements: (i) the rights issue undertaken by the issuer of the underlying securities (or, where the underlying securities are Thailand Non‑Voting Depository Receipts, the issuer of the shares to which those instruments relate); and (ii) the DR is offered to any existing holder of a depositary receipt where the underlying securities have been previously issued and are listed for quotation on a specified exchange. This is significant because the Regulations treat “rights issue depositary receipts” as a distinct concept, and the exemption conditions in section 3 are drafted with that distinction in mind.
“Specified exchange” is defined to include: (a) a corporation declared by the Authority to be a recognised securities exchange in the Securities and Futures (Recognised Securities Exchange) Order 2018; (b) the Stock Exchange of Thailand; and (c) the Indonesia Stock Exchange. The timeline indicates that the definition was amended by S 124/2025 with effect from 25/02/2025, which practitioners should verify against the current consolidated text when advising on qualifying exchanges.
“Underlying securities” includes: (a) shares; (b) units of a business trust; and (c) any instrument listed for quotation on the Stock Exchange of Thailand as a Non‑Voting Depository Receipt. This definition is important because it determines what can be “underlying” for DR purposes. It also signals that the Regulations anticipate DR structures involving Thailand-listed non-voting depository receipts.
Section 2(2): Beneficial ownership test is the most legally technical part of the Regulations. It states 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.
- Custody/holding 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).
- Exchangeability: the holder has the right to exchange the instrument for the underlying securities on the terms and conditions governing the instrument.
- 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, whether in cash or otherwise.
- No encumbrance: the issuer undertakes not to pledge or create any lien or encumbrance over the underlying securities it holds, even if the holder does not control voting rights attached to the underlying securities.
For legal advisers, this test is crucial because it determines whether the instrument is truly a “beneficial ownership” DR rather than a different kind of derivative, note, or contractual exposure. If any element fails—particularly the exchange right, economic entitlement, or the prohibition on encumbrance—then the exemption may not be available.
Section 3: The exemption is the operative provision. It provides 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 met:
- Listing/quotation requirement: the depositary receipts are or will be listed for quotation or quoted on an approved exchange.
- No DR issuance agreement with underlying issuer (with a specific exception): the depositary receipts are not issued or proposed to be issued pursuant to any agreement between the issuer of the depositary receipts and (i) the issuer of the underlying securities; or (ii) where the underlying securities are Thailand Non‑Voting Depository Receipts, the issuer of the shares to which those instruments relate.
- Underlying securities already issued and listed (non-rights issue DRs): for DRs that are not rights issue depositary receipts, all underlying securities of the depositary receipts have been previously issued and are listed for quotation on a specified exchange.
In practice, section 3 is a carefully calibrated exemption. It is not a blanket exemption for all DR offers; it is conditional on exchange listing, the absence of certain issuance agreements with the underlying issuer (or related issuer in the Thailand structure), and—where the DR is not connected to a rights issue—confirmation that the underlying securities already exist and are listed.
The “approved exchange” concept is not defined in the excerpt provided, but it typically refers to exchanges approved under the SFA framework. Practitioners should confirm the relevant approval status of the exchange on which the DRs are listed.
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions and, importantly, the detailed criteria for when an instrument qualifies as representing beneficial ownership of underlying securities.
- Section 3 contains the exemption from specified provisions of the SFA for qualifying offers of depositary receipts.
Although the Regulations refer to “Division 1 of Part 13” and “Subdivisions (2) and (3)”, the Regulations themselves do not reproduce those SFA provisions. Instead, they operate by excluding the application of those SFA subdivisions to qualifying DR offers.
Who Does This Legislation Apply To?
The exemption applies to offers of securities that are offers of depositary receipts meeting the conditions in section 3. This will typically concern:
- issuers or depositary institutions arranging DR programmes;
- offerors distributing DRs to investors in Singapore or in connection with Singapore-regulated offer processes; and
- legal teams advising on whether DR offers trigger prospectus/offer requirements under the SFA.
It is not limited to a particular investor type (retail vs institutional) in the text provided; rather, it is structured around the characteristics of the instrument (section 2) and the conditions of the offer (section 3). Therefore, the key question for applicability is whether the DR programme and the specific offer satisfy each statutory condition.
Why Is This Legislation Important?
The DR Exemption Regulations matter because they provide a practical compliance pathway for cross-border DR offerings. Without an exemption, offers of securities may be subject to additional statutory requirements under the SFA’s Part 13 framework. By carving out qualifying DR offers, the Regulations reduce regulatory friction where the DR structure already provides investor-relevant protections—such as exchange listing, economic pass-through, and exchangeability for underlying securities.
For practitioners, the most significant legal work is typically in structuring and documentation. Section 2(2) imposes a stringent beneficial ownership test. Counsel must ensure that the DR terms (including custody arrangements, exchange rights, dividend/distribution mechanics, and restrictions on encumbrances) align with the statutory criteria. Similarly, section 3 requires careful assessment of the relationship between the DR issuer and the underlying issuer, including whether the DR is issued pursuant to an agreement with the underlying issuer (or, in the Thailand Non‑Voting Depository Receipt context, the issuer of the shares to which those instruments relate).
Finally, the exemption’s conditional nature—especially the distinction between rights issue depositary receipts and other DRs—means that transaction timing and underlying security status (previously issued and listed) can be decisive. In advising on a DR programme, lawyers should build a compliance checklist that maps each transaction feature to the statutory conditions in sections 2 and 3, and confirm the relevant exchange approvals and “specified exchange” status at the time of the offer.
Related Legislation
- Securities and Futures Act 2001 (especially Part 13, Division 1, and section 337(1) as the enabling provision)
- Futures Act 2001 (listed in the provided metadata; relevance should be confirmed in the full legislative context)
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.