SINGAPORE Law and Practice Contributed by: Benjamin Gaw and Joel Tan, Drew & Napier LLC
mergers. For instance, in 2017, the SGX reprimanded Singapore Post Limited (SingPost) for its non-compli - ance with the SGX Listing Rules, including its failure to accurately disclose that its then director had an interest in acquisition by SingPost’s subsidiary of all the shares in F.S. Mackenzie Limited (FSM Acquisi - tion). The then director was the non-executive chair - man and a 34.5% shareholder of the arranger for the FSM Acquisition. The clarification announcement released by Sing - Post attributing the inaccuracy to an administrative oversight led to public commentaries questioning its corporate governance, including the then director’s independence, as well as whether the then director should have disclosed their interest to SingPost’s board, abstained from voting and recused themselves from the discussions on the FSM Acquisition. It should be noted that, under the Takeover Code, the board of a Singapore-incorporated bidder must obtain competent independent advice when it faces a material conflict of interests and make known the substance of the advice obtained to its shareholders. A conflict of interest will exist where there are signifi - cant cross-shareholdings between the bidder and the target company, where there are a number of direc - tors common to both companies, or where a common substantial shareholder in both companies is a direc - tor of or has a nominee director in either company. Furthermore, directors who have an irreconcilable conflict of interests and those who have been exempt - ed by the Council from making recommendations to shareholders on an offer should not join with the remainder of the board in the expression of its views on the offer.
interest in acquisition by SingPost’s subsidiary of all the shares in F.S. Mackenzie Limited (FSM Acquisi - tion). The then director was the non-executive chair - man and a 34.5% shareholder of the arranger for the FSM Acquisition. The clarification announcement released by Sing - Post attributing the inaccuracy to an administrative oversight led to public commentaries questioning its corporate governance, including the then director’s independence, as well as whether the then director should have disclosed their interest to SingPost’s board, abstained from voting and recused themselves from the discussions on the FSM Acquisition. It should be noted that, under the Takeover Code, the board of a Singapore-incorporated bidder must obtain competent independent advice when it faces a material conflict of interests and make known the substance of the advice obtained to its shareholders. A conflict of interest will exist where there are signifi - cant cross-shareholdings between the bidder and the target company, where there are a number of direc - tors common to both companies, or where a common substantial shareholder in both companies is a direc - tor of or has a nominee director in either company. Furthermore, directors who have an irreconcilable conflict of interests and those who have been exempt - ed by the Council from making recommendations to shareholders on an offer should not join with the remainder of the board in the expression of its views on the offer. 9.2 Directors’ Use of Defensive Measures In a public M&A transaction that is subject to the Take - over Code, directors are prohibited under the Takeo - ver Code from taking any action on the affairs of the offeree company that could effectively result in any bona fide offer being frustrated or the shareholders being denied an opportunity to decide on its merits. This is unless they have shareholder approval to do so, or they do so pursuant to a contract entered into earlier during the negotiation process. Some of the actions that may constitute frustration are:
9. Defensive Measures 9.1 Hostile Tender Offers
There are reported cases in recent years involving conflicts of interests in the context of takeovers and mergers. For instance, in 2017, the SGX reprimanded Singapore Post Limited (SingPost) for its non-compli - ance with the SGX Listing Rules, including its failure to accurately disclose that its then director had an
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