SINGAPORE Law and Practice Contributed by: Benjamin Gaw and Joel Tan, Drew & Napier LLC
2.3 Restrictions on Foreign Investments There is no general restriction on the amount of shares that a foreign entity may own in a company incorpo - rated in Singapore. However, there may be restric - tions that limit or require prior regulatory approval for control or share ownership in companies in certain regulated industries that are perceived to be critical to national interests, such as banking, insurance, broad - casting, defence and newspaper publishing. Under the Singapore Significant Investments Review Act 2024 (SIRA), which came into effect on 28 March 2024, investors and acquirors are subject to notifica - tion and approval requirements prior to becoming a controller of a designated entity. Presently, there are nine designated entities under SIRA, including com - panies in the oil industry and four entities under Sin - gapore technology, defence and engineering group ST Engineering. 2.4 Antitrust Regulations Business combinations in Singapore are subject to the Competition Act 2004, which contains, among others, the following provisions: • Section 34, which prohibits agreements which have as their object or effect the prevention, restriction or distortion of competition within Singapore; • Section 47, which prohibits conduct that amounts to the abuse of a dominant position in any Singa - pore market; and • Section 54, which prohibits mergers that have resulted, or may be expected to result, in a sub - stantial lessening of competition within any market in Singapore for goods or services. As the merger notification regime in Singapore under the Competition Act 2004 is voluntary, parties to a merger are not obliged to notify the CCS of their pro - posed or completed business combinations. How - ever, parties to a merger situation may do so where, following a self-assessment, they have concerns that the merger or anticipated merger has led to or may lead to a substantial lessening of competition in a Sin - gapore market. Although the CCS can investigate mergers on its own initiative, it is unlikely to intervene in a merger situation
that only involves small companies – ie, where the turnover in Singapore in the financial year preceding the transaction of each of the parties is below SGD5 million and the combined worldwide turnover in the financial year preceding the transaction of all of the parties is below SGD50 million. Generally, the CCS is also unlikely to investigate in a merger situation, unless the merged entity will have a market share of: • 40% or more; or • between 20% and 40% and the post-merger combined market share of the three largest firms is 70% or more. 2.5 Labour Law Regulations Where the acquisition is structured as a transfer of the business undertaking of the target company, the automatic employment transfer provisions under the Employment Act 1968, Section 18A may be applica - ble in respect of employees who are covered under the Employment Act 1968 at the time of the business transfer (EA employees) – ie, generally all employees. In particular, the Employment Act 1968, Section 18A provides for: • an automatic transfer of the EA employees on the same terms as their existing employment contract, unless the acquirer and the EA employees agree to different terms; • a continuation of the EA employees’ period of employment; • a transfer of existing rights, powers, duties and liabilities of the target company in respect of the EA employees to the acquirer; and • a requirement to notify the EA employees of the proposed business transfer. Where the business transfer involves a transfer of foreign employees, the acquirer should consider if new work-pass applications would be required for the incoming foreign employees or if the transfer of foreign employees would affect work-pass quotas. Where the acquisition is structured as a transfer of shares, the employees of the target company will con -
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