SINGAPORE Law and Practice Contributed by: Benjamin Gaw and Joel Tan, Drew & Napier LLC
access to means such as class action lawsuits or liti - gation funding. 10.2 Stage of Deal As litigation concerning M&A transactions is not com - mon in Singapore, there is no established pattern in relation to the stage of a transaction at which legal proceedings are commonly brought (see 10.1 Fre- quency of Litigation ). 10.3 “Broken-Deal” Disputes The COVID-19 pandemic has resulted in a volatile M&A climate, with buyers increasingly seeking to rely on material adverse change clauses. Given that such clauses have taken on unprecedented importance, it would be important for parties to give greater consid - eration in drafting such clauses to ensure that they reflect the intended allocation of risk between the par - ties. When interpreting material adverse change clauses in light of pandemics, the English High Court has retained the application of conventional contractual principles to establish the parties’ objective understanding of the extent to which a pandemic constitutes a mate - rial adverse effect. This was on the basis that M&A transactions are heavily negotiated contracts between sophisticated parties and lawyers, hence showing that even in the context of a pandemic, the Singa - pore courts will likely be reluctant to imply terms when there is any ambiguity. Conversely, Singapore courts have held that pandem - ic restrictions may render contracts to be terminated by operation of law pursuant to the Frustrated Con - tracts Act 1959. In the case of Dathena Science Pte Ltd v JustCo (Singapore) Pte Ltd [2021] SGHC 219, the Singapore High Court had found that agreements may be discharged by frustration where such restric - tions had rendered the contractual obligation radi - cally fundamentally different from what was agreed between the parties. In Lachman’s Emporium Pte Ltd v Kang Tien Kuan (trading as Lookers Music Café, a sole proprietorship) [2022] SGHC 19, the Singapore High Court dismissed a summary judgment applica - tion against a defendant for the prima facie breach of a tenancy agreement, on the basis that the defend - ant had a bona fide defence of frustration due to the
measures imposed by the government during the COVID-19 pandemic. There have not been any other recent identifiable trends regarding material adverse effect or material adverse change clauses. Another potential area of dispute may concern clauses specifying the party responsible for any material changes in law. Proper negotiation of such change of law clauses will be cru - cial especially if a target’s prospects in M&A will be negatively impacted. Separately, it will be beneficial for parties to increas - ingly utilise due diligence technology to bridge any information gaps during this period of greater volatility in valuations. 11. Activism 11.1 Shareholder Activism There has been a rise in shareholder activism in pub - licly listed companies. In Singapore, the focus of shareholder activists tends to be on improving corporate governance and the pro - tection of minority investors’ rights. The SIAS is also involved in this field by conducting investor education workshops and helping to monitor the corporate gov - ernance of companies. Some recent notable instances of shareholder activ - ism include: • Pangolin Investment Management Pte. Ltd. and other minority shareholders who consolidated a shareholding block of more than 10% to derail the privatisation of Challenger Technologies Limited by voting against the voluntary delisting resolution at the general meeting; • investors of Hyflux Ltd’s perpetual securities and preference shares organised a public demonstra - tion to rally support for the rejection of the com - pany’s restructuring plan; and • unitholders of Sabana Industrial REIT set up a website called “Save Sabana REIT” and sought regulatory intervention to disallow ESR Cayman from being the manager if the all-stock merger
1163 CHAMBERS.COM
Powered by FlippingBook