Investigators have launched a probe into No Signboard Holdings' recent share buyback.
The stock fell by 8.33 per cent to 7.7 cents after the probe announcement was released before markets opened.
No Signboard said the Commercial Affairs Department (CAD) asked it last Wednesday about a purchase by the company of its own shares on Jan 31.
The stock was bought at a price above the regulatory limit set for buybacks and was carried out during a blackout period.
No Signboard said it has provided the CAD with copies of documents in connection with the buyback.
Chief executive Sam Lim Yong Sim and chief financial officer Voon Sze Yin have given statements. Mr Lim's passport has also been retained by the CAD, which the company described as a requirement during investigations.
No one in the company has been arrested or charged, and operations "have not been affected and will continue as usual", it added.
Earlier announcements by No Signboard disclosed that Mr Lim instructed the company's broker, UOB Kay Hian, to submit bids on Jan 31 to buy the company's own stock at up to 14 cents each under a newly obtained share buyback mandate.
The bid price was more than 5 per cent above the five-day average closing price so it exceeded the regulatory limit on share buyback prices.
UOB Kay Hian bought the shares at the higher-than-allowed prices and No Signboard's stock surged by almost 24 per cent to 15 cents on Jan 31, prompting a query from the Singapore Exchange and a trading halt from the company. The halt was lifted on Feb 3.
The share buyback also breached a blackout period because the company's audit committee and board had yet to approve its first-quarter results for the three months to Dec 31, 2018.
The company has described Mr Lim's instructions to the broker as an "honest mistake".
About a week after the buyback trades, No Signboard also disclosed that the board had not sanctioned these transactions.
That prompted UOB Kay Hian and the company to "mitigate" the error by taking the position into the broker's error-in-trade account, while any costs related to the purchased shares will not be borne by the company.