SINGAPORE Law and Practice Contributed by: Terence Quek, Benjamin Cheong, Hoon Chi Tern and Favian Tan, Rajah & Tann Singapore
(VIMA 2.0). Revisions include the incorporation of more annotations and alternative provisions, while the new documents include templates for: • convertible notes; • employee share option scheme (ESOS) prim- ers; • model constitutions; • mutual non-disclosure agreements; • founders’ agreements; • employee deeds of assignment of IP; • a list of key terms for employees; • share incentive plans; and • an ESG letter of agreement. 2.6 Change of Corporate Form or Migration Start-ups typically continue to remain in the same corporate form. One restriction Singa- pore-incorporated private companies need to be aware of should they wish to remain private is the limit on the number of shareholders, which is 50 (subject to certain exceptions). Singapore- incorporated private companies typically convert to a public company (which has no restrictions on the number of shareholders) prior to an IPO, or where they have more than 50 shareholders. There has also been an uptick in inversions – ie, when start-ups primarily based in other Asian jurisdictions restructure to become a Singapore holding company. 3. Initial Public Offering (IPO) as a Liquidity Event 3.1 IPO v Sale Investors in start-ups are generally open to both options, and these are drafted accordingly in the transaction documents for venture capital investments. If a listing is chosen, Singapore-
based start-ups have several options for securi- ties exchanges, including Singapore, Hong Kong and New York. If a trade sale occurs, it is not uncommon for Singapore-based start-ups to be acquired by foreign buyers looking to gain quick access to the regional market or to bolster their technology and IP assets. Depending on the size of the company, both options of an IPO and a trade sale would be con- sidered. Typically, larger companies with growth and expansion plans would opt for an IPO. 3.2 Choice of Listing The Singapore Exchange (SGX) is one option for Singapore companies looking to raise capital and list on an exchange. Other common options include the Australian Securities Exchange, the Stock Exchange of Hong Kong, the New York Stock Exchange (NYSE) and Nasdaq. The SGX tends to attract companies based in traditional sectors such as property and manu- facturing. Technology companies, on the other hand, have mostly chosen to list on foreign exchanges, owing to the better valuations avail- able. 3.3 Impact of the Choice of Listing on Future M&A Transactions With regard to Singapore-incorporated compa- nies, there is presently a squeeze-out under the Companies Act 1967 of Singapore (the “Com- panies Act”). This applies to all Singapore-incor- porated companies by law, irrespective of their choice of listing jurisdiction.
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