3. Introduction to Public Take-overs and Mergers
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3. Introduction to Public Take-overs and Mergers

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Questions and Answers

What is the time frame during which the Offeror and Concert Parties are prohibited from acquiring Voting Shares prior to announcing a Partial Offer?

  • 6 months (correct)
  • 3 months
  • 12 months
  • 1 month

    • What is required for a Partial Offer to be valid if the Offeror and Concert Parties hold more than 50% of the Target Company's shares?

  • No shareholder approval is required
  • Approval from shareholders must be obtained (correct)
  • Approval only from the Offeror
  • Written agreement from all shareholders

    • What must the Offeror and Concert Parties do regarding voting if they hold more than 50% of the Target Company?

  • Nominate alternate voters
  • Not participate in the voting (correct)
  • Vote against the Partial Offer
  • Vote in favor of the Partial Offer

    • After a successful Partial Offer, when can the Offeror acquire further shares without making a general offer?

    <p>6 months after the close of the Partial Offer</p> Signup and view all the answers

    What forms of compensation can the Partial Offer Price consist of?

    <p>Cash, securities, or a combination of both</p> Signup and view all the answers

    Which requirement must be included in the Partial Offer Document regarding control over the Target Company?

    <p>Offeror can exercise statutory control if Partial Offer succeeds</p> Signup and view all the answers

    What occurs if a Partial Offer could lead to the Offeror and Concert Parties holding over 90% of the Voting Shares?

    <p>Shareholder approval is still required</p> Signup and view all the answers

    What is the purpose of the 6-month prohibition on acquiring Voting Shares following a Partial Offer?

    <p>To prevent market manipulation</p> Signup and view all the answers

    What activity occurs on D+1 in the offer timeline?

    <p>Target company releases holding announcement</p> Signup and view all the answers

    Which significant action takes place on T + 14?

    <p>Target Company issues Offeree Circular</p> Signup and view all the answers

    What is the latest date for the Offer to become unconditional as to acceptances?

    <p>T + 60</p> Signup and view all the answers

    What must the Offeror do if they seek irrevocable undertakings from shareholders?

    <p>Treat all shareholders equally</p> Signup and view all the answers

    Which statement is true regarding cash offers made by the Offeror?

    <p>They must be in cash or have a cash alternative.</p> Signup and view all the answers

    What is required if the Offeror has acquired more than 10% of voting rights in exchange for securities?

    <p>Securities must be offered to all other shareholders.</p> Signup and view all the answers

    When does the earliest possible closing date of the Offer occur?

    <p>T + 28</p> Signup and view all the answers

    What is required within 7 business days after the Offer becomes unconditional?

    <p>Cash settlement must be effected.</p> Signup and view all the answers

    What triggers a mandatory offer according to the Take-over Code?

    <p>Holding between 30% and 50% of shares and acquiring more than 1% in any rolling 6-month period</p> Signup and view all the answers

    In what scenario is an offer deemed to be an unconditional mandatory offer?

    <p>When the Offeror and Concert Parties already control over 50% before launching the offer</p> Signup and view all the answers

    What is the minimum offer price based on?

    <p>The highest price the Offeror paid for Voting Shares in the Relevant MGO Period</p> Signup and view all the answers

    What additional condition is generally permitted for mandatory offers?

    <p>Merger control condition</p> Signup and view all the answers

    For voluntary offers, what must the Offeror stipulate?

    <p>They can set a higher acceptance level condition, e.g., 75% or 90%</p> Signup and view all the answers

    What is included in the offer price determination according to the requirements?

    <p>Prices paid for Voting Shares purchased through options and rights</p> Signup and view all the answers

    Which of the following statements is NOT a condition for making a mandatory offer?

    <p>Can include conditions on future profitability</p> Signup and view all the answers

    What happens if the Offeror's share acquisition is prompted by conditions outlined in a voluntary offer?

    <p>The offer remains voluntary but might require higher acceptance</p> Signup and view all the answers

    When can a partial offer be made by the Offeror?

    <p>For a specified number of shares on a voluntary basis</p> Signup and view all the answers

    What is the primary document that outlines the process for a Scheme of Arrangement?

    <p>Companies Act</p> Signup and view all the answers

    Which approval threshold is required from Target Company shareholders during the Court Meeting?

    <p>Majority in number and 75% in value</p> Signup and view all the answers

    Which parties must abstain from voting during the Court Meeting for the Scheme?

    <p>Offeror and its Concert Parties</p> Signup and view all the answers

    What must occur for the Scheme to become effective?

    <p>Court sanction order must be filed with ACRA</p> Signup and view all the answers

    Who is responsible for proposing the Scheme to shareholders?

    <p>The Target Company's board</p> Signup and view all the answers

    What is the consequence of the Exit Offer for shareholders during the voluntary delisting process?

    <p>They get monetary compensation</p> Signup and view all the answers

    What is a requirement for the Scheme to be exempt from certain Take-over Code rules?

    <p>Conditions set by SIC</p> Signup and view all the answers

    What is the primary legal action needed to begin the approval process for a Scheme of Arrangement?

    <p>Seeking leave from the High Court</p> Signup and view all the answers

    Which of the following is NOT a step in the approval process for delisting a company?

    <p>Court sanctioning</p> Signup and view all the answers

    What role does the Target Company's board play in the context of a voluntary delisting?

    <p>They can propose the delisting and make necessary applications</p> Signup and view all the answers

    What is the minimum approval threshold required from shareholders for voluntary delisting?

    <p>75% of total number of issued shares</p> Signup and view all the answers

    Which entity's approval is needed following shareholder approval for the exit offer in voluntary delisting?

    <p>SGX-ST</p> Signup and view all the answers

    What is a requirement for the exit offer to be considered valid in voluntary delisting?

    <p>It must include a cash alternative as reasonable</p> Signup and view all the answers

    During voluntary delisting, who must abstain from voting on the delisting resolution?

    <p>Offeror and Offeror Concert Party Group</p> Signup and view all the answers

    What is not a requirement for amalgamation under the Companies Act?

    <p>Approval from the Court</p> Signup and view all the answers

    Which of the following approvals is not necessary for a general offer?

    <p>Court approval</p> Signup and view all the answers

    How long must the exit offer remain open for acceptances if despatched after shareholder approval?

    <p>21 days</p> Signup and view all the answers

    What percentage of equity share capital qualifies as an associated company?

    <p>At least 20% but not more than 50%</p> Signup and view all the answers

    Which statement about concert parties is true?

    <p>They are individuals or companies cooperating to gain effective control.</p> Signup and view all the answers

    Which of the following is a characteristic of a scheme of arrangement?

    <p>Requires court approval</p> Signup and view all the answers

    Which of these is a condition that might allow the SIC to waive certain rules of the Take-over Code?

    <p>Exit Offer must comply with specific conditions</p> Signup and view all the answers

    What is the main purpose of obtaining an IFA opinion in the context of voluntary delisting?

    <p>To verify the reasonableness of the Exit Offer</p> Signup and view all the answers

    In a mandatory general offer, what percentage of shares must the Offeror and its concert parties typically aim to acquire?

    <p>More than 50%</p> Signup and view all the answers

    Study Notes

    General points relating to offers

    • Offeror can request commitments from Target shareholders to accept an offer.
    • All Target shareholders must be treated equally.
    • If an offeror pays for shares in cash, the cash price offered to other shareholders cannot be less than the highest price paid for Target shares.
    • The offer price cannot be less than the highest price paid by any concert parties during the offer period or in the 6 months prior to the offer.
    • Concert parties are those who work together to acquire or consolidate shares in a company.
    • If an offeror paid for shares in securities, those securities must also be offered to all other shareholders.

    Mandatory Offer Trigger Thresholds

    • A mandatory offer is triggered when an Offeror and Concert Parties acquire 30% or more of the Target Company's shares that carry voting rights.
    • If Offeror and Concert Parties hold between 30% and 50% of the Target Company's shares, a further 1% acquisition within a 6-month period will also trigger a mandatory offer.

    Mandatory Offer Conditions

    • A mandatory offer is conditional on Offeror acquiring more than 50% of voting rights of Target. If Offeror already holds more than 50% of voting rights, the offer is unconditional.
    • Mandatory offers can include only a merger control condition as a stipulation.

    Mandatory Offer Price

    • The Offer Price must be in cash, or accompanied by a cash alternative.
    • It must be equal to or higher than the highest price paid by the Offeror or any Concert Parties for Target shares during the offer period or the 6 months leading up to the offer.
    • The Offer Price must consider prices paid for shares through the exercise of convertible instruments, rights to subscribe for shares or options.

    Voluntary Offers

    • A voluntary offer must be conditional on Offeror and Concert Parties acquiring more than 50% of the Target Company.
    • Higher acceptance levels can be stipulated for voluntary offers, which must be stated publicly.
    • Voluntary Offers include conditions that no voting shares can be acquired by Offeror and Concert Parties for 6 months before the offer, or the period between applying for SIC consent and the announcement of the offer.

    Partial Offers

    • Partial offers are for a specific number of shares in a Target Company.
    • A partial offer can be made on a voluntary basis.

    Partial Offers for more than 50%

    • The Offeror and Concert Parties can't acquire any more shares during the offer period or for 6 months after the offer closes, unless through the partial offer.
    • They must abstain from voting on the offer approval amongst target shareholders.
    • The Offeror must disclose to Target shareholders that a successful Partial Offer will give them statutory control over the Target Company.
    • The Offeror and Concert Parties will be able to acquire Target shares freely 6 months after the Offer closes.

    Partial Offer Price

    • The Offer Price must be in cash, securities, or a mix of both.

    Scheme of Arrangement

    • A Scheme is a Court-sanctioned process that allows Offeror to take over the Target Company and have 100% ownership.
    • The Takeover Code allows schemes subject to certain conditions.
    • The Target Company's board must propose the scheme to its shareholders, unlike a general offer.
    • Approval is needed from Target shareholders, and the Scheme must be sanctioned by the Court.
    • The Target Company must be delisted from the SGX-ST if the Scheme is successful.

    Voluntary Delisting

    • Delisting is governed by the SGX-ST Listing Manual.
    • Shareholders must approve the Delisting.
    • A majority shareholder or third party must provide an exit offer to Target shareholders.
    • Delisting is proposed by the Target Board.

    Voluntary Delisting Approvals

    • Target shareholders must approve the Delisting at a general meeting by a majority of at least 75% of issued shares.
    • The Offeror and Concert Parties must abstain from voting on the resolution.
    • The Exit Offer must be fair and reasonable. SGX-ST requires there to be a cash alternative as the default option.
    • An IFA must give an opinion that the Exit Offer is fair before Delisting can happen.

    Voluntary Delisting SIC Approval

    • The SIC will waive certain rules of the Take-over Code for voluntary delisting, subject to certain conditions, including a certain period for the Exit Offer to remain open for acceptances.

    Amalgamation

    • A statutory merger of two Singapore-incorporated companies.
    • No Court approval is needed.
    • Provides an alternative to a general offer or scheme of arrangement for takeovers.

    Concert Parties

    • Individuals or companies who cooperate in acquiring or consolidating shares in a company.

    Presumed Concert Parties

    • A company and any of its directors, subsidiaries, associated companies, financial providers, close relatives, or related trusts of those individuals or companies.
    • A company and any of its pension funds and employee share schemes.
    • A financial advisor and its client if they hold 10% of the client's equity shares.
    • Partners.
    • Persons who provide financial assistance to an individual, their close relatives, or related trusts, companies controlled by them, or any organizations who act under instructions.

    Mandatory Offer Price

    • The Offer Price must be in cash, or accompanied by a cash alternative.
    • It must be equal to or higher than the highest price paid by the Offeror or any Concert Parties for Target shares during the offer period or the 6 months leading up to the offer.
    • The Offer Price must consider prices paid for shares through the exercise of convertible instruments, rights to subscribe for shares or options.

    Approvals Required for Takeover Transactions

    • Shareholder approval is required for a scheme of arrangement, amalgamation, and delisting, but not for a general offer.
    • Court sanction only applies to a scheme of arrangement.
    • The SIC must clear a general offer, scheme of arrangement, amalgamation, and delisting.

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    Description

    Test your knowledge on the general points relating to offers and mandatory offer trigger thresholds in corporate finance. This quiz covers important rules regarding shareholder treatment, offer pricing, and acquisition thresholds. Challenge yourself to see how well you understand these critical aspects of corporate governance.

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