Singapore Securities Industry Council Issues Consultation Paper to Amend Singapore Code on Take-overs & Mergers, 1) Deal Protection Measures Including Break Fees Break Fees to be Prohibited to Deter Higher Competing Offers Except in Limited Circumstances, 2) Take-overs or Merger Process to be Effective Without Delay Once Shareholders Approved & Meeting to be Held Within 6 Months from Announcement of Take-overs or Merger, 3) Offeror Who Declared No Increase or Extension of Offer Not Allowed to Make Subsequent Offer Increase or Extension Within Window, 4) Potential Offer Must be Clarified Within 28 Days, 5) Company to State Cash Sum Paid to Shareholders in Competing Asset Offer to Allow Shareholders to Compare Asset Offer vs Take-over Offer
6th May 2025 | Hong Kong
The Singapore Securities Industry Council (SIC) has issued a Consultation Paper to amend Singapore Code on Take-overs & Mergers, 1) Deal protection measures including break fees break fees to be prohibited to deter higher competing offers except in limited circumstances, 2) Take-overs or merger process to be effective without delay once shareholders approved & meeting to be held within 6 months from announcement of take-overs or merger, 3) Offeror who declared no increase or extension of offer not allowed to make subsequent offer increase or extension within window, 4) Potential offer must be clarified within 28 days, 5) Company to state cash sum paid to shareholders in competing asset offer to allow shareholders to compare asset offer vs take-over offer. SIC (5/5/25): “The Securities Industry Council (the Council) today issued a consultation paper on proposed amendments to the Singapore Code on Take-overs and Mergers (the Code). The proposed amendments seek to enhance the regulation of take-overs and mergers in Singapore by protecting the competitive process of take-over and merger transactions, improving certainty and timeliness of schemes of arrangement, and enhancing disclosures to investors and shareholders. They take into account market developments and evolving international practices since the Code was last revised in 2019, and discussions with practitioners active in the field of mergers and acquisitions.” See below for more details:
“ Singapore Securities Industry Council Issues Consultation Paper to Amend Singapore Code on Take-overs & Mergers, 1) Deal Protection Measures Including Break Fees Break Fees to be Prohibited to Deter Higher Competing Offers Except in Limited Circumstances, 2) Take-overs or Merger Process to be Effective Without Delay Once Shareholders Approved & Meeting to be Held Within 6 Months from Announcement of Take-overs or Merger, 3) Offeror Who Declared No Increase or Extension of Offer Not Allowed to Make Subsequent Offer Increase or Extension Within Window, 4) Potential Offer Must be Clarified Within 28 Days, 5) Company to State Cash Sum Paid to Shareholders in Competing Asset Offer to Allow Shareholders to Compare Asset Offer vs Take-over Offer “
Key proposals in the paper include:
(a) Protecting the competitive process for potential offerors by regulating deal protection measures.
Deal protection measures could deter higher offers from competing offerors. For instance, break fees that an offeree agrees to pay an initial offeror if this offeror’s offer does not succeed would count as a loss of value to any subsequent offeror, should the subsequent offeror succeed. Therefore, deal protection measures would be prohibited except in limited circumstances.
(b) Improving certainty and timeliness in take-overs via schemes.
It is proposed that rules be included to make clear that for schemes of arrangement:
- (i) an offeror should take the procedural steps necessary for the scheme to become effective without delay, once shareholders have approved the scheme.
- (ii) that the meeting to approve the scheme of arrangement to effect a take-over or merger should be held within 6 months of the announcement of the scheme.
(c) Preventing a false market by holding an offeror to its earlier statement, or requiring clarity on earlier statements.
- (i) Shareholders and investors would have relied on an offeror’s no increase or no extension statement to make their investment decision. Therefore, an offeror who has issued such statements would not be permitted to make a subsequent offer – which could in effect increase or extend the original offer – within a certain window.
- (ii) Where a potential offeror has made a holding announcement about a possible offer and has not clarified its intentions for a prolonged period, it would be given a 28-day deadline to clarify its intentions by announcing a firm offer or stating that it would not be making an offer. If an indicative offer price is disclosed prior to a firm offer, the firm offer must be at no less than such indicative price.
(d) Enhancing information provided to shareholders to enable their decision-making on frustrating actions.
A frustrating action is an action taken by an offeree board which could result in shareholders being denied an opportunity to consider an offer. An example would be a competing asset offer for all or materially all the assets of the offeree company. It is proposed that:
- (i) Where there is a competing asset offer, the offeree company would be required to issue a statement quantifying the cash sum expected to be paid to shareholders from the asset offer. This would allow shareholders to compare the economic outcomes of the two transactions (i.e. asset offer versus take-over offer).
- (ii) Where shareholders’ approval is sought for a proposed frustrating action, the Code would require independent advice to be obtained.
Interested parties can submit written comments to the Council via email to [email protected] by Thursday, 5 June 2025. The consultation paper can be accessed via the following links, and is also available on the Council’s website. Consultation Paper on Revision of the Singapore Code on Take-overs and Mergers [Link (469.8 KB)] | Annex [Link (996.6 KB)]
Singapore Securities Industry Council Issues Consultation Paper to Amend Singapore Code on Take-overs & Mergers, 1) Deal Protection Measures Including Break Fees Break Fees to be Prohibited to Deter Higher Competing Offers Except in Limited Circumstances, 2) Take-overs or Merger Process to be Effective Without Delay Once Shareholders Approved & Meeting to be Held Within 6 Months from Announcement of Take-overs or Merger, 3) Offeror Who Declared No Increase or Extension of Offer Not Allowed to Make Subsequent Offer Increase or Extension Within Window, 4) Potential Offer Must be Clarified Within 28 Days, 5) Company to State Cash Sum Paid to Shareholders in Competing Asset Offer to Allow Shareholders to Compare Asset Offer vs Take-over Offer
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