SINGAPORE Law and Practice Contributed by: Terence Quek, Benjamin Cheong, Hoon Chi Tern and Favian Tan, Rajah & Tann Singapore
of-interest issues, it is becoming increasingly common – especially in the case of management buyouts. Furthermore, the board is allowed to delegate the day-to-day conduct of an offer to a commit- tee; however, it must continue to take respon- sibility for every document, advertisement or announcement that the target company pub- lishes in relation to an offer. Directors who have an irreconcilable conflict of interests may be exempted by the SIC from making recommen- dations to shareholders but must still assume responsibility for every document, advertise- ment or announcement that is published by the target company in relation to an offer. 11.3 Board’s Role Depending on the structure of the transaction (and whether the offer is an unsolicited offer), the board of a target company may not necessarily be involved in negotiating a takeover offer. Apart from schemes of arrangement, target companies in Singapore do not typically enter into imple- mentation agreements or conduct bid agree- ments for takeover offers. However, as mentioned in 6.10 Types of Deal Protection Measures , the Takeover Code does specifically provide that the board of the target company may solicit for a competing offer or run a sale process – given that a better offer is in the interests of the target company’s shareholders and would still allow shareholders to consider the merits of the first offer. It is not common for shareholders in a target company to challenge the recommendation of its directors with regard to the advice and rec- ommendations of the independent financial
adviser appointed to advise on the offer. How- ever, shareholder activism has been on the rise in recent times when it comes to takeovers of public companies. 11.4 Independent Outside Advice The board of a Singapore-incorporated buyer must obtain competent independent advice on any offer, and the essence of such must be made known to its shareholders. Furthermore, the Listing Manual provides that – where the target company is seeking to delist from the SGX – the issuer must appoint an independent financial adviser to: • advise on the exit offer; and • assess whether the exit offer is fair and rea- sonable. The target company must issue a circular for the shareholders’ consideration, in which the follow- ing are published: • the analysis of the independent financial adviser; • the opinion of the financial adviser on the offer; and • the recommendations of the directors who are considered independent for the purposes of the offer. On 3 July 2023, SGX RegCo issued the Guide- lines on Independent Financial Adviser s and an accompanying “regulator’s column” setting out SGX RegCo’s expectations and guidance for independent financial advisers and their opin- ions, as well as the role and expectations for directors in procuring an opinion from independ- ent financial advisers, in the context of the SGX listing rules.
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