The Monetary Authority of Singapore (MAS), on the advice of the Securities Industry Council (SIC or the Council), issued a revised Code on Take-overs and Mergers on June 16.
To reduce the anti-competitive effects of deal protection measures commonly used in Singapore, these enhancements include capping the total break fees payable by an offeree company to be no more than 1% of its value; requiring the offeree board and its financial adviser to explain in submission to the Council why the break fee is in the best interests of shareholders; and providing guidance on when exclusivity given by the offeree board to an offeror may be anti-competitive.
For schemes of arrangement (SOA), the enhancements are: i) the meeting to approve the scheme of arrangement must be held within six months of its announcement; and ii) both the offeror and offeree company must take all necessary steps for the scheme to be effective without delay once shareholders have approved it.
An offeror who has issued a no increase or no extension statement may not make a subsequent offer that would effectively increase or extend the offer, until the later of: three months after the close or lapse of the original offer; or the end of the offer period of a competing offer.
Where an indicative offer price has been disclosed before the firm offer announcement, the announced offer price must be no less than the indicated price. Where a potential offeror has not clarified its intentions to make an offer for the company for a prolonged period, the Council may, after consulting the parties, impose a 28-day deadline for the offeror to either announce a firm offer or confirm that it would not proceed.
To enhance and inform shareholder decision-making, an offeree company seeking shareholder approval on a proposed frustrating action must obtain and disclose independent advice on the proposed frustrating action.
See also: Allianz said to lead bidding for HSBC Life Singapore
Where an asset sale competes with an offer for shares, the offeree company must disclose the quantified expected cash proceeds to be returned to shareholders from the asset sales.
