SINGAPORE Law and Practice Contributed by: Evelyn Wee, Sandy Foo, Tracy-Anne Ang, Terence Quek, Hoon Chi Tern, Goh Jun Yi and Tricia Teo, Rajah & Tann Singapore LLP
Key Regulators Relevant to Private Equity Transactions and the Private Equity Community Monetary Authority of Singapore Fund management is a regulated activity under the Monetary Authority of Singapore Act, for which a Capital Markets Services (CMS) licence is required – unless one of the available licensing exemptions applies. Typically, the manager of the private equity funds in Singapore must be a licensed fund manage - ment company that holds a CMS licence. Singapore Exchange and Securities Industry Council Public-to-private transactions need to comply with the regime under the Takeover Code, which is adminis - tered by the SIC, and voluntary delistings under the SGX Listing Rules. Competition and Consumer Commission of Singapore The Competition and Consumer Commission of Sin - gapore (CCCS) is the regulator for competition law and regulations. Relevant Laws/Regulations Private equity players will often encounter the follow - ing legislative provisions in the course of their busi - ness compliance or in transactions: • the Securities and Futures Act; • the Takeover Code; • the SGX Listing Rules – these apply to all compa - nies listed on the SGX (whether the Mainboard or the secondary “Catalist” board) and require con - trolling shareholders to notify listed companies of: (a) any share-pledging arrangements; and (b) any event that may result in a breach of loan covenants entered into by the listed company, which may impact acquisition financing terms for buyouts; • the Competition Act – generally, anti-competitive agreements or any M&A that substantially lessen competition are prohibited under the Competition Act and require clearance/consent from the CCCS; • the Companies Act – this is applicable to all incor - porated companies in Singapore; • the Employment Act – this applies where the trans - fer of employees is involved or where it is neces -
sary to enter into employment agreements with key employees; and • sector-specific legislation the target may be sub - ject to.
4. Due Diligence 4.1 General Information
Typically, detailed due diligence is carried out by pri - vate equity bidders covering the usual areas, such as commercial, financial, tax, legal, insurance, compli - ance and environment. Materiality and scope depend on the private equity investor’s risk assessment and financing requirements, the complexity of the target’s business, and the timeframe for the particular acqui - sition. Legal due diligence usually covers the following areas: • corporate information and records; • regulatory approvals; • licences or permits; • material contracts; • any change of control or change in shareholding restrictions; • information relating to assets (including title to real estate), IP rights and IT; • employee and labour law matters; • litigation that the target is involved in (including customary litigation and court searches); • charges and encumbrances registered against the target’s assets; and • ESG, responsible investing and compliance mat - ters, such as environmental laws, data protection, and anti-bribery and corruption (although these will typically be conducted with the help of specialist advisers). 4.2 Vendor Due Diligence Vendor due diligence (VDD) and reliance on VDD reports is not as common in Singapore as it is in other jurisdictions (eg, the UK and Europe), but there has been a growing trend towards this in recent years – especially for competitive auction deals run by private equity sellers (who tend to run better-organised sale processes than less sophisticated sellers).
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