4 Services that a Top Share Registrar Provides

4 Services that a Top Share Registrar Providers

4 Services that a Top Share Registrar Provides

4 Services that a Top Share Registrar Provides

Unless you are experienced in working with the capital markets, most would be unfamiliar with the differences between the type of services provided by different Share Registry Services providers. Some basic roles of a Share Registrar that most are aware of would be maintaining the register of shareholders for their listed and unlisted clients and ensuring that all Corporate Actions are processed according to the regulations listed by the Singapore Exchange (“SGX”). However, a top share registrar should go beyond these basic services and add value to their clients by providing a one-stop-shop approach to their service offering. In this article, we’ll discuss the 4 important services a top share registrar should provide.

01 Provides Secure Processes to Protect Clients’ Personal Data

An excellent share registrar takes on the task of liaising with regulatory parties such as SGX to ensure important information like the shareholder registers and lists of active shareholders are actively maintained. This is a standard service offering for a share registry provider, however, what differs between service providers are their policies and procedures around Personal Data Protection.

The information housed in the share register contains highly sensitive personal data like residential addresses and identity numbers, which are considered personal data and in Singapore, personal data is protected by law under the Personal Data Protection Act (“PDPA”). A professional Share Registrar will not only have strict policies and procedures in place to demonstrate compliance to the PDPA, but will also go one step further and showcase Accountability through the appointment of; and regular training of their Data Protection Officer (“DPO”). To learn more about why Accountability in Personal Data Protection is important, take a look at our joint article with the leader in Personal Data Protection governance, Straits Interactive.

02 Meeting Services: AGMs/EGMs/SGMs

Under the Accounting and Corporate Regulatory Authority (“ACRA”) all companies are required to hold Annual General Meetings (“AGM”) within four months after their financial year end (“FYE”). An exceptional share registry provider will offer meeting services to ease the stress of arranging for such meetings.

Other significant shareholder meeting services that a share registrar will provide are Extraordinary General Meetings (“EGMs”) or Special General Meetings (“SGMs”). These meetings are typically irregular and usually called for issues that require immediate resolution such as legal matters. As AGMs and EGMs are often a good gauge for shareholders to judge the company’s status, a successful shareholders’ meeting is crucial to boost stakeholders’ confidence in the company.

Given AGMs & EGMs involve important stakeholder voting on the passing of resolutions, a holistic package of meeting services should be offered to meet the needs of clients. AGMs and EGMs include several key stages: pre-meeting, during the meeting, and post-meeting, each with its own unique set of needs. We have listed the services an experienced Share Registrar would provide at each stage below.

Pre-meeting

  • Advise on event planning including the recommendation of vendors for catering, venues and expected timelines
  • Prepare and coordinate the printing and sending of Companies’ Annual Reports to shareholders
  • Process proxy forms and generate reports for clients to get an idea of the general sentiment regarding certain resolutions before the meeting
  • Sourcing of scrutineers if the Share Registrar is the registered Polling Agent
  • Prepare proxy summary listing based on the valid proxy forms received
  • Arrange for site survey and dry-run at meeting venue prior to the meeting (if necessary)

During the Meeting

  • Managing the attendees through attendance taking and ushering of shareholders
  • Verifying the attendee’s particulars to ascertain their identity as a valid shareholder before admission
  • Providing up to date attendance registration status
  • Run the polling, with support of relevant IT personnel
  • Provide Scrutineering services, provided the Share Registrar is not the registered Polling Agent. If they are, they are unable to provide this service
  • Computation of polling results

Post-meeting

  • Generation of an official certificate with the resolutions and polling results for the perusal of the Board of Directors and Chairman
  • Generate reports including information on shareholder attendees, audit trails on voting instructions by shareholders, to name just a few

Outside of this, an experienced share registrar should be pre-emptive and adapt quickly to changes. A good example would be during the COVID-19 pandemic which disrupted the traditional methods of holding AGMs. Social distancing measures made it almost impossible to hold physical meetings, resulting in a need for alternative solutions. Any exemplary service provider should enhance their voting/polling solutions to swiftly cater for Hybrid or Virtual AGMs.

03 Offers a Variety of Polling Solutions

There is no “one size fits all” polling service. Share registrars should anticipate the various needs of clients and advise companies on which polling solution is most suitable for them based on factors such as the number of shareholders or the company’s budget.

Detailed below are the common types of polling services in Singapore today:

  • Manual Polling/Voting – Executed through paper and pen with the share registrar manually counting the votes during a meeting. It can also be a semi-automated process where details and votes are captured electronically on a polling/voting solution. Typically used by companies with a small to medium shareholder base as the time taken can be longer due to the manual work needed as headcount increases
  • Electronic-polling/Voting – Administrated via handsets and smart cards provided to shareholders, a card reader is used to capture information which collates and display results instantly. This is usually engaged by companies with a sizeable shareholder base where speed and real-time polling data is an important factor.

04 Provides Support for IPO Listing

Whilst a lot of the services discussed above are post Initial Public Offering (“IPO”), an important role of a Share Registrar should be to support clients through their IPO listing. A professional share registry service provider offers support through advising on the SGX requirements for a successful listing in Singapore. There are many unknowns on an IPO journey, a capable share registrar will have experience across a variety of situations to ensure they can advise the necessary actions for a seamless experience founded on compliance and best practice governance. Some common areas an experienced share registrar can support with are:

  • Backend processes such as IPO application, IPO subscriptions and IPO administration
  • Both local and inbound overseas companies have specific requirements for IPOs, a Share Registrar experienced in regional dealings will be able to safeguard businesses from compliance risks

Conclusion

An exemplary Share Registrar should offer an astute suite of services that cater to clients’ needs. They should be proactive in all their dealings and prioritise delivering a service that alleviates administrative burden. A good share registrar can be the make or break for maintaining valuable shareholder relations and ensuring compliance with all local regulations to avoid any potential loss in reputation or monetary fines.

BoardRoom – Share Registry Services in Singapore

As one of the leaders and pioneers in the share registry industry, BoardRoom has over 50 years of experience guiding many listed corporations in Singapore, Malaysia, Hong Kong and Australia. Contact our Share Registry Services experts for your personalised consultation and see how we can add value to your business today.

Wondering what insights and experience a seasoned share registrar can bring to the table? Explore our full report on Singapore 2019 AGM Landscape Trends that we observed from our vast experience in handling a wide range of clients in the 2019 AGM season.

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The Ultimate Guide to an Employee Stock Option Plan (ESOP)

The Ultimate Guide to an Employee Stock Option Plan (ESOP)

The Ultimate Guide to an Employee Stock Option Plan (ESOP)

Introduction to Employee Stock Option Plan (ESOP)

We have all heard of an employee stock option plan / employee stock ownership plan or ESOP in abbreviation, but how does an ESOP scheme work in practice, and how do you determine if it’s suitable for your company? In this article, we will provide the basic guidelines of an ESOP plan and how it works so you can see if it might be a viable solution for your business.

What is an Employee Stock Option Plan (ESOP)?

An employee stock option plan or ESOP for short, is one form of remuneration given to employees, by means of retaining them or to reward them based on their performance. They are usually offered in the form of company shares which gives the employee ownership rights as a shareholder of the company. As part of an ESOP scheme the employee is able to acquire the shares at a predetermines price, or what we call an exercise price.

The Lifecycle of an ESOP scheme

The lifecycle on an ESOP scheme can be broken down into a few events; Offer, Vesting, Exercise, Leaver and Lapse. An employee will firstly accept an ESOP option offering, whereby a fixed number of options will be allotted to them. After a certain timeframe, a proportion of the allotted options will vest, which means that these options can now be exercised.

To exercise these vested options, the employee will pay the total exercise cost (number of options x exercise price) and receive actual shares of the company thereafter. If they don’t exercise these vested options after the expiry date, these vested options will lapse or expire, meaning the participant can no longer exercise these options moving forward. If the employee leaves the company halfway through the ESOP’s lifecycle, in some cases, all their vested and unvested options will lapse completely. This will depend on the particular company’s employee stock option plan rules.

Why would companies adopt an Employee Stock Option Plan (ESOP)?

Companies who want to grow their business whilst mitigating costs will usually adopt an ESOP plan. The this is driven by two primary reasons:

  • Employee performance is directly linked to company performance and thus employee remuneration. Employees can only benefit from their ESOP when the market price of the company is above the exercise price which means that a company needs to grow in order to spur the market price of the share.
  • There is no heavy upfront cost to the company. Cost to the company in this case is only incurred during the exercise of option. Furthermore, the exercise cost will be covered by the employee so it’s a win win for companies looking to grow whilst mitigating costs.

How do employees benefit from an ESOP?

When employees are rewarded with shares of the company, they essentially become part owners in the company. This in turn has a direct correlation with employee performance and investment in business performance. The employee’s actions, decisions and work output are all focussed on the greater good of the firm as this is mutually aligned with their own rewards.

Employee Stock Option Plan (ESOP) Illustration

To provide an illustration, say on 1st Sept 2019, Mei San has accepted her company’s ESOP 2019 Offer for 900 options with an exercise price of S$ 1 per share. These options will vest annually across 3 years in equal proportions. The expiry date of the options will be 10 years from the offer date, which will be 1st Sept 2029.

ESOP 2019 OfferVesting DatesOptions to be vestedUnvested OptionsVested Options
Allotment Day1st Sept 201909000
Vesting 11st Sept 2020300600300
Vesting 21st Sept 2021300300600
Vesting 31st Sept 20223000900

A few points to take note of in the table above:

  • On 1st Sept 2019, 900 options are allotted but remain unvested, which means Mei San cannot exercise these options
  • On 1st Sept 2020, 300 have vested meaning Mei San can exercise them by paying the exercise cost of S$ 300 (300 Options x S$ 1) to acquire 300 shares of the company
  • After 1st Sept 2029, all vested options will lapse, if Mei San has not exercised them prior to this date she will not be able to do so, they have effectively expired
  • If Mei San leaves the company to join another firm halfway through, all vested and unvested options shall expire upon notice of resignation

Other variables to consider:

The illustration above is only one of many examples. Common variables that change include:

  • Inclusion of a performance matrix, where the number of options to be vested will depend on the employee’s work performance
  • More frequent vesting (e.g. Bi-annual), to entice employees with “more” reward
  • Broad-based share option plan where all employees are offered the options plan to encourage ownership thinking across the company
  • Some companies may allow retirees to continue to hold on to their vested options until the expiry date

Depending on your company’s requirements, you will need to understand the implications of these variables, and whether they can help achieve your ultimate objective of your employee stock option plan (ESOP).

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