SINGAPORE Law and Practice Contributed by: Benjamin Gaw and Joel Tan, Drew & Napier LLC
any such offer, etc; (d) a confirmation that all other agreements or understandings in relation to the break fee ar - rangements have been fully disclosed; (e) a confirmation that they each believe the fee to be in the best interests of the target company’s shareholders; and (f) any break fee arrangement must be fully dis - closed in the offer announcement and the offer document. Relevant documents must be made available for inspection. Under the Proposed Amendments, the SIC is consid - ering a general prohibition of deal protection meas - ures, except in limited circumstances. For example, the SIC proposes introducing additional limits on break fees, such as how they will only become pay - able if an offer becomes or is declared unconditional. 6.8 Additional Governance Rights Apart from its shareholding, additional governance rights such as board seats that a bidder may seek in respect of a target company generally need to be set out in the target company’s constitution. 6.9 Voting by Proxy Shareholders are generally allowed to vote by proxy, subject to the restrictions under the Companies Act 1967. Unless the constitution otherwise provides: • a proxy shall not be entitled to vote except on a poll; • a shareholder shall not be entitled to appoint more than two proxies to attend and vote at the same meeting; and • an appointment of two proxies will be invalid unless the shareholder specifies the proportions of their holdings to be represented by each proxy. 6.10 Squeeze-Out Mechanisms The Companies Act 1967, Section 215 provides a mechanism for the compulsory acquisition of shares. Where a bidder makes an offer that is approved within four months by shareholders holding not less than 90% of the shares that are the subject of the offer (excluding shares issued after the date of the offer and
treasury shares), the bidder may within two months thereafter give notice in the prescribed manner to dis - senting shareholders to acquire their shares. Additionally, where the target company’s constitution provides for drag-along rights, minority shareholders may be required to accept the offer along with the exiting shareholders. 6.11 Irrevocable Commitments Bidders may request for irrevocable undertakings from principal shareholders of the target company to accept the offer. These undertakings are usually given immediately before the offer is made, and it is com - mon for them to provide an out for shareholders if a better offer is made. For acquisitions of a target company to which the Takeover Code applies, information about the com - mitments (including in what circumstances, if any, they will cease to be binding – eg, if a higher offer is made) must be set out in the offer announcement and offer document. Relevant documents evidencing such commitments must also be made available for inspection. For acquisitions of a target company to which the Takeover Code applies, once an approach has been made to the board, the primary responsibility for mak - ing an announcement typically rests with the board. The target company’s board is required to make an announcement in any of the following circumstances: • it receives notification of a firm intention to make an offer from a serious source; • if, after the bidder has approached the target com - pany, the target company is the subject of rumour or speculation about a possible offer, or there is undue movement in its share price or a significant increase in the volume of share turnover; • negotiations or discussions between the bidder or the target company are about to be extended to include more than a very restricted number of 7. Disclosure 7.1 Making a Bid Public
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