Media Releases
Published Date: 08 June 2007

SIC to Extend the Application of the Singapore Code on Take-Overs and Mergers to REITS

Singapore, 8 June 2007... The Securities Industry Council (SIC) has decided to extend the ambit of the Singapore Code on Take-overs and Mergers (Code) to property trusts structured as collective investment schemes (REITs). SIC’s decision is in line with the regimes in the UK and Australia, where property trusts are subject to take-over provisions.

2   The application of the Code to REITs would not only protect the interests of minority investors but also that of the incumbent controlling unitholders. In the absence of a proper framework governing take-over and merger transactions of REITs, a party would be able to accumulate effective control of a REIT without incurring a general offer obligation. Under such circumstances, incumbent controlling unitholders might not be able to extract a control premium from such party. A proper framework that ensures the fair and equal treatment of all unitholders would enhance the reputation of the REIT market in Singapore and add to its growth.  Further, concerns relating to proper governance and accountability are equally applicable to REITs.  In the opinion of SIC, there is no strong basis for not extending the Code to REITs.

3   The Monetary Authority of Singapore, on the advice of SIC, will be making the amendments to the Securities and Futures Act (SFA) and the Code, where necessary, to give effect to the extension of the Code to REITs.

4   Prior to the SFA and Code amendments, the SIC suggests that parties engaged in take-over or merger transactions involving REITs comply with the Code.  In particular, 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 the REIT in any six-month period, should make a general offer for the REIT. The SIC should be consulted in cases of doubt.