Media Releases
Published Date: 15 March 2007

MAS Amends the Singapore Code on Take-overs and Mergers

Singapore, 15 March 2007...The Monetary Authority of Singapore (MAS), on the advice of the Securities Industry Council (SIC), today issued a revised Singapore Code on Take-overs and Mergers (Code) pursuant to Section 139(6) of the Securities and Futures Act. 


2   The revised Code incorporates feedback received from the public consultation conducted by the SIC in June 2006 and is consistent with international best practices.  SIC's response to the public consultation, which sets out the rationale and policy intent for the amendments, is available on the MAS website at SIC Overview.

3   The key changes to the Code are as follows:-

a) limit the application of the Singapore Code with respect to foreign-incorporated companies and foreign-registered trusts to only those with a primary listing in Singapore. This provides certainty to the market on the take-over regulations that potential offerors need to comply with;

b) provide SIC with the discretion to waive the application of the Singapore Code in relation to (i) Singapore-incorporated companies or Singapore-registered business trusts with a primary listing overseas; and (ii) unlisted public companies and unlisted registered business trusts with more than 50 shareholders or unitholders, as the case may be, and more than S$5 million of net tangible assets. Such discretion allows SIC to waive the Singapore Code where the costs of compliance outweigh the benefits;

Greater Flexibility
c) allow offerors to negotiate break fees with the offeree company, subject to conditions that the break fee will not exceed 1% of the offer value. The financial adviser will also need to confirm that the break fee is in the best interest of the offeree company. This is in line with practices in the UK and Hong Kong;

d) allow an offeror who has statutory control (i.e. own more than 50% of the voting rights) of an offeree company to make a partial offer without seeking the offeree company shareholders' approval as long as the partial offer does not result in the offeree company breaching the minimum free float requirement under SGX Listing Rules. This lowers the regulatory burden on the offeree company when a partial offer is inconsequential in terms of effective control;

e) increase the Whitewash validity period for convertible instruments from two to five years subject to periodic disclosure. This is in response to market feedback requesting for a longer validity period to facilitate deal structuring and considering that such longer period would not be prejudicial to shareholders' interests;

Removal of Requirements
f) remove the requirement for an offeree company to appoint an independent financial adviser to advise its shareholders in respect of partial offers for less than 30% of the voting rights.  This would reduce the regulatory burden on the offeree company in cases where there is no change in effective control;

g) remove the requirement for a person with a commercial interest in the outcome of the offer (e.g. major suppliers and customers) to consult the SIC in advance for his dealings. Such parties are nonetheless deemed as associates and are required to disclose their dealings.  This is in line with SICs philosophy of not fettering the market as far as possible;

Specific Rules
h) require an offeror to settle acceptances tendered within 10 days (from the current 21 days).  Shareholders will be able to obtain consideration for their shares tendered in acceptance more speedily, as is the case in the UK and Hong Kong;

i) require an appointed independent financial adviser to assume responsibility for making a recommendation on the offer in cases where all the offeree company directors face a conflict of interest.  This provides the shareholders of the offeree company with unbiased advice as all the directors face a conflict of interest in making a recommendation on the offer; and

j) introduce a tiered fee structure for the lodgement of offer documents and Whitewash circulars. The fees levied are in line with the practice in the UK and Hong Kong.


4   The amendments take effect on 1 April 2007. Where parties have doubts as to the consequences of any of the rule changes, in particular the impact on any transaction which is in existence or contemplation, they may consult SIC prior to 1 April 2007 to obtain a ruling or guidance.


5   The SIC is studying whether the Singapore Code should apply to REITs and the extent to which specific provisions of the Code will need to be tailored to apply to REITs.  Prior to the release of the guidance for REITs, parties intending to (i) acquire 30% or more of the total units of a REIT; or (ii) when holding not less than 30% but not more than 50% of the total units of a REIT, acquire more than 1% of the total units of a REIT in any six-month period, as well as make a general offer for a REIT, should consult the SIC beforehand.

Consultation Conclusions On Revision of the Singapore Code on Take-Overs and Mergers ()
Annex I ()
- Annex II ()
- Annex III ()


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