The Monetary Authority of Singapore, on the advice of the Securities
Industry Council (SIC), has revised the Code on Takeovers and Mergers
which came into force on April 9 2012.
The fundamental purpose of the Code is to ensure fair and unbiased
treatment to all shareholders in any takeover or merger transaction. One
of the primary requirements is that the shareholders must be provided
with adequate information, advice and time to contemplate and decide on
the offer in any takeover or merger transaction.
There are a number of key changes which amount to codification of
existing practices. For example, in extreme cases, further actions may
be taken by the SIC against an offender of the Code in addition to
depriving him from the use of the facilities of the securities market.
Professional advisers who breach the Code may be ordered by the SIC to
abstain from Code-related work for a stipulated time period.
A list of rules, which if breached may result in the SIC to make an
order for monetary compensation, is set out in the Code. Finally, a list
of factors, which the SIC will consider in determining whether to
permit an offeree company shareholder (not being part of management) to
invest in the bid company to the exclusion of all other offeree company
shareholders, is also set out in the Code.
In order to keep pace with product innovation and market
developments, the application of the Code has been extended to real
estate investment trusts and business trusts. Also, all acquisitions of
long options or derivatives will be subject to the mandatory offer
requirements under Rule 14 and any person who would breach the mandatory
offer threshold is required to consult the SIC in advance.
- To enhance disclosure, any person who holds 5% or more in the
offeree company shares is required to disclose any dealing in long
option and derivative during the offer period. An offeror is required to
disclose the quantity and percentage of his shareholdings in the
offeree company which have been charged as security, borrowed or lent.
Also, the shareholding threshold for a person to be deemed an
"associate" of a party to a take-over offer has been reduced from 10% to
In order to provide greater flexibility, a class of shareholders of a
company is exempted from the requirement to make a mandatory offer in a
share buy-back exercise.
- Other changes to the Code include that, under certain circumstances,
the shareholders voting together on a board control-seeking resolution
will be considered as parties acting in concert and may trigger the
general offer obligation. Finally, a list of factors, which the SIC will
consider in determining whether a proposal is board control-seeking, is
set out in the Code.
Those who are interested to know more about this topic may wish to access the relevant website at http://www.mas.gov.sg/sic/press_release/SIC_Press_Statement_23_March_2012.html
Serene Sia and Chen Shu