Securities Industry Council consults on amendments to Singapore Code on Take-Overs and Mergers

21 May 2025

On 5 May 2025, the Securities Industry Council (“SIC”) published a consultation paper seeking feedback on proposed amendments to the Singapore Code on Take-overs and Mergers (“Code”). The proposed amendments seek to enhance the regulation of take-overs and mergers in Singapore by protecting the competitive process of take-over and merger transactions, improving the certainty and timeliness of schemes of arrangement, and enhancing disclosures to investors and shareholders. They take into account market developments and evolving international practices since the Code was last revised in 2019, and discussions with practitioners active in the field of mergers and acquisitions. The consultation closes on 5 June 2025.

This article provides an overview of some of the key proposals.

Protecting competitive process for potential offerors by regulating deal protection measures

SIC has observed the increasing use of deal protection measures such as break fees and exclusivity arrangements in negotiated take-over and merger transactions.

Deal protection measures are by design anti-competitive. SIC is of the view that the widespread use of such offer-related arrangements in the context of take-overs would have a detrimental effect on the offeree company, by deterring competing bidders and thus reducing the scope for shareholders to be able to consider and benefit from a competing offer.

SIC therefore proposes to impose a general prohibition on offer-related arrangements other than in certain limited cases.

Improving certainty and timeliness in take-overs via schemes

Scheme meeting to be held within six months of announcement

The application of Rule 22 of the Code (Offer Timetable) is normally waived in the case of take-overs via schemes of arrangement (“schemes”). This approach was taken to take into account the court process required to sanction a scheme. SIC notes that in practice, schemes could take from three months to more than a year to complete.

To avoid prolonged offer periods, SIC proposes requiring the scheme meeting to be held within six months of the announcement of the scheme.

Necessary procedural steps to be taken in relation to scheme

While an offeror cannot unilaterally cause a scheme to become effective, it does in practice have the ability to prevent this from occurring by refusing to take certain actions in relation to the court sanction hearing.

SIC therefore proposes, in cases where an offer is implemented as a scheme, to include an express requirement under the Code for the offeror to undertake procedural steps necessary for the scheme to be effective once all relevant conditions have been satisfied or waived. This would prevent a situation where an offeror might seek to rely upon a long-stop date to lapse its offer where only an immaterial condition is outstanding or by refusing to take the required steps.

Preventing a false market by holding an offeror to its earlier statement, or requiring clarity on earlier statements

Offeror who has issued no increase or no extension statements not permitted to make subsequent offer within certain window

Rule 33.1(a) of the Code imposes a 12-month delay on a subsequent offer by an offeror whose offer has been withdrawn or lapsed. This is to prevent the offeree company from being put under a prolonged “siege” by an unwelcome offeror. However, SIC would normally lift such restriction if the subsequent offer was recommended by the offeree company board.

SIC is of the view that an offeror that has made a no increase statement or a no extension statement should be held to it, as shareholders and investors would have relied on it to make their investment decision. SIC proposes that, where an offeror has issued such statements, it will not normally consent to a new offer that is on more favourable terms than the previous offer until the later of:

  • three months from the date on which the previous offer was withdrawn or lapsed; and
  • the end of the offer period of any competing offer existing at the time the previous offer lapsed or is withdrawn.

Codification of 28-day put up or shut up deadline

Currently, where an announcement of a firm intention to make an offer is premature or inappropriate, a holding announcement may be made in accordance with the Code. Subsequently, monthly updates on the progress of such talks are required until a firm intention to make an offer or a decision not to proceed with an offer is announced in accordance with Note 5 on Rules 3.1, 3.2, and 3.3 of the Code. The Code however does not provide a deadline for when the potential offeror must clarify its intentions.

As a codification of its current practice, SIC proposes to amend the Code such that where a potential offeror has made a holding announcement about a possible offer and has not clarified its intentions for a prolonged period, it would be given a 28-day deadline to clarify its intentions by announcing a firm offer or stating that it would not be making an offer. If an indicative offer price is disclosed prior to a firm offer, the firm offer must be at no less than such indicative price.

Enhancing information provided to shareholders to enable their decision-making on frustrating actions

Regulation relating to an asset sale that is in competition with an offer for voting rights

A frustrating action is an action taken by an offeree board which could result in shareholders being denied an opportunity to consider an offer. An example would be a competing offer for all or materially all the assets of the offeree company.

The Code does not currently apply to transactions under which the offeree board, in competition with an offer for voting rights, is proposing to sell all or materially all of the company’s assets and to return to shareholders all or materially all of the company’s cash balances, including any asset sale proceeds. However, the economic outcomes of the two transactions (i.e. asset sale vs offer for voting rights) for shareholders in the offeree company are comparable. In addition, there is concern that the offeror for voting rights could be disadvantaged vis-à-vis the asset acquirer given that only the offeror for voting rights has to comply with the Code. To address these issues, SIC proposes to regulate an asset sale that is in competition with an offer for voting rights.

In view of the potential uncertainties involved in returning to shareholders all or substantially all of the company’s cash balances, SIC proposes to require a statement by the offeree company quantifying the cash sum expected to be paid to shareholders and accord similar treatment as a profit forecast, which is subject to reporting and disclosure requirements. The asset purchaser would also be restricted from acquiring shares in the offeree company during the offer period at above the amount per share quantified.

Requirements relating to meeting to approve proposed frustrating action

Rule 5 of the Code prohibits the taking of any action that could effectively result in any bona fide offer being frustrated or in shareholders being denied an opportunity to decide on its merits, without shareholder approval in general meeting. There is, however, little guidance on the information to be provided to shareholders to approve the frustrating action, aside from requiring that the notice convening such meeting include information about the offer or anticipated offer.

SIC proposes to:

  • set out the information to be provided to offeree company shareholders;
  • require that the offeree company obtain competent independent advice as to whether the financial terms of the proposed action are fair and reasonable; and
  • require that the offeree company consult SIC on the timing of the general meeting.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg: