Guide to

Takeovers and
Mergers
in Singapore

Colin Ng & Partners LLP (UEN T08LL0403K) is registered with limited liability.
© 2017 Colin Ng & Partners LLP; images (or clipart) © Microsoft Corporation
 CONTENT

Introduction 3
What governs and regulates a take-over and merger in Singapore 4
Main liabilities in a take-over and merger 7
Modes of acquisition 7
Consideration 15
Specimen timetable for a take-over offer 21
Specimen timetable for a take-over offer in competitive situations 22
Case study: F&N Take-over 2013 23
Contact details 25
INTRODUCTION

This guide discusses some of the regulatory requirements

to be complied with by parties involved in a take-over in
Singapore, following the revision to The Singapore Code
on Take-overs and Mergers ("Code") effective on 25
March 2016 ("2016 amendments").

There were amendments to the Companies Act, govern-

ing the compulsory acquisition mechanism that came
into effect on 3 January 2016 (“Companies Act Amend-
ments”).

This memorandum states the position under the laws,

PAGE 3
regulations and rules as on July 2016.

Readers should note that this guide seeks only to be an

introduction to some of the compliance obligations
involved in a take-over in Singapore and should not be
treated as comprehensive. This guide should not be
relied on as legal advice.
 WHAT GOVERNS AND REGULATES A TAKE -OVER AND
MERGER IN SINGAPORE
In Singapore, the take-over of a public company (“company”) is principally regulated by the
following regulations and statutes.

The Singapore Code on Take-overs and f. General Principle 11: all documents to
Mergers shareholders must be prepared to the high-
est standards of care and accuracy, to en-
sure that they are not misleading. Special
While the Code is non-statutory in nature, it is care is required in respect of profit fore-
issued by the Monetary Authority of Singapore casts.
("MAS") pursuant to the power conferred upon it
Application
by Sections 139(2) and 321 of the SFA.
The Code applies to take-over offers of shares
or units of:
The body which administers and enforces the
provisions of the Code is the Securities Industry  Corporations (whether or not incorporated
Council (“Council”). in Singapore) with a primary listing of their
shares in Singapore
Basically, the Code states its rules on the Ap-
proach, the Conduct, the Timing, the Docu-  Business trusts with a primary listing of their
mentation and the various types of offers and units in Singapore
their terms in a Take-over.
 Real Estate Investment Trusts (“REITs”) under
General principles the Securities and Futures Act (SFA)

a. General Principle 6: the offer should only be

announced after careful consideration and  Unlisted Singapore incorporated public
when the offeror has every reason to be- companies with more than 50 shareholders
PAGE 4

lieve that it can and will continue to be and net tangible assets of $5 million or
able to implement the offer in full; more

b. General Principle 2: there are limits on the

 Unlisted registered business trusts with more
freedom of action which directors would
than 50 unitholders and net tangible assets
normally have, outside the context of a
of $5 million or more
take-over, to act in what they consider to
be in the best interests of the company and
The terms “business trust” and “registered busi-
its shareholders. They must therefore accept
ness trust” have the same meanings attributed
that there are limitations on the manner in
to such terms by Section 2 of the Business Trust
which those interests can be pursued in a
Act (Cap. 31A). Presently, the Code also has a
take-over situation;
table of prescribed lodgement fees for various
c. General Principle 3: an offeror must treat all thresholds of takeovers.
shareholders of the same class in a target
company equally. This applies not only to Although the Code is not law, a breach of the
the terms of the offer but also to the nature, Code may prompt the Council to issue a pri-
quality and timing of information made vate reprimand or public censure or further
available to them; action as the Council thinks fit, including one
designed to deprive an offender of the benefits
d. General Principle 10: shareholders of the of the capital markets. In the case of advisers,
target company must be given sufficient the Council may also require such advisers to
information, advice and time to make an abstain from taking on Code-related work for a
adequate assessment and an informed stated period. If the Council finds evidence to
decision on the offer. No relevant informa- show that a criminal offence has taken place
tion must be withheld from them; whether under the Companies Act, the SFA or
under the criminal law, it will refer the matter to
e. General Principle 12: all parties to a take-
the appropriate authority.
over must make full and prompt disclosure
of all relevant information and use every
The Council may also require an offender to
endeavour to prevent the creation of a
pay to the holders of securities of the offeree
false market in the shares of the offeror or
company a just and reasonable amount to
the target company; and
ensure the holders receive what they would
have been entitled to if a relevant Rule had
been complied with. In addition, the Council should be calculated in the new Note 1 on
may also make a ruling requiring simple or Rule 18 of the Code.
compound interest to be paid at a rate and for
a period determined by the Council until full
Securities and Futures Act (Cap. 289) (the
payment is made.
“SFA”)
The 2016 Amendments

The 2016 amendments to the Code came into Part VIII of the SFA (Securities Industry
effect on 25 March 2016. Council and Take-over Offers) contains
legal provisions pertaining to take-overs.
In summary, the key amendments in the 2016
amendments are as follows: Offences

1. clarifying that the offer timetables will be

aligned to that of the latest offer, where The SFA lists offences relating to take-overs.
there are competing offers in the new Note For instance, pursuant to Section 140, it is
on Rule 22.9; an offence for anyone to make a take-over
offer if he has no grounds to believe that
2. prescribing a default auction procedure, if he will be able to fulfil the relevant terms
neither offeror has declared its final offer and conditions once the take-over offer is
price in the later stages of the offer period being accepted.
in the new Rule 20.5;
Application
3. extending the deadline for a potential
competing offeror to announce the mak-
Section 139 of the SFA (Take-over Code)
ing of a competing offer in the new Note 6
effectively states that the Code shall
on Rules 3.1, 3.2 and 3.3;
“apply to and in relation to all natural per-
4. clarifying that soliciting a competing offer sons, whether resident in Singapore or not
or running a sale process does not amount and whether citizens of Singapore or not,
to frustration of the existing offer and that and to all corporations or bodies unincor-
porated, whether incorporated or carrying

PAGE 5
SIC should be consulted in cases of doubt
in the new Note 8 on Rule 5; on business in Singapore or not, and shall
extend to acts done outside Singapore.”
5. clarifying that an offeree board can con-
sider sharing available management pro- Part VIII of the SFA (Securities Industry
jections and forecasts with the independ- Council and Take-over Offers) applies to all
ent financial adviser in the new Note 5 on offerors regardless whether they are incor-
Rule 7.1; porated or carrying on businesses in Singa-
pore or are foreigners or Singapore citizens.
6. requiring earlier disclosure of any material
change to information previously published
in an offer in order to ensure that share- The SFA governs the disclosure require-
holders and investors are apprised of mate- ments on the part of substantial sharehold-
rial information on a timely basis in Note 1 ers of listed companies on the Singapore
on Rule 8.1; Exchange Securities Trading Limited ("SGX-
ST").
7. adopting a 7 business day settlement pe-
riod instead of the previous 10 calendar Section 135 SFA (Duty of substantial share-
day settlement period as reflected from holder to notify the incorporation of his in-
the amended Rules 16.6 and 30; terests)

8. codifying and streamlining the standards

Anyone (i.e. including a body corporate)
required of pre-conditions in a pre-
who acquires an interest or interests in one
conditional voluntary offer in the new Note
or more voting shares (excluding treasury
5 on Rule 15.1;
shares) in a Singapore company whose
shares are listed on the SGX-ST or a foreign
9. permitting the offeree company to post
company whose shares have a primary list-
the offer document at an earlier date in a
ing on the SGX-ST and where the total
pre-conditional offer in the new Note on
votes attached to that shares or shares is
Rule 22.1 of the Code; and
not less than 5% of the total votes attached
10. clarifying how the offer value for a different to all voting shares (excluding treasury
class of shares (e.g. preference shares) shares), must notify such company of his
 interest within 2 business days after becom- Listing Manual
ing aware that he is a substantial share-
holder. Where the company has different
The Listing Manual applies where the ac-
classes of shares, a person is a substantial
quiring company or the target company is
shareholder if he has an interest of 5% or
listed on the SGX-ST.
more of the voting shares of that class.

Chapter 9 (Interested Person Transactions)

Section 136 SFA (Duty of substantial share-
states requirements to be met in relation to
holder to notify corporation of change in
interested person transactions (“IPTs”).
interests)

Chapter 10 (Acquisitions and Realisations)

The SFA also imposes a continuing obliga-
primarily lists varying levels of obligations
tion on a substantial shareholder to give
needed to be complied with by a com-
written notification to the company of sub-
pany listed on the SGX-ST, depending on
sequent changes (subject to the percent-
which materiality thresholds set out within
age threshold set out in Section 136 of the
are crossed by the transaction proposed to
SFA) to the interest or interests of a substan-
be undertaken by the company (e.g. dis-
tial shareholder. The notice must be given
closeable transactions, major transactions,
within 2 business days after the substantial
very substantial acquisitions and reverse
shareholder becomes aware of such a
takeovers).
change.

Chapter 11 (Takeovers) pertains to take-

However, exemption regulations promul-
overs and complements the regulations in
gated under the SFA exempt certain per-
the Code.
sons from the entire Part VII of the SFA
(which governs disclosure and notification
obligations, and which contains Sections For acquisitions and realisations, the Listing
135 and 136 SFA referred to above). Manual imposes disclosure obligations as
follows:
Such exemption applies to any offeror (as  Acquisitions and realisations in Rule 704
well as to any person deemed to have an (Announcement of Specific Informa-
PAGE 6

interest in the shares held by the offeror) tion).

who has announced an offer (which is gov-
erned by the Code) for a listed company in  IPTs in Rules 905 and 906 (General Re-
respect of any change in the offeror’s inter- quirements).
est after the offer announcement and be-
fore the offer lapses, closes or is withdrawn  Discloseable transactions, major trans-
provided such change results from accep- actions or very substantial acquisitions
tances received pursuant to the offer that or reverse take-overs in Chapter 10
comply with the provisions of the Code or (Acquisitions and Realisations).
any other acquisition or disposal made by
offeror and provided the relevant disclo- Competition Act (Cap. 50B)
sure requirements under the Code on such
acquisition or disposal are complied with.
TThe Competition Act prohibits mergers
that result in a substantial alleviation of
Companies Act (Cap. 50) competition within any market for goods or
services in Singapore. Any party may notify
Sections 210, 212, 215, 215A or consult the Competition Commission of
Singapore for a decision or guidance on
any merger that it is about to undertake or
The Companies Act provides the frame- that may affect it.
work for schemes of arrangement (Sections
210, 212) and amalgamations (Sections
215A to 215K) in corporate take-overs and The Competition Act prohibits anti-
mergers. For example, the compulsory ac- competitive agreements (Section 34), the
quisition of shares of minority shareholders abuse of a dominant market position
(Section 215) of the target companies is (Section 47) and mergers resulting in a sub-
governed by the Companies Act. stantial lessening of competition (Section
54).

The Competition Act allows the Competi-

tion Commission of Singapore (“CCS”) to
review and regulate mergers that have of the offeree company include convertible
anti-competitive effects in Singapore. securities, warrants, options and derivatives.

Notwithstanding, there is no statutory re- Rule 11.1 (Restrictions on dealings before the
quirement to notify agreements, conduct offer) of the Code and Sections 218 (Prohibited
or mergers to the CCS. conduct by connected person in possession of
inside information) and 219 (Prohibited conduct
by other persons in possession of inside informa-
Prior regulatory approval is required for tion) of the SFA restrict dealing by persons in
share-ownership in the following sectors: possession of confidential price sensitive infor-
 Banks and finance companies mation.

 Insurance companies Sections 221 (Penalties) and 232 (Civil penalty)

of the SFA impose criminal and civil penalties on
 New spaper and broadc asti ng
persons who contravene the insider dealing
companies provisions under the SFA.
 Telecommunications companies
Market Manipulation
 Exchanges (SGX-ST, Singapore Ex-
change Derivatives Trading Limited and
It is an offence under Section 198 (Securities
Singapore Mercantile Exchange Pte Ltd
market manipulation) of the SFA to carry out
 Clearing houses: The Central Depository any transaction in securities which manipulates
Pte Ltd, the Singapore Exchange De- the price of securities of a listed company with
rivatives Clearing Limited and Singa- the intent to induce investors to deal with those
pore Mercantile Exchange Clearing securities or other related securities and in a
Corporation Pte Ltd take-over, the associates of an offeror or the
target may not as such acquire the shares of
 Holding company of an approved ex- either the offeror or the target for the purpose
change or a designated clearing house of manipulating the price of either of these
namely the Singapore Exchange companies.

PAGE 7
Mandatory offers under Rule 14 and volun- Anyone who commits the abovementioned
tary offers under Rule 15 of the Code may, offences may subject themselves to criminal
where appropriate, be required to contain prosecution or a civil suit by an affected inves-
the terms set out in Appendix 3 of the tor or even a civil action by the MAS.
Code, which provides a guidance note on
the merger procedures of the CCS (the
“Guidance Note on Mergers”). Where such MODES OF ACQUISITION
offers under the Code fall within the ambit One can acquire control of a Singapore public
of the merger provisions of the Competition company by several forms of acquisition.
Act, the parties to the take-over will need
to comply with the requirements under (A) Take-over offer
both the Code and the Competition Act.1
These offers come in 3 forms:

(1) Mandatory offer

MAIN LIABILITIES IN A
TAKE-OVER AND MERGER What is a Mandatory Offer?

This is triggered under Rule 14 of the Code

Insider Trading
when an offeror and parties acting in concert
with it acquire shares of the target in amounts
If an offeror is in possession of price-sensitive crossing the threshold prescribed in Rule 14.
information relating to the target, he cannot
deal with its shares until the information is no The offer is conditional upon the offeror obtain-
longer price sensitive and in a take-over, he ing a minimum level of acceptance which has
cannot bid unless the information is disclosed to the offeror and parties acting in concert with it
all shareholders of the target. Therefore if during holding shares that carry more than 50% of the
the course of negotiation an offeror is provided voting rights of the target.
with price sensitive information from the target,
the offeror must then take note of the insider
trading prohibitions. Under the Code, securities
 When is a Mandatory Offer triggered? there is an independent vote 2 at a
shareholders’ meeting approving the
Under Rule 14 of the Code, a mandatory take- issue of the securities.
over offer is required to be made if:
(ii) a waiver will also normally be granted
a) a person acquires, whether by a series of where (a) the obligation arises from
transactions over a period of time or not, the underwriting of an issue of new
shares which (taken together with shares securities, (b) there is an independent
3
held or acquired by persons acting in con- vote at a shareholders’ meeting; and
cert with him) carry 30% or more of the the underwriter puts in place clear and
voting rights of a company; or effective arrangements not to exercise
the voting rights of these shares;
b) a person who, together with persons
acting in concert with him, holds between b) Enforcement or foreclosure of security for a
30% and 50% of the voting rights in the loan, receivers, etc.: Where shares in the
target company and such person, or any target company constitute security for a
person acting in concert with him, loan and upon foreclosure or enforce-
acquires in any 6-month period additional ment, the lender would incur the obliga-
shares carrying more than 1% of the voting tion to make a mandatory take-over bid;4
rights of the target company.
c) Balancing blocks of 50%: In very excep-
There is a presumption where shareholders tional cases, where shareholder(s) holding
who requisition or threaten to requisition the 50% or more of the votes attached to the
consideration of a board control-seeking remaining shares of the target company
proposal at a shareholders’ meeting, together have, without receiving any inducement
with their supporters at the date of the to do so, stated in writing that they will not
requisition or threat, act in concert with each accept any take-over offer by the offeree
other as well as with the proposed new company for their shares in the target
directors. The key to whether such a presump- company, and such written undertaking is
tion arises is whether the proposal is seen to be given before the acquisition by the offeror
board control-seeking (Note 3 on Rule 14.1 sets of shares in the target company crossing
out the factors relevant in determining whether the take-over threshold;5
PAGE 8

a proposal is board control-seeking).

Subsequent acquisitions of interests in shares d) Placing and top up transactions: Where a
by any concert party could trigger a general person and the parties acting in concert
offer obligation under Rule 14 of the Code. with him hold 50% or less of the voting
rights in the target company, places part
Rule 14 clarifies that any person who has of his holdings to one or more independ-
acquired or written an option on existing ent parties and then, as soon as practica-
shares or derivative on existing shares which ble subscribes for such additional shares as
causes him to have a long economic he requires to maintain the percentage
exposure, whether absolute or conditional, to interest in the target company which he
changes in the price of shares, will normally be held prior to the placement at a price sub-
treated as equivalent to having acquired stantially equivalent to the placing price
those shares for the purpose of Rule 14. A after taking into account expenses in-
person is regarded as having a long economic curred in the transaction; and
exposure to changes in the price of shares if he
benefits economically from the price increase e) Share buy backs: Where the whitewash
or suffers economically from the price procedure for share buy-backs in Appen-
decrease. Where there are such proposed dix 2 of the Code is complied with.
transactions involving convertibles, prior
consultation with the Council should be under- Appendix 2 (Share buy-back guidance note)
taken to determine if this default rule would of the Code sets out briefly the procedure and
not apply. conditions on which an exemption from the
requirements of Rule 14 are granted to direc-
a) Issues of new securities: tors and persons acting in concert with them
who are obliged to make a take-over bid un-
(i) where the obligation to make a man- der Rule 14 following a share buy-back.
datory take-over bid arises from the
issue of new securities as consideration Furthermore, there is a class exemption in the
for an acquisition, a cash subscription case of a listed company, for its directors and
or the taking of a scrip dividend and persons acting in concert with them, for situa-
tions of share buy-back, from Rule 14 where Conditions Imposed in a Mandatory Take-Over
Rule 14.1 shareholding thresholds are crossed Bid
as a result of a reduced share base brought
about by share buy-backs. There is an addi- (1) Except with the Council’s consent, a
tional reporting requirement in that, within mandatory take-over offer must be condi-
seven days of shareholders approving of the tional on, and only on, the offeror receiving
share buy-back mandate, each of the direc- acceptances which together with shares
tors of the company (for which the sharehold- acquired or agreed to be acquired by it
ers’ mandate for share buy-back has been before or during the offer will result in the
obtained) has to submit to the Council a duly offeror (together with parties acting in
signed form as prescribed by the Council. concert with it) holding shares carrying
more than 50% of the voting rights
Although not specifically set out in the Code, a attached to the target company’s voting
whitewash waiver has also been granted in the shares.
following circumstances:
(2) Mandatory bids must always be in cash or
a) Rescue (“white knight”) operations - where provide for a cash alternative. The cash
the target company is in a serious financial price must not be less than the highest
position and the rescue operation involves price paid by the offeror and persons
the issue of new shares in the target com- acting in concert with it within the 6 months
pany to the rescuer which crosses the prior to the making of the offer.
m a nd a t o ry t ake-ove r t h re s h o l d .
(3) Except for the condition mentioned above
in paragraph (1) i.e. with the Council’s
b) Group restructuring exercises - where a
consent, no acquisition of voting rights
scheme of reconstruction to be imple-
which would give rise to a mandatory take­
mented involves the transfer of one com-
over offer may be made if it is subject to
pany’s controlling interest in the target
any other conditions, consents or arrange-
company to another company (which is
ments (including approval of the offeror's
also controlled by the first-mentioned com-
shareholders and any foreign regulatory
pany) such that there is, in practice, no
authority).
effective change in control of the target
company at the ultimate holding com- The Council’s consent is required if the offeror

PAGE 9
pany level. considers that the highest price should not
apply in a particular case. Factors which the
Council might take into account when consid-
Share Buy-backs
ering an application for an adjusted price,
Where a company buys back its shares, include:
Appendix 2 of the Code provides that any
resulting increase in the percentage of voting
 The size and timing of the relevant
purchases;
rights held by a shareholder and persons acting
in concert with him will be treated as an acqui-
 The attitude of the board of the target
sition for the purposes of Rule 14. A director
company;
(who is also a shareholder) and persons acting
in concert with him would, in the absence of  Whether shares have been purchased at
an exemption from the Council, become
higher prices from directors or other per-
obliged to make a mandatory take-over bid if
sons closely connected with the offeror or
the effect of the company buying back its
the target company; and
shares would be to increase their voting rights
in the company to 30% or more, or if they  The number of shares purchased in the
together already hold between 30% and 50% preceding six months.
of the voting rights, the effect would be to
increase their voting rights by more than 1% in Chain Principle
any 6-month period. This rule does not however
apply to shareholders who are not acting in A person may acquire more than 50% of a
concert with any director of the company. company to which the Code does not apply
Appendix 2 sets out the circumstances in which (for example, a private limited company) and
a shareholder, who is not acting in concert with consequently, acquire or consolidate control of
any director of the Company, will be required a second company to which the Code does
to make an offer under Rule 14. apply. It is possible that this could be used as a
back-door means of acquiring control in a
company which is subject to the provisions of
the Code. The Council should be consulted in
 all such cases to establish whether any obliga- Conditions are also subject to the principle that
tion to make a mandatory take-over bid arises. all shareholders of the same class of the target
The Code states that the Council would not company are to be treated equally and fairly.
normally require a mandatory take-over offer A term which would result in shareholders of the
to be made in such cases unless the second same class being treated differently would not
company constitutes or contributes significantly be acceptable.
to the first company in the following aspects:
A voluntary offer also need not be in cash or
 assets; have a cash alternative but must be in cash or
securities or in a combination thereof at the
 market capitalisation (where the first and highest price (excluding stamp duty and
second companies are listed); commission) paid by the offeror or a concert
party for shares in the target company
 sales; or acquired during the offer period and the 3
months prior to the making of the offer.
 earnings.
However when an offeror has acquired (or an
The “relevant price” depends on when the offeror and concert parties have together
mandatory offer is triggered; within 3 months acquired) for cash 10% or more of the target
form the date of announcement of the company's voting rights during the offer period
conditional share acquisition agreements or and the 6 months prior to the making of the
the put and call option or after 3 months of offer (or when the Council thinks it is otherwise
such announcement. The relevant price can necessary in order to give effect to the
be determined in accordance with the principle of equality of treatment), except with
principle stated in Note 5 (Conditional the Council’s consent:
agreement and put and call option) of the
Notes on Rule 14.3 of the Code. (a) the offeror must make an offer at not less
than the highest price (excluding stamp
(2) Voluntary Offer duty and commission) paid for shares in the
target company acquired during the offer
What is a Voluntary Offer? period and the 6 months prior to the
making of the offer; and
A voluntary offer is a take-over offer for the
PAGE 10

shares of a company made by an offeror who (b) the offer must be in cash or accompanied
has not incurred an obligation to make a by a cash alternative.
mandatory offer under Rule 14.1.
Conditions pertaining to the level of
An offeror may choose to make a general offer acceptance, shareholder approval for issue of
for all equity shares in the target company (not new shares and SGX-ST approval for listing may
already owned by it) even though not obliged be attached without Council’s consent. Where
to do so under Rule 14 of the Code.9 appropriate, a voluntary offer must contain the
terms set out in Appendix 3 (Guidance note on
Conditions
the merger procedures of the Competition
It is conditional upon the offeror and parties Commission of Singapore) of the Code.
acting in concert with it acquiring more than
Partial Voluntary Offers
50% of the voting rights of the target company.
Partial voluntary offers for a specified percent-
A voluntary take-over offer, unlike a mandatory
age of the target company’s equity shares
offer, can be subject to conditions other than
may be made if the Council consents. It will
the acceptance condition. It must also
normally do so if the offer could not result in the
stipulate an acceptance condition higher (but
offeror and its concert parties holding 30% or
not lower) than the 50% level.
more of the voting rights.
Apart from conditions as to acceptance level,
For offers which may result in a holding of 50%
shareholder approval and SGX-ST approval, the
or more, the Council will not normally consent
offeror should consult the Council on any other
unless a number of requirements are satisfied
conditions it wishes to impose.
including the obtaining of the approval of the
Generally, the fulfilment of conditions attached target company’s shareholders. This can be
to an offer must not be dependent to an done at a general meeting. A majority of more
unacceptable degree on a subjective interpre- than 50% of the votes cast is required.
tation of discretion of the offeror nor lie in the
Minimum Price
offeror’s hands. The Council will normally allow
conditions which are objectively reasonable The minimum price is the highest price paid by
based on the circumstances of each case. the offeror or any of the parties acting in
concert with it for shares carrying voting rights
in the target during the offer period and within under Rule 14;
3 months prior to the commencement of the
offer period. (b) The offeror confirms and undertakes in its
application for consent that it and its con-
Pre-conditional voluntary offer cert parties did not and will not acquire
any voting shares (excluding voting shares
With the 2016 amendments, the offeror may acquired by the offeror and its concert
announce a pre-conditional voluntary offer parties via a rights issue and/or bonus issue
where the announcement of a firm intention to without increasing their aggregate per-
make an offer is subject to the fulfilment of cer- centage shareholdings) in the offeree
tain pre-conditions. These pre-conditions are company:-
subject to the following:
(i) in the 6 months prior to the date of the
a. the pre-conditions should be stated clearly offer announcement (and confirms this
in the announcement of the pre- fact in the offer announcement);
conditional offer;
(ii) in the period between submitting the
b. the pre-conditions should be objective and application for the Council's consent
reasonable; and the making of the partial offer;

c. the announcement of the pre-conditional (iii) during the offer period (except pursu-
offer must specify a reasonable period for ant to the partial offer); and
fulfilment of the pre-conditions, failing
which the offer will lapse; and (iv) during a period of 6 months after the
close of the partial offer, if the partial
d. no pre-condition should be relied upon to offer becomes unconditional as to ac-
cause the offer to lapse unless: ceptances. The Council's consent for
purchases of shares in the offeree com-
 the offeror has demonstrated rea- pany by the offeror and its concert
sonable efforts to fulfil the condi- parties within 12 months of the close of
tions within the specified time pe- a successful partial offer will normally
riod; and be granted if such purchases are pro-

PAGE 11
posed to be made more than 6 months
 the circumstances that give rise to after the partial offer;
the right to rely upon the condi-
tions are material in the context of (c) The partial offer is conditional, not only on
the proposed transaction. the specified number or percentage of
acceptances being received, but also on
(3) Partial Offer approval by the offeree company's share-
holders, where the offeror together with
What is a Partial Offer? parties acting in concert with it hold 50% or
less in the offeree company prior to the
Partial offers are voluntary offers for some of the
announcement of the partial offer. Where
shares in the target.
the offeror together with parties acting in
The Council's consent is required for any partial concert with it hold more than 50% of the
offer. The Council will normally consent to a voting rights of the offeree company, ap-
partial offer which could not result in the offeror proval by the offeree company's share-
and persons acting in concert with it holding holders is still required if the partial offer
shares carrying 30% or more of the voting rights could result in the offeror and parties act-
of the offeree company. ing in concert with it holding more than
90%, or the offeree company failing to
The Council will not consent to any partial offer comply with the SGX-ST's rules on minimum
which could result in the offeror and its concert free float. The offeror, parties acting in con-
parties holding shares carrying not less than cert with it and their associates are not al-
30% but not more than 50% of the voting rights lowed to vote on the partial offer. Voting
of the offeree company should be:-

The Council will not normally consent to a par- (i) if a general meeting is convened, by
tial offer which could result in the offeror and its way of a poll on a separate ordinary
concert parties holding shares carrying more resolution on the partial offer. The par-
than 50% of the voting rights of the offeree tial offer must be approved by share-
company, unless: holders (present and voting either in
person or by proxy) of more than 50%
(a) The partial offer is not a mandatory offer of the votes cast; or
 (ii) if it is on the form of acceptance for respect of, securities which carry voting
the partial offer, in a separate box with rights. In addition, the partial offer to share-
the number of voting shares indicated. holders must be extended to holders of
The partial offer must be approved by newly issued shares arising from the exer-
shareholders of more than 50% of the cise of such instruments, subscription rights
votes received. Upon the close of the or options during the offer period; and
partial offer, the receiving agent must
confirm in writing to the Council that it (i) the precise number of shares, percentage
has done the necessary checks and or proportion offered is stated, and the of-
verification to ensure that votes (if any) fer may not be declared unconditional as
cast by shareholders not allowed to to acceptances unless acceptances are
vote are disregarded and excluded for received for not less than that number, per-
the purpose of determining sharehold- centage or proportion.
ers' approval for the partial offer;
Partial offers may, in respect of each class
Where approval for a partial offer has been of share capital involved, be in cash or
obtained from the offeree company's share- securities or a combination of cash and
holders before the partial offer is made, the securities.
offeror must announce the offer on the date of
the shareholders' meeting to approve the par- Shares represented by acceptances in a
tial offer; partial offer should not be acquired by the
offeror prior to expiry of the partial offer.
(d) arrangements are made with the SGX-ST Such shares must be paid for by the offeror
prior to the posting of the offer document as soon as possible following expiry of the
to provide a temporary trading counter to partial offer but in any event within 10 days
trade odd -lots in the offeree company's of the partial offer's expiry date.
shares after the close of the partial offer.
Such counter should be open for a reason- Any person who intends to make a partial
able period of time, which in any case offer for the same offeree company within
should not be shorter than 1 month; 12 months from the date of the close of a
previous partial offer (whether successful or
(e) the offer document contains a specific not) must seek the Council's prior consent.
PAGE 12

and prominent statement to the effect that

if the partial offer succeeds, the offeror will In the case of subsequent offers other than
be able to exercise statutory control over partial offers:-
the offeree company and that the offeror
a) the restrictions in Rule 33.1(a) apply follow-
and its concert parties will be free, subject
ing a partial offer:-
to the 6 -month rest mentioned above, to
acquire further shares without incurring any (i) for more than 50% of the voting rights
obligation to make a general offer; of the offeree company which has not
become or been declared uncondi-
(f) the partial offer is made to all shareholders
tional; and
of the class and arrangements are made
for those shareholders who wish to accept (ii) for less than 30% of the voting rights of
in full for the relevant percentage of their the offeree company which has not
holdings. Shares tendered in excess of this become or been declared uncondi-
percentage should be accepted by the tional.
offeror from each shareholder in the same
proportion as the number tendered to the b) the restrictions in Rule 33.1(b) apply follow-
extent necessary to enable the offeror to ing a partial offer for less than 30% of the
obtain the total number of shares for which voting rights of the offeree company which
he has offered. The offeror should arrange has become or been declared wholly
its acceptance procedure to minimise the unconditional.
number of new odd-lot shareholdings;
Conditions
(g) when a partial offer is made for a com-
pany with more than one class of equity Generally a partial offer is conditional not only
share capital, a comparable offer is made on the number/percentage of acceptances
for each other class; received but also on the approval of
shareholders where offeror and its concert
(h) an appropriate partial offer is made for parties hold 50% or less of the voting rights of
outstanding instruments convertible into, the offeree.
rights to subscribe for, and options in
Minimum Price Once the court’s order has been passed and
lodged at the Accounting and Corporate
The minimum price is the highest price paid by Regulatory Authority (“ACRA”), this has the ef-
the offeror or any of the parties acting in fect of immediately and compulsorily transfer-
concert with it for shares carrying voting rights ring 100% control of the target company to the
in the target during the offer period and within bidder.
3 months prior to the commencement of the
offer period. To be effective and binding

Subsequent Offers (a) the scheme must be approved by a major-

ity in number representing 75% in value of
In cases of subsequent offers, Rule 33.1 applies the shareholders or creditors, as the case
with regard to Delay in Subsequent Offers. may be, present and voting either in
person or by proxy at the meeting
(B) Scheme of Arrangement (“SOA”) convened to approve the scheme;

What is a Scheme of Arrangement? (b) the scheme must be sanctioned by the

court; and
A Scheme of Arrangement is a reorganising of
a company's capital structure or its debts (c) a copy of the court order approving the
which is binding on creditors and shareholders. scheme must be lodged with the Registrar
It is carried out in accordance with Section 210 of Companies.
of the Companies Act.
Advantages of an SOA
There are two types of schemes: a creditors'
scheme and a members' or shareholders' Some advantages of a scheme of arrange-
scheme. A creditors' scheme is generally used ment over a takeover bid are as follows:
by companies in financial difficulties. A
members' scheme is used to effect corporate (a) a scheme of arrangement requires the
reorganisations, including mergers. A scheme approval of a majority in number represent-
of arrangement would involve the target ing three-quarters in value of the members
company, its shareholders and the offeror. A or creditors (and of any relevant class of
scheme of arrangement may provide that all them) who are present and vote either in

PAGE 13
the issued shares in the target company are to person or by proxy at the meeting
be cancelled and new shares issued to the convened by the court for the purpose of
offeror, or it may provide for the transfer of the approving the scheme. Provided this
existing shares to the offeror. In consideration majority is obtained and the scheme is
for the cancellation or transfer of their shares in sanctioned by the court, it then becomes
the target company, the shareholders will binding on all members of the class and on
either receive a cash payment from the offeror, the company. A substantially lower majority
or receive shares in another company. is required under a scheme of
arrangement than that which is required to
How an SOA is implemented? invoke the provisions of Section 215 of the
Companies Act in a compulsory acquisi-
A scheme of arrangement is implemented by tion. In relation to shareholders outside
means of resolutions passed at meetings of Singapore, in certain jurisdictions, the
classes of shareholders and, if appropriate, circulation of documents offering to
creditors, of the target company convened by acquire or inducing shareholders to dispose
the court. Shareholders connected with the of their shares is subject to regulation and
bidder are precluded from attending the other restrictions; depending on the nature
meetings, and precluded from voting. If of these rules, it may be that a scheme will
members or members of any class have be less likely to contravene them; and
sufficiently dissimilar rights it may be necessary
to hold separate class meetings to approve the (b) a scheme may result in greater certainty
scheme. where the objective of the offeror is to
acquire all the shares in the target
But if the scheme of arrangement is approved company, especially where the offeror
at the relevant meetings by a majority in wants to acquire all the shares or none of
number representing three-fourths or 75% in them.
value of the members or class of members
voting, the scheme is passed and the court will Exemptions from Code
proceed to confirm the scheme at subsequent
court hearings. All schemes of arrangements are subject to the
provisions of the Code. However, the Council
 may, subject to certain conditions, exempt a provisions such as those in relation to
scheme of arrangement from the Code’s announcements, withdrawal of offer, frustration
provisions on the following: of offer, directors’ responsibilities, independent
advice, release of information, restriction and
 Mandatory, voluntary and partial offers disclosure of dealings, information to be
contained in offer documents, settlement of
 When a cash offer is required
consideration and proxies.
 The appropriate offers to holders of
With the 2016 amendments, in the case of a
convertibles
scheme of arrangement, the deadline for a
 The requirement to keep offer open for 14 potential competing offeror who must an-
days after it is revised nounce its intentions to either make an offer or
no bid has been revised from the 50th Day to
 Purchases above the offer price 53rd Day, from the date the first offeror des-
patches its initial offer document.
 Offer timetable

 Acceptances and delay before acquisition (C) Compulsory Acquisition of Minority

of voting rights in the scheme company Holdings Section 215 of the Companies
above the offer price Act
The Council would normally grant an When
exemption from the above provisions if:
Generally, a person who succeeds in acquiring
(a) the common substantial shareholders of majority control of a company has no power to
the scheme companies abstain from force minority shareholders to sell their
voting on the scheme of arrangement; shareholdings to him. However, under some
circumstances minority shareholders’ shares
(b) persons and their concert parties who will may be compulsorily acquired under Section
as a result of the scheme of arrangement 215 of the Companies Act.
(i) acquire 30% or more or in the scheme
company or new entity that holds one or How
both the scheme companies or (ii) if they
PAGE 14

together already hold between 30% and If an offeror has, within 4 months of the making
50% of the scheme company’s voting of the offer, obtained approval for the transfer
rights, would increase their voting rights by of all the shares in the target company to the
more than 1% in 6 months, abstain from offeror from shareholders in the target
voting on the scheme of arrangement; company who hold at least 90% of the shares
involved in the transfer (excluding the shares
(c) the scheme document contains advice to already held at the date of the offer by, or by a
the effect that by voting for the scheme, nominee for, the offeror or its subsidiary), it may
shareholders are agreeing to such persons by notice, pursuant to Section 215 of the
and their concert parties acquiring Companies Act, require that the dissenting
effective control in the scheme company shareholders sell their shares to it on the terms
without having to make a general offer for of the offer. The notice must be sent within 2
the company and discloses the names of months of attaining the 90% assent level.
such persons, their current voting rights in
the scheme company and their voting A shareholder whose shares are being
rights in the scheme company and/or new compulsorily acquired may apply to court to
entity after the scheme of arrangement; have the acquisition stopped. The court will
decline to allow the proposed acquisition to
(d) the common directors of the scheme proceed only if the applicant can show that
companies or the directors who are acting the proposed acquisition is unfair or not bona
in concert with the persons in (a) or (b) fide.
above abstain from making a recommen-
dation on the scheme; and In the event that an offeror does not succeed
in compulsorily acquiring all the minority shares
(e) the scheme company which is in effect the under Section 215, but the remaining shares
target company appoints an independent held by the public nevertheless constitute less
financial adviser to advise its shareholders than 10% of the total shares in the listed target
on the scheme of arrangement. company or are held by less than 500 members
of the public, the target company must
Non-Exemption from Principles of Code announce that fact. SGX-ST may suspend
trading of the securities, pursuant to such
Schemes of arrangement are not exempted
announcement. SGX-ST may allow the target
from the General Principles in the Code and
company a grace period of 3 months or more
to raise the percentage of securities held by
the public to at least 10% or increase the
CONSIDERATION
number of shareholders who are members of Settlement period
the public to 500, failing which SGX-ST may
de-list the target company. With the 2016 amendments, settlement of con-
sideration of the offer is to be within 7 business
Delisting days after the date of expiry of the offer in-
stead of the previous 10 calendar days.
A listed company may also choose to be
de-listed by applying to SGX-ST. SGX-ST may Securities as Consideration
agree to de-list the listed company if a resolu-
tion to de-list the listed company has been Shares acquired in exchange for securities
approved, at a general meeting, by a majority during the offer period or in the 6 months prior
of at least 75% in nominal value of the shares to the offer period will be deemed to be
held by the shareholders present and voting purchases for cash unless the securities are
and such resolution must not have been voted required to be held till the offer period expires
against by 10% or more in nominal value of the or the offer consideration has been posted to
shares held by the shareholders present and accepting shareholders.
voting. Before making a decision to de-list the
listed company, SGX-ST would also require the Where purchases of shares of any class
listed company to appoint an independent carrying 10% or more of the voting rights have
financial advisor to advise on a reasonable exit been made by offeror or its concert parties in
alternative, which is normally in cash, to be exchange for securities during the offer period
offered to its shareholders and holders of any and in the 3 months prior to the offer period,
other classes of listed securities to be de-listed. such securities will be required to be offered to
all shareholders of that class of shares.
(D) Amalgamation
Unless the securities are to be held till the end
An amalgamation is effected through Sections of the offer period or till the offer consideration
215A to 215G of the Companies Act. has been posted to shareholders, there is also
an obligation to provide a cash alternative in
This process involves two or more companies this situation.

PAGE 15
amalgamating and/or forming a new
company and continuing thereafter as one There is also a need to consult the Council if
company. 10% or more of the voting rights of the offeree
has been acquired during the offer period or in
An amalgamation is to be approved pursuant the 6 months prior to the commencement of
to Section 215C of the Companies Act in a the offer period and consideration received by
general meeting and should be registered vendor of offeree-shares includes shares with
thereafter with the Registrar of Companies selling restrictions.
further to Section 215E of the Companies Act.
Generally, the offeror would typically consult
With the 2016 amendments, in the case of an the Council on the basis on valuation of consid-
amalgamation, the deadline for a potential eration being offered if such consideration is on
competing offeror who must announce its in- the form of a cash alternative or securities.
tentions to either make an offer or no bid has
been revised from the 50th Day to 53rd Day, Deal Protection: Break Fees
from the date the first offeror despatches its
initial offer document. Offerors are allowed to negotiate break fees
with offeree subject to the conditions that the
(E) Reverse Take-over (“RTO”) break fee will not exceed 1% of the offer value
and the financial adviser would need to
In an RTO, the offeror exchanges its shares with confirm that the break fee is in the best interest
the publicly-listed company. The offeror then of the offeree company. This applies also to
makes a take-over offer for the remaining any other favourable arrangement with the
shares in the publicly-listed company, thereby offeror even if such arrangements do not
gaining control of the publicly-company. involve cash payment.

Notwithstanding the above, there are

safeguards in Rule 13 of the Code to ensure
that directors act in good faith when negotiat-
ing break fees and that such break fees should
not constitute the giving of financial assistance
by target to offeror in the acquisition of its
 shares. A company listed on the SGX-ST is required to
immediately announce any material informa-
No Frustration of Offer tion relating to it unless a reasonable person
would not expect the information to be dis-
The Code prevents directors of the offeree from closed.
frustrating a takeover offer. In the course of an
offer, or even before the date of the offer, if Also a target is required under the Code to pro-
the board of the offeree company has reason vide the same information that is given to one
to believe that a bona fide offer is imminent, offeror to any other bona fide or potential of-
the board must not, except pursuant to a feror.
contract entered into earlier, take any action,
without the approval of shareholders at a With the 2016 amendments, there needs to be
general meeting, on the affairs of the offeree prompt disclosure of (i) any material change to
company that could effectively result in any information previously published in connection
bona fide offer being frustrated or the with an offer; and (ii) any material new informa-
shareholders being denied an opportunity to tion which would have been required to be
decide on its merits. disclosed in any previous document or an-
nouncement published during an offer period.
In the case of an offeree registered business In any cases of doubt, the SIC should be con-
trust or business trust, by the trustee-manager sulted.
and/or the directors of the trustee-manager,
and in the case of an offeree REIT, no frustrat- Announcements to be made by Offeree
ing action by the manager and/or any of the Company
directors of the manager of the REIT and/or the
trustee of the REIT (in its capacity as trustee of Before the board of the offeree company is
such offeree REIT). Certain matters have also approached, the responsibility for making an
been spelt out as prohibited action unless car- announcement will normally rest with the of-
ried out with the prior approval of unitholders feror or potential offeror.
and these actions include the alteration of
terms of engagement between the business Following an approach to the board of the of-
trust and the trustee-manager or the offeree feree company which may or may not lead to
REIT and its manager. an offer, the primary responsibility for making
PAGE 16

an announcement will normally rest with the

However, with the 2016 amendments, there is board of the offeree company. The offeree
now clarification that (i) soliciting a competing board should keep a close watch on the of-
offer or running a sale process does not feree company's share price and volume for
amount to frustration of an existing offer and (ii) signs of undue movement.
directors of the offeree company may consider
sharing available management projections The offeree board must make an
and forecasts with the independent financial announcement:-
adviser.
(a) When the offeree board receives
Disclosures and Announcements notification of a firm intention to make an
offer from a serious source. Irrespective of
During the offer period, the parties to a take- whether the offeree board views the offer
over and their associates are required by the favourably or otherwise, it must inform its
Code to disclose any dealings in the relevant shareholders without delay. The board of
securities to the SGX-ST, the Council and the the offeree company must issue a paid
press. press notice or, where the offeror has
published a paid press notice, an
Dealings in securities are extended to dealings announcement;
in derivatives.
(b) When, following an approach to the
It is clear that the taking, granting, acquisition, offeree company, the offeree company is
disposal, exercising (by either party), lapsing, the subject of rumour or speculation about
closing out or variation of an option, whether in a possible offer, or there is undue
respect of new or existing securities, and the movement in its share price or a significant
acquisition of, disposal of, entering into, closing increase in the volume of share turnover,
out, exercise (by either party) of any rights un- whether or not there is a firm intention to
der, or issue or variation of, a derivative will be make an offer;
regarded as a dealing in relevant securities.
(c) When negotiations or discussions between
Dealings for non-discretionary investment the offeror and the offeree company are
clients should be privately disclosed to the about to be extended to include more
Council.
 than a very restricted number of people; or Dealings in Shares of Offeror and Target

(d) When the board of a company is aware Rule 12 of the Code provides for disclosure of
that there are negotiations or discussions dealings in the shares of the offeror and the
between a potential offeror and the target company during the offer period.
holder, or holders, of shares carrying 30% or Generally, parties to a take-over or merger
more of the voting rights of a company or transaction and their associates are free to
when the board of a company is seeking deal in shares of the offeror or the target
potential offerors, and:- company, for their own account, provided
they make the relevant disclosures required
(i) the company is the subject of rumour under Rule 12 to SGX-ST, the Council and the
or speculation about a possible offer, press, and subject to compliance with the laws
or there is undue movement in its share relating to insider dealing. Such disclosures must
price or a significant increase in the be made by noon on the next dealing day.
volume of share turnover; or
Offeror Disclosure Requirements
(ii) more than a very restricted number of
potential purchasers or offerors are As soon as the offeror has a firm intention to
about to be approached. make a take-over offer must be publicly
announced by the offeror in the newspapers.
Substantial Shareholder
The public announcement by the offeror must
Under Section 135 of the SFA, a person who is a disclose:
substantial shareholder must give notice in a
MAS-prescribed notification form to the (a) The terms of the offer;
company of his interest within 2 business days
after becoming aware of his becoming a (b) The identity of the offeror (and where appli-
substantial shareholder. Any changes in the cable, the identity of the ultimate offeror or
interest of a substantial shareholder must ultimate controlling shareholder of the of-
likewise be notified in a prescribed notification feror);
form within 2 business days (see Section 136 of
the SFA). (c) Details of any existing holding of securities
which are being offered for or which carry

PAGE 17
Under Section 2 of the SFA, a “substantial voting rights, or convertible securities, war-
shareholder” is a person who has an interest or rants, options or derivatives in respect of
interests in one or more voting shares securities which are being offered for or
(excluding treasury shares) in the company which carry voting rights in the offeree
and the total votes attached to that share or company which the offeror or any person
those shares is not less than 5% of the total acting in concert with him owns or controls
votes attached to all the voting shares or in respect of which the offeror or any
(excluding treasury shares) in the company. person acting in concert with him has
received an irrevocable commitment to
All notification requirements in respect of inter- accept the offer;
ests in listed companies have been consoli-
dated in the SFA. A listed issuer is required to (d) All conditions to which the offer is subject;
disseminate on SGXNET all MAS-prescribed noti-
fications received from substantial shareholders (e) Details of any arrangement in relation to
and directors as soon as possible and not later shares of the offeror or target company
than the end of the following business day. which might be material to the offer; and
Substantial shareholders and directors are no
(f) In the case of a mandatory offer or a vol-
longer required to separately report their inter-
untary offer in cash or with a cash element,
ests, and changes in interests, in securities to
the announcement must include an un-
the SGX-ST.
conditional confirmation by the offeror’s
The MAS prescribed form provides for informa- financial adviser, or another appropriate
tion such as name of substantial shareholder or third party, that financial resources are
director, reason for notification, date of available to the offeror to satisfy full accep-
change, date of becoming aware of change, tance of the offer.
number of securities the subject of change,
There is a requirement for disclosure in the offer
consideration, circumstances of change, and
announcement the number and percentage
the shareholding situation before and after
of any relevant securities in the offeree com-
change, to be disclosed.
pany which the offeror or any person acting in
concert with it has:-
 (a) granted a security interest to another per- liabilities shown in the last published au-
son, whether through a charge, pledge or dited accounts;
otherwise;
(10) Particulars of all publicly known material
(b) borrowed from another person (excluding changes in the financial position of the
borrowed securities which have been company subsequent to the last published
on-lent or sold); or audited accounts or a statement that
there are no such publicly known material
(c) lent to another person. changes;
The offer document which must be dispatched (11) Similar details from any interim statement
by, or on behalf of, the offeror to shareholders on preliminary announcement made since
of the target company must include, inter alia, the last published audited accounts, as
the following: with the audited accounts;
(1) The offeror’s intentions regarding the busi- (12) Significant accounting policies together
ness of the target company; with any points from the notes of the ac-
counts which are of major relevance for
(2) The offeror’s intentions regarding any major the interpretation of accounts;
changes to be introduced in that business,
including any redeployment of fixed assets (13) Where, because of a change in account-
of the target company; ing policy, figures are not comparable to a
material extent, this should be disclosed
(3) The long-term commercial justification for and the approximate amount of the resul-
the offer; tant variation should be stated;
(4) Its intentions with regard to continued em- (14) Whether or not there has been, within the
ployment of employees of the target com- knowledge of the offeror, any material
pany and its subsidiaries; change in the financial position or pros-
pects of the target company since the
(5) The shareholdings of the offeror in the tar-
date of the last balance sheet laid before
get company;
the company in general meeting and if so,
PAGE 18

The definition of shareholdings for disclosure particulars of any such change;

purposes includes derivatives (apart from con-
(15) Where the offeror is a subsidiary, the ulti-
vertible securities, warrants and options which
mate holding company will normally have
already required disclosure previously). Where
to disclose the prescribed information on a
any shareholdings have been made the sub-
consolidated basis in the offer document.
ject of a security interest, whether through a
The Council may dispense with this require-
charge, pledge or otherwise, or borrowed from
ment if the subsidiary in question is of suffi-
another person (excluding borrowed shares
cient substance in relation to the group
which have been on-lent or sold) or lent to an-
and the offer;
other person, such disclosures must also be
made. (16) The price or other considerations to be
paid for the target company’s securities;
(6) If the offeror has dealt in the shareholdings
of the target company during the period 6 (17) All conditions attached to acceptances,
months prior to the beginning of the offer and in particular whether the offer is condi-
period and ending with the latest practica- tional upon acceptances being received
ble date prior to the posting of the Offer in respect of a minimum number of securi-
Document, details, including dates and ties or percentage of shares, and if so, that
prices of such dealings and if no such deal- number of securities or percentage of
ings were made, a statement to that ef- shares and the last day on which the offer
fect; can become unconditional;
(7) The names, descriptions and addresses of (18) A statement whether or not the offeror in-
all the offeror’s directors; tends to avail itself of the powers of com-
pulsory acquisition;
(8) A summary of its principal activities;
(19) A statement as to whether there is any
(9) Details for the last 3 financial years, of turn-
agreement, arrangement or understanding
over, exceptional items, net profit or loss
between the offeror or any person acting
before and after tax, minority interests, net
in concert with it, and any of the directors
earnings per share, net dividends per share
or recent directors or shareholders or re-
together with a statement of assets and
 cent shareholders of the target company, be declared
having any connection with or depend-
ence upon the offer, and full particulars of Where the transaction involves an exchange of
any such agreement, arrangement or un- securities, the offer document must, in addition
derstanding; to providing for the above, contain the follow-
ing:
(20) A statement as to whether any securities
acquired pursuant to the offer will be trans- (a) The nature and particulars of the offeror’s
ferred to any other person, and the names business;
of the parties to any such agreement, ar-
rangement or understanding together with (b) The date and country of the offeror’s incor-
the particulars of all securities in the target poration;
company held by such persons, or a state-
(c) The address of its principal office in Singa-
ment that no such securities are held, and
pore;
particulars of all securities which will or may
be transferred; (d) The authorised and issued share capital
and the rights of the offeror’s shareholders
(21) Except in the case of an offeror offering
in respect of capital, dividends and voting;
solely cash, a statement on whether and in
what manner the total emoluments of the (e) Whether the shares offered will rank pari
directors of the offeror will be varied in con- passu with the existing issued shares of the
sequence of the acquisition of the target offeror, and if not, a precise description of
company or in any associated relevant how the shares will rank for dividends and
transaction; capital;
(22) Where the offer is for cash or includes an (f) The number of shares issued since the end
element of cash, an unconditional confir- of the last financial year of the offeror;
mation by the offeror’s financial adviser, or
another appropriate third party, that finan- (g) Where the offeror’s securities are quoted or
cial resources are available to the offeror dealt in or on a stock exchange, this fact
to satisfy full acceptance of the offer must should be stated. The following information
be included; should also be included:

PAGE 19
(23) A statement as to whether or not any secu- (i) The closing price on the latest practica-
rities acquired pursuant to the offer will be ble date prior to the publication of the
transferred to any other persons, together Offer Document;
with the names of the parties to any such
agreement, arrangement or understanding (ii) Where the offer was publicly
and particulars of all securities in the target announced the closing price on the
company held by such persons, or a state- latest business day immediately pre-
ment that no such securities are held; ceding the date of the initial an-
nouncement of the offer;
(24) The closing price on the SGX-ST of the secu-
rities of the target company which are sub- (iii) The closing price at the end of each of
ject of the offer on the latest practicable the 6 calendar months preceding the
date prior to the publication of the Offer date of the initial announcement; and
Document, on the latest business day im-
mediately preceding the date of the initial (iv) The highest and lowest closing prices
announcement of the offer and at the end during the period between the start of
of each 6 calendar months preceding the 6 months preceding the date of the
date of the initial announcement; initial announcement and the latest
practicable date prior to the posting of
(25) The highest and lowest closing prices dur- the offer document and the respective
ing the period between the start of the 6 dates of the relevant sales;
months preceding the date of the initial
announcement and the latest practicable (h) Where the offeror’s securities are not
date prior to the posting of the Offer Docu- quoted or dealt in on a stock exchange,
ment and the respective dates of the rele- the statement should contain all informa-
vant sales; and tion which the offeror may have as to the
number, amount and price at which the
(26) Details of the securities for which the offer is securities may have been sold during the
made and a statement whether they are period between the start of the 6 months
to be acquired cum or ex any dividend or immediately preceding the date of the
other distribution which has been or may initial announcement and the latest practi-
 cable date prior to the publication of the (o) The shareholdings in the offeror (in the case
offer document and if the offeror has no of a securities exchange offer only) and in
such information, a statement to that ef- the target company in which directors of
fect should be made; the offeror are interested;

(i) Details of the outstanding securities con- (p) The shareholdings in the offeror (in the case
vertible, into rights to subscribe for and op- of a securities exchange offer only) and in
tions in respect of securities which carry the target company which any person act-
voting rights affecting shares in the offeror; ing in concert with the Offeror owns or con-
trols (with the names of such persons acting
(j) Details of any reorganisation of capital dur- in concert);
ing the 3 financial years preceding the
date of the offer; (q) The shareholdings in the offeror (in the case
of a securities exchange offer only) and in
(k) Details of any bank overdrafts or loans, or the target company owned or controlled
any other similar indebtedness, mortgages, by any persons who, prior to the posting of
charges or guarantees or other material the offer document, have irrevocably com-
contingent liabilities of the offeror and any mitted themselves to accept the offer to-
of its subsidiaries, or, if there are no such gether with the names of such persons;
liabilities a statement to that effect; and
(l) Details of any material litigation to which (r) The shareholdings in the offeror (in the case
the offeror is, or may become, a party; of a securities exchange offer only) and
the target company owned or controlled
(m) Details of every material contract entered by a person with whom the offeror or any
into with an interested person not more person acting in concert with the offeror
than 3 years before the date of the Offer, has any indemnity or option arrangements
not being a contract entered into in the or any agreement or understanding, formal
ordinary course of the business carried on or informal, of whatever nature relating to
or intended to be carried on by the offeror; the relevant securities which may be an
inducement to deal or refrain from dealing.
(n) How and when the documents of title to
the securities will be issued;
PAGE 20
 SPECIMEN TIME TABLE FOR A TAKE-OVER OFFER

Date Event
D-21 Public announcement of offer by offeror.
D-21 Holding announcement by target company of Offer.
D Offeror to dispatch the Offer Document to the target company.
("D day") Copy of the Offer Document to be lodged with the Council and SGX-ST
(if the Target Company is a listed company) on the same day.

D+14 Target company to send the offeree circular containing

the recommendation of the independent directors and the advice of
the independent financial advisers of the target company to the share-
holders of the target company.

The offeree circular must be lodged with the Council and SGX-ST on
the date of dispatch.
D+28 First closing date:

The closing date of the offer will be as stated in the offer document,
but the offer must initially be open for at least 28 days after the dis-
patch of the offer document.

By 8.00 a.m. on D+29 Announcement of level of acceptances.

D+39 Last date that target company can announce material new information
(results, etc).
D+42 Acceptances may be withdrawn if offer still unconditional as to accep-
tances.
D+46 Last day for revised offer.

D+60 Last day for offer to become or be declared unconditional as to

acceptances, failing which the offer will lapse.

PAGE 21
D+74 Earliest date on which offer can close (assuming offer became uncondi-
tional as to acceptances on Day 60).
D+81 Last day for fulfillment of other conditions if offer unconditional as to
acceptances on Day 60, failing which the offer will lapse.
D+4 months Final date for acquiring 90% of the offer shares under section 215(1) Com-
panies Act to commence compulsory acquisition procedures.
D+6 months Final date for compulsory acquisition notices under section 215 (1) Com-
panies Act.

Endnotes
1 Appendix 3 paragraph 1
2 Refer to Note 1 (Vote of independent shareholder on the issue of new securities “Whitewash”) of the Notes on dispensa-
tion from Rule 14 defines “Independent vote” to mean a vote by shareholders who are not involved in, or interested in,
the transaction in question
3 Refer to Note 1 (Vote of independent shareholder on the issue of new securities “Whitewash”) in the Notes on dispensa-
tion from Rule 14 for the situations in which waivers pursuant to this exception will not normally be granted
4 Refer to Note 2 (Enforcement or foreclosure of security for a loan, receivers, etc.) in the Notes on dispensation from Rule
14 for the conditions which apply to waivers which are granted pursuant to this exception. A waiver will not be granted if
at the time the security was given the lender had reason to believe that foreclosure was likely. Additionally, following
foreclosure, any purchaser from the lender who crosses the take-over threshold will also be subject to the mandatory
take-over offer obligation
5 Refer to Note 3 in the Notes on Dispensation from Rule 14 for the conditions which apply to waivers which are granted
pursuant to this exception.
 COMPETING OFFERS

With the 2016 amendments, there is now greater certainty on the applicable procedures and time-
lines where there are competing offers. In cases of competing offers, all existing offers will be bound
by the timetable established by despatch of the offer document of the latest competing offeror.
For a contractual offer, the deadline for a potential competing offeror who must announce its inten-
tions to either make an offer or no bid has since been revised from the 50th Day to the 53rd Day from
the date the first offeror despatches its initial offer document.

Where there are competing offers and if neither offeror has declared its final offer price till the 46th
day following the positing of the offer document, an auction procedure will be prescribed. After the
end of the auction procedure at 5.00pm on any of the Auction Days 1 to 5, SIC will make an an-
nouncement confirming that the auction procedure has ended.

Competing offerors are usually required to post their revised offer documents no later than 7 days
after the end of the auction. The SIC may also dispense with the requirement for a competing offeror
to post its revised offer document, if it is clear that the value of the competing offeror’s offer is lower
than the value of the other competing offeror’s offer. The latest date in which either offer made by
the competing offerors may become or be declared unconditional as to acceptances will be 14
days after the posting of the revised offer documents.

SPECIMEN TIME TABLE FOR A TAKE-OVER OFFER IN

COMPETITIVE SITUATIONS

Date Event
D+46 Last day for revised offer;
If a competitive offer continues to exist at 5.00pm on Day 46 and no alter-
native procedure has been agreed between the competing offerors, the
board of the offeree company and the Council., the competing offeror
may announce a revised offer only in accordance with the Auction Pro-
PAGE 22

cedure.
D+47 Auction Day 1:
Auction procedure commences and both offerors can announce a re-
vised offer in 1st round. Revised offers announced in this round must be
unconditional.
If no competing offeror announces a revised offer on Auction Day 1, the
auction procedure will end at 5.00pm on this day.
D+48 Auction Day 2 :
A competing offeror may announce a revised offer on Auction Day 2, if
the other competing offeror announced a revised offer on Auction Day 1.
If no such revised offer is announced, the auction procedure will end at
5.00pm on this day.
D+49 Auction Day 3
A competing offeror may announce a revised offer on Auction Day 3, if
the other competing offeror announced a revised offer on Auction Day 2.
If no such revised offer is announced, the auction procedure will end at
5.00pm on this day.
D+50 Auction Day 4
A competing offeror may announce a revised offer on Auction Day 4, if
the other competing offeror announced a revised offer on Auction Day 3.
If no such revised offer is announced, the auction procedure will end at
5.00pm on this day.

D+51 Auction Day 5

If a competing offeror permitted to announce a revised offer on Auction
Day 4 does so, either or both of the competing offerors may announce a
revised offer on Auction Day 5. In any event, the auction procedure will
end at 5.00pm on Auction Day 5.
D+58 Last day for competing offerors to post revised offer documents
(assuming last day of auction was Auction Day 5)
D+72 Last day for offer to become or be declared unconditional as to
acceptances
 CASE STUDY: F&N TAKE-OVER 2013
The successful conclusion to the takeover but not reasonable, from a financial point
of Fraser & Neave Limited ("F&N") in early of view.
2013, by Thai group TCC Assets, facing off
an earlier competitive bid from a consor- A factor JP Morgan took into account was
tium led by property developer Overseas the fact that the Kirin F&B Offer was a ne-
Union Enterprise (“OUE”), merits special gotiated sale (rather than an auction) in
mention, given the unusual features in the which F&N had not an opportunity to par-
bids. ticipate in negotiations or to seek alterna-
tives. As such, the Kirin F&B Offer price for
TCC Assets announced a mandatory offer the F&B Business was not derived from a
on 13 September 2012 at $8.88 per F&N market check involving F&N, for the pur-
share, which closing date was extended pose of maximizing value to F&N. The inde-
multiple times. Prior to the close of the TCC pendent financial adviser further noted
$8.88 offer, the offeror in the OUE-led bid, that since F&N was not a distressed seller, a
OUE Baytown announced a voluntary offer price discovery method for the F&B assets
on 15 November 2012 at $9.08 per F&N would be practicable as part of a thor-
share. The OUE offer had 2 special fea- ough market check. Consideration was
tures. The first special feature was that a also given by the independent financial
third party, Kirin Holdings Company, Limited adviser to the fact that F&N shareholders
("Kirin"), which held a 14.8% interest in F&N who continue to remain invested in F&N
at the time of the OUE offer announce- could potentially see, under the terms of
ment, had provided an undertaking to the Kirin F&B Offer, a major asset sold
OUE Baytown that it would accept the OUE without a defined use of proceeds.
offer, and would not accept any compet-
ing offer. Kirin had also provided an under- Following the transaction, the SIC issued a
taking to OUE Baytown that it would make practice statement on fair and reasonable
a binding offer to F&N to acquire the food statements by IFAs. The term “fair and rea-
and beverage business of the F&N group sonable” should be regarded as compris-

PAGE 23
(“F&B Business”), at a price of S$2.7 billion ing two distinct concepts. The term “fair”
and on other terms pre-agreed between relates to an opinion on the value of the
Kirin and the OUE Baytown. The Kirin F&B offer price or consideration compared
Offer shall be capable of acceptance by against the value of the securities subject
F&N upon the OUE Offer becoming uncon- to the offer (the “Offeree Securities”). An
ditional. offer is “fair” if the price offered is equal to
or greater than the value of the Offeree
OUE Baytown, on its part, had undertaken Securities. In considering whether an offer
to Kirin that subject to there being no is “reasonable”, the IFA should consider
higher offer for the F&B Business (within cer- matters other than the value of the Offeree
tain parameters), it shall vote in favour of Securities. Such matters include, but are
the sale of the F&B Business to Kirin in F&N not limited to, the existing voting rights in
shareholders' meeting relating to approval the offeree company held by the offeror
of the sale. and its concert parties and the market li-
quidity of the Offeree Securities. Under this
The SIC had earlier confirmed that such approach, an offer can be “fair and rea-
arrangements between OUE Baytown and sonable”, “not fair but reasonable”, “not
Kirin did not constitute special deals for the fair and not reasonable” or “fair but not
purposes of the Code, subject to the inde- reasonable”. In all cases, the IFA must ex-
pendent financial adviser to the independ- plain clearly the bases for its conclusion.
ent directors of F&N publicly stating that in While the opinion “fair but not reasonable”
their opinion the terms of the Kirin F&B Offer is not ruled out, an offer would normally be
are fair and reasonable. considered “reasonable” if it is assessed to
be “fair”. Hence, an opinion that an offer is
It eventuated that the independent finan- “fair but not reasonable” should not be
cial adviser (IFA), JP Morgan, formed the given unless there are strong and excep-
opinion that the terms of the F&B offer tional grounds.
made by Kirin for the F&B assets were fair
 However, the broader lesson from JPMor- The SIC had earlier issued a ruling that such
gan's conclusion in the OUE offer case is a break fee arrangement was in compli-
that in structuring future deals, one key ance with Rule 13 (on Break Fee) of the
commercial consideration should be Code.
whether such side deals (such as the
mutual undertakings between OUE Bay- F&N stressed that the break fee was not to
town and Kirin) should be intricately built be construed as a positive recommenda-
into the offer, or not, such that, without the tion of the OUE Offer by the F&N board, nor
side deal, the larger bid exercise fails as is the minimum offer price of S$9.08 per
well. Share to be construed as a statement by
the F&N board that such an offer price was
In the OUE case, the OUE offer survived fair and reasonable. F&N explained that
even though the Kirin F&B offer terms were the break fee arrangement was put in
advised by JP Morgan to be fair but not place in order to create a competitive bid
reasonable. situation, thereby maximising value for its
shareholders.
The second special feature of the OUE of-
fer was that F&N agreed to pay OUE Bay- The other feature of the takeover bids by
town a break fee equal to the costs and TCC Assets and OUE Baytown was that the
expenses reasonably incurred in respect of Council felt fit, in the interests, inter alia, of
its legal and financial advisers and lenders providing certainty to F&N shareholders in
in connection with the making of the OUE making a decision on the two competing
Offer, subject to a maximum of S$50 million bids, to set out its own auction procedure
and the operation of a reduction mecha- for the two bids.
nism.
The breakthrough to resolution of the two
The break fee would be payable in the competing bids came on 18 January 2013,
event that a general offer (not being the when TCC Assets revised its offer price for
PAGE 24

OUE offer) for the F&N Shares at or above F&N shares to $9.55 (from $8.88 previously),
the OUE offer price becomes or is declared which was not counterbid by OUE Bay-
unconditional as to acceptances within 85 town, whose original and unchanged offer
calendar days from the date of the OUE at $9.08 lapsed on 21 January 2013, with-
Offer announcement or such longer period out turning unconditional.
that the Council may allow the other offer
to continue. Similar to the auction procedure adopted
for F&N, the 2016 amendments have pro-
The break fee would not be payable, inter vided for the aforementioned Modified
alia, if, after the announcement of the OUE Auction Procedure, which is designed to
Offer, OUE Baytown withdraws or is pre- achieve finality and an orderly conclusion
vented from proceeding with the OUE Of- to a competitive situation in an open and
fer at any time before (i) the despatch of transparent manner.
the offer document, or (ii) the closing date
of the offer.
CONTACT DETAILS

Bill JAMIESON
Partner
[email protected]
+65 6349 8680

PAGE 25

Colin Ng & Partners LLP

600 North Bridge Road, #13-01,
Parkview Square (Parkview 2),
Singapore 188778
T: +65 6323 8383
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www.cnplaw.com