MA 3 - Public Takeovers
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Questions and Answers

What must be included in the disclosure for a partial offer exceeding 50% of shares?

  • The offeror's ability to liquidate assets immediately.
  • The possibility of exercising statutory control over the target company. (correct)
  • An assurance that no special deals will be made.
  • The percentage of shares already acquired by the offeror.

Which method of compensation is NOT allowed for the offer price in a partial offer?

  • A combination of cash and securities
  • Securities only
  • Cash only
  • Goods or services (correct)

What is a required characteristic of irrevocable undertakings in a partial offer?

  • They can be canceled during the offer period.
  • They provide assurance of a certain level of acceptances. (correct)
  • They should be sought from all shareholders before the offer period.
  • They must be non-binding.

Which of the following principles underlies the rules of the Takeover Code?

<p>Equal treatment of all shareholders. (D)</p> Signup and view all the answers

What is the threshold for a mandatory cash offer if shares carrying 10% voting rights are bought?

<p>Not less than the highest price paid by the offeror or parties. (B)</p> Signup and view all the answers

Which rule prescribes the timetable for mandatory, voluntary, or partial offers?

<p>Rule 22 (B)</p> Signup and view all the answers

What is a requirement for an offer document according to the partial offer for more than 50% of shares?

<p>It must have certain disclosures about statutory control. (C)</p> Signup and view all the answers

In the context of offers, what is the main purpose of issuing an offer document?

<p>To communicate the terms and conditions of the offer. (C)</p> Signup and view all the answers

During the offer period, what must be assured regarding the offering process?

<p>No special deals can be made to specific shareholders. (C)</p> Signup and view all the answers

Which of the following is NOT a condition for a partial offer?

<p>A minimum duration for the offer's validity. (A)</p> Signup and view all the answers

What is a key reason that amalgamation is not a popular structure for public takeovers?

<p>It exposes directors to personal liability through sovereignty statements. (D)</p> Signup and view all the answers

Which of the following takeover structures requires shareholder approval during a general meeting?

<p>Both B and C (D)</p> Signup and view all the answers

Which structure strictly requires approval from the CORD?

<p>Schema arrangement (D)</p> Signup and view all the answers

What role do concert parties play in structuring a takeover?

<p>They influence minimum acceptance conditions based on their shareholdings. (B)</p> Signup and view all the answers

What is a common characteristic of all takeover structures regarding SIC approval?

<p>All discussed takeover structures require SIC consultation. (B)</p> Signup and view all the answers

Which entities are excluded from the applicability of the Takeover Code?

<p>Foreign companies without a primary listing (A), Unlisted Singapore companies with fewer than 50 shareholders (B)</p> Signup and view all the answers

What is the minimum net tangible assets requirement for an unlisted company to fall under the Takeover Code?

<p>$5 million (A)</p> Signup and view all the answers

Under what circumstances may the SIC grant a waiver of the Takeover Code?

<p>For foreign entities with significant trading in Singapore (C)</p> Signup and view all the answers

What factor does the SIC consider when evaluating waiver applications for the Takeover Code?

<p>The number of shareholders or unit holders in Singapore (A)</p> Signup and view all the answers

Which of the following entities is directly governed by the Takeover Code?

<p>Registered business trusts with a primary listing on the Singapore Exchange (D)</p> Signup and view all the answers

What is the primary focus of the Takeover Code?

<p>Protecting the rights of shareholders in takeover situations (C)</p> Signup and view all the answers

Which of the following statements about the Takeover Code is true?

<p>It applies to unlisted companies with specific criteria. (C)</p> Signup and view all the answers

What happens if the offeror does not meet the minimum acceptance condition in a mandatory offer?

<p>The offeror is required to return all shares tendered in acceptance. (C)</p> Signup and view all the answers

Which of the following is a permitted condition for a mandatory offer under the takeover code?

<p>A merger control condition. (C)</p> Signup and view all the answers

What is the minimum price requirement for a mandatory offer?

<p>It cannot be less than the highest price paid during the offer period. (B)</p> Signup and view all the answers

In a voluntary offer, what is the default minimum acceptance condition according to the Takeover Code?

<p>More than 50% of the target company. (C)</p> Signup and view all the answers

How does the offeror's flexibility differ between mandatory and voluntary offers?

<p>Offerors have less flexibility in voluntary offers. (B)</p> Signup and view all the answers

When considering the price paid in a mandatory offer, which of the following must be taken into account?

<p>Shares acquired through convertible instruments and options. (C)</p> Signup and view all the answers

What must be provided by the offeror in the form of pricing for mandatory offers?

<p>Cash or a cash alternative. (D)</p> Signup and view all the answers

What occurs if an offeror has already reached over 50% at the time of a mandatory offer being triggered?

<p>The offer is deemed unconditional without a minimum acceptance condition. (C)</p> Signup and view all the answers

Which option best defines the purpose of a minimum acceptance condition in an offer?

<p>To secure majority control of the target company. (C)</p> Signup and view all the answers

What is the minimum percentage of issued shares required for shareholders to approve a voluntary delisting?

<p>75% (C)</p> Signup and view all the answers

Which of the following statements regarding the SGXST's approval process for voluntary delisting is true?

<p>The SGXST must clear the circular issued by the target company. (A)</p> Signup and view all the answers

Which condition must be met for the exit offer to shareholders during a voluntary delisting process?

<p>It must include a fair cash alternative as the default. (D)</p> Signup and view all the answers

What is meant by 'off-road' parties in the context of voluntary delisting?

<p>Individuals associated with the offeror that must abstain from voting. (C)</p> Signup and view all the answers

Under what conditions can the SIC waive certain rules of the takeover code?

<p>Provided the exit offer remains open for a specified period. (A)</p> Signup and view all the answers

What type of merger is described as an amalgamation under the Companies Act?

<p>A statutory merger only applicable to Singapore incorporated companies. (C)</p> Signup and view all the answers

What is the outcome for the offeror in a general offer and scheme of arrangement?

<p>They hold either a majority stake or all shares in the target company. (D)</p> Signup and view all the answers

Which authority grants the final approval for voluntary delisting after shareholder approval?

<p>The SGXST. (C)</p> Signup and view all the answers

What is a critical characteristic of the exit offer during voluntary delisting?

<p>It must be accompanied by an opinion affirming its fairness. (A)</p> Signup and view all the answers

Which of the following options is NOT a requirement for a successful voluntary delisting?

<p>Exit offer to be open indefinitely. (D)</p> Signup and view all the answers

Flashcards

Takeover Code

A non-statutory set of rules, administered by the Securities Industry Council (SIC), that governs corporate takeovers in Singapore.

SIC

Securities Industry Council, the body responsible for administering the Takeover Code.

Public Takeover

Acquisition of a publicly listed company.

Unlisted Companies

Companies not listed on a stock exchange.

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Waiver of Takeover Code

Requesting that the SIC allows an exception to the application of the Takeover Code in specific cases.

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50+ Shareholders/Unit Holders

Threshold for application of the Takeover Code to unlisted companies or trusts having 50 or more shareholders or unit holders.

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Net Tangible Assets of SGD 5 Million

Another threshold for application of the Takeover Code to unlisted companies or trusts with net tangible assets of 5 million or more.

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Mandatory Offer Minimum Acceptance

If an offeror already owns more than 50% of the target company's shares at the time of a mandatory offer, this condition is waived.

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Mandatory Offer's Failure

If a mandatory offer does not meet the minimum acceptance condition, the offer lapses, and shares must be returned to sellers.

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Mandatory Offer Price

Mandatory offers must be in cash or have a cash alternative. The price must be at least as high as the highest price the offeror or anyone acting in concert paid in the offer period and six months before.

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Offer Price Consideration

Consider convertible instruments, stock options, or rights-to-purchase when determining offer's minimum acceptable price

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Voluntary Offer Minimum Acceptance

A voluntary offer typically requires acquiring more than 50% of the target company's shares, but a higher percentage can be set, such as 75%.

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Voluntary vs. Mandatory Offers

Voluntary offers are flexible and can set more stipulations, unlike mandatory offers which primarily involve a minimum acceptance threshold.

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Merger Control Condition

The only other condition allowed for a mandatory offer aside from minimum acceptance.

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Offeror

The party seeking to acquire shares of a company in takeover offers (mandatory or voluntary).

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Concept Parties

Individuals or entities working with the offeror in a takeover attempt to gain control.

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Delisting Proposal

A proposal by a company to remove its shares from trading on a stock exchange.

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Voluntary Delisting

A company's voluntary decision to remove its shares from a stock exchange.

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Shareholder Approval for Delisting

A majority of at least 75% of shareholders must approve the voluntary delisting proposal.

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SGX-ST Approval for Delisting

The Singapore Exchange (SGX-ST) must also approve the voluntary delisting.

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Fair and Reasonable Exit Offer

The offer made to shareholders in a voluntary delisting must be fair and reasonable.

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Independent Opinion on Exit Offer

A third-party expert must confirm that the exit offer is fair and reasonable.

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Takeover Code Requirements

The exit offer in a delisting is subject to certain rules in the Takeover Code.

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Amalgamation

A statutory merger of two Singapore-incorporated companies, where they combine to form a single entity.

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General Offer

A takeover method where the offeror aims to acquire a majority or all of the target company's shares.

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Scheme of Arrangement

A legal procedure where shareholders of a company approve a specific arrangement, often related to a takeover.

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Amalgamation Takeover

A takeover structure where two companies merge into a single new entity. It involves shareholder approval and requires a sovereignty statement from directors.

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Shareholder Approval in Takeovers

Different takeover structures have varying shareholder approval requirements. General offers don't need a general meeting, while others like schema arrangements, amalgamations, and delistings require shareholder vote.

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CORD Approval in Takeovers

Only schema arrangements require approval from the Companies, Registrar and Official Receiver's Department (CORD).

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SIC Consultation in Takeovers

All takeover structures require consultation with the Securities Industry Council (SIC) for compliance.

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Concert Party in Takeovers

A group of individuals or entities acting together to influence a takeover, impacting rules like mandatory offer thresholds and minimum acceptance conditions.

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Partial Offer Disclosure

When a partial offer for more than 50% of a target company's shares is made, the offer document must disclose the offeror's ability to gain statutory control if the offer is successful. This refers to the possibility of gaining control through the exercise of voting rights.

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Partial Offer Price

The price offered for a partial takeover must be in cash, securities, or a combination of both. The offeror has the flexibility to choose the payment method that is most advantageous for them.

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Takeover Code Timetable

All mandatory, voluntary, or partial offers must adhere to a specific timetable outlined in Rule 22 of the Takeover Code. The timetable dictates when offer documents must be dispatched, when responses from the target company are due, and the minimum duration the offer must remain open.

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Irrevocable Undertakings

Offerors can obtain irrevocable undertakings from target company shareholders before or during the offer period. These undertakings are binding agreements by the shareholder to accept the offer, assuring the offeror of a minimum number of acceptances.

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Equal Treatment Rule

When making a takeover offer, all shareholders of the target company must be treated equally. No shareholder should receive preferential treatment or benefits that are not offered to others.

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Mandatory Cash Offer Trigger

If an offeror and their concert parties have acquired 10% or more of the voting rights of the target company through cash purchases within six months before or during the offer period, a mandatory cash offer must be made. This offer price must be at least as high as the highest cash price paid by the offeror or their concert parties.

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Voting Rights

Voting rights are associated with shares of a company. These rights allow shareholders to participate in certain company decisions, influencing the company's direction and actions.

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Offer Period

The offer period is the duration during which an offeror can attempt to acquire shares of a target company. It commences with the announcement of the offer and ends when the offer is closed.

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Statutory Control

Statutory control refers to the legal right to control a company's activities. This can be achieved through various means, including the acquisition of a significant number of shares, enabling an entity to exercise voting rights.

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Study Notes

Public Takeovers and Mergers in Singapore

  • Public takeovers and mergers in Singapore are governed by the Singapore Code on Takeovers and Mergers (Takeover Code).
  • The Takeover Code applies to takeovers of corporations and registered business trusts with a primary listing on the Singapore Exchange, as well as certain unlisted companies and business trusts.
  • Breaching the Takeover Code may result in sanctions from the Securities Industry Council (SIC), including private reprimands, public censures, and restrictions on dealing in securities.
  • Takeover structures include general offers, scheme arrangements, voluntary delistings, and amalgamations.
  • Shareholder approval, CORD approval, and SIC approval may be needed, depending on the takeover structure.
  • Concert parties (parties cooperating to control a target company) are significant in takeover transactions.

Regulatory Framework

  • The Takeover Code (non-statutory rules) is administered by the SIC.
  • The Takeover Code applies to takeovers of corporations (including foreign incorporated companies) and registered business trusts listed on the Singapore Exchange.
  • It also applies to takeovers of certain unlisted companies and trusts (with more than 50 shareholders/unit holders and net tangible assets of S$5 million or more).
  • Waivers to the code may be possible for some foreign incorporated companies and trusts.
  • The SIC will consider the number of Singapore shareholders, trading volume, and if shareholder protections are in place before granting a waiver.
  • The target company's business trust (REIT) is also subject to the Takeover Code (whether the acquisition is structured within or outside Singapore). All offerors, whether individuals or companies, and whether Singapore residents or not, have to comply.

Types of Acquisition Structures

  • General Offer: The offeror makes an offer directly to all target company shareholders irrespective of the target board's stance. Shareholders decide if they will accept the offer.
    • Mandatory Offer: Triggered when the offeror's and concert parties' combined shareholding exceeds 30% of the target company's voting rights or when their holdings are between 30% and 50% and they acquire more than 1% of the voting rights of the target company within six months.
    • Voluntary Offer: Made by the offeror at its own discretion, not triggered by mandatory offer rules.
    • Partial Offer: Made to shareholders for a specific number or percentage of shares, instead of all shares. This must be approved by the SIC.
  • Schema Arrangement: A statutory structure for acquiring a target company whereby shareholders vote on transferring shares in a general meeting to the off-road in exchange for specified consideration. All shareholders are legally bound by the arrangement, effectively transferring ownership to the off-road.
  • Amalgamation: Two or more Singapore companies merging into a single entity (requires approval).
  • Voluntary Delisting: An exit offering made by the target company in a general meeting. It must be approved by shareholders and the SGXST, and the exit offer needs to be reasonable and fair.

Implication of a Breach of the Takeover Code

  • While the Takeover Code isn't legally binding, strict compliance is essential.
  • Sanctions by the SIC range from private reprimands to public censures and restrictions on dealing in securities, and potentially criminal prosecution if the breach is severe enough.
  • Shareholders of the target company may be compensated by the SIC if there has been a breach of the code for example.

Other Considerations

  • Statutory and regulatory provisions (e.g., Companies Act, Securities & Futures Act).
  • Timetables and procedures (e.g., offer documents release, and closing dates)
  • Concert party definitions and considerations for determining if parties are in concert.

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Singapore Public Takeovers and Mergers PDF

Description

This quiz explores the regulations governing public takeovers and mergers in Singapore, specifically focusing on the Singapore Code on Takeovers and Mergers. It covers key aspects such as the approval processes, types of takeover structures, and the implications of breaching the Takeover Code. Test your knowledge on the legal framework and practices surrounding corporate acquisitions in Singapore.

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