Proposed Singapore Rules Aim for More Transparent M&A Disclosures and Fairer Takeover Deals

The Securities Industry Council (SIC) has recently put forth a consultation paper with proposed amendments to the Singapore Code on Take-overs and Mergers, a set of rules last revised in 2019. These suggested changes are designed to align with current market trends, global standards, and to enhance oversight of take-over and merger activities.

Crafted after in-depth discussions with industry specialists, the proposed revisions focus on maintaining competitive dynamics, expediting transactions, and ensuring that shareholders are provided with transparent disclosures throughout the entire process.

One significant alteration aims at deal protection mechanisms such as break fees that may deter potential competing bids. Under the proposed changes, these measures would typically not be allowed, except in specific circumstances like formal sale processes or securing a white knight, with break fees capped at 1% of the offer’s value.

To enhance certainty in take-overs conducted through schemes of arrangement, the SIC suggests that scheme meetings should occur within six months of the announcement. Once shareholders approve the deal, offerors must promptly proceed with the scheme’s implementation.

Additionally, certain proposals seek to decrease market speculation. Any offeror who makes statements like “no increase” or “no extension” would be legally bound by these statements and would be subject to a six-month cooling-off period before making any revised offer. Moreover, potential offerors who issue holding announcements must declare their intentions within 28 calendar days. If an indicative offer price is publicized beforehand, any official offer must either match or exceed that amount unless the SIC grants permission for a lower offer under exceptional circumstances.

These suggested changes in the Singapore Code on Take-overs and Mergers come as a response to evolving market needs and are intended to promote fairness, transparency, and efficiency in the takeover and merger processes. By incorporating feedback and insights from industry stakeholders, the Securities Industry Council aims to ensure that Singapore’s regulatory framework remains robust, balanced, and aligned with international best practices.