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
above a certain threshold, and material acquisitions and disposals. Directors of the portfolio company appointed by the private equity investor may disclose information received by such directors if such disclosure is: • not likely to prejudice the portfolio company; and • made with the authorisation of the portfolio com - pany’s board of directors, with regard to all, any class of, or specific information. 9.2 Shareholder Liability As a fundamental principle of company law, a com - pany is a separate legal entity from its shareholders and its shareholders are not liable for the company’s actions. The Singapore courts would not generally pierce the corporate veil. Accordingly, it is unlikely that a private equity investor will be liable for the liabilities of underlying portfolio companies, except in very unu - sual circumstances. 10. Exits 10.1 Types of Exit Most exits in recent years have been through trade sales rather than through public offerings. Holding periods seem to be on the rise and average about five to six years or even more. Dual-tracked exit processes are only undertaken when private equity sellers are truly unsure which option is more likely to be consummated; however, they are usually keen to end the dual track as soon as possible. 10.2 Drag and Tag Rights Drag Rights Drag rights are common in the event of an exit by the private equity investor, but it is less common for the drag to actually be enforced, since interests are usu - ally aligned, and most exits are done on a consensual basis. Drag thresholds vary but will typically be 50% or more. In transactions where there is a significant minority or institutional co-investor, it could be that a hurdle
needs to be achieved before the drag can be acti - vated. Tag Rights Tag rights in favour of management and co-investors are not uncommon, but they depend on the bargaining powers of the management shareholders. Institutional co-investors would typically expect a quid pro quo tag right for drag rights. 10.3 IPO Lock-Up Moratorium requirements are set out under the SGX Listing Rules for the Mainboard and Catalist respec - tively. For the Mainboard For promoters (which include persons holding 15% or more of the total voting rights in the issuer and their associates, and executive directors with an interest in 5% or more of the issued share capital of the issuer, excluding subsidiary holdings, at the time of listing): • the moratorium is for the entire shareholding for at least six months after listing; and • if the issuer is relying on certain admission criteria, the promoters’ shareholding will be subject there - after to a further lock-up of no less than 50% of the original shareholding (adjusted for bonus issue, subdivision or consolidation) for an additional six months thereafter. Where a promoter has an indirect shareholding in the issuer, the promoter must also provide an undertak - ing to maintain the promoter’s effective interest in the securities under moratorium during the moratorium period. However, where an indirect shareholding is held through a company which is listed, the promot - er’s holding in that listed company is excluded from the moratorium. For investors with 5% or more of post-invitation share capital who acquired and paid for their shares less than 12 months prior to the date of the listing applica - tion, their shares will be subject to a six-month lock-up to be given over the proportion of shares representing the profit portion of the shares.
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