Issuers may apply to Singapore Exchange (SGX) to seek a delisting for a variety of reasons and strategic impetuses. Various mechanisms may also be utilised to privatise an issuer, such as, a general offer under the Singapore Code on Take-overs and Mergers (“General Offer”). The Listing Rules stipulate the requirements that must be satisfied before SGX will agree to the delisting (“Delisting Rules”). On 11 July 2019, following consultations with market participants and the public, Singapore Exchange Regulation (SGX RegCo) amended the Delisting Rules to enhance minority shareholder protection. SGX RegCo also published a Regulator’s Column on 11 July 2019 to clarify the applicability of the Delisting Rules to a delisting through a General Offer (available here).
To recap, if the issuer loses free float pursuant to a General Offer but the following conditions are met, SGX RegCo may take the view that the Delisting Rules are substantively complied with and will consider waiving strict compliance:
- as at the close of the General Offer, the offeror has received acceptances from independent shareholders (i.e. shareholders excluding the offeror and parties acting in concert with it) (“Independent Acceptances”) that represent a majority of at least 75% of the total number of issued shares held by independent shareholders (“75% Acceptance Condition”); and
- the General Offer is fair and reasonable (and the independent financial adviser has opined that the General Offer is fair and reasonable).
It is important that shareholders are aware of the potential consequences in considering whether to accept a General Offer, particularly where free float has been lost but the requisite conditions for delisting, including the 75% Acceptance Condition, are not met. Therefore, SGX RegCo wishes to reiterate that takeover documents should contain appropriate disclosures to highlight to shareholders the risk that the issuer may consequently be subject to prolonged suspension.
In addition, SGX RegCo is publishing this Regulator’s Column to highlight that it expects that shareholders be kept updated, by way of an announcement on SGXNET, at the following key milestones:
- when the offeror has achieved the 75% Acceptance Condition; and
- when the issuer has lost free float, as required under Rule 724 of the Listing Rules.
In each case, the announcement should clearly disclose the specific level of Independent Acceptances and the issuer’s free float. The announcement should also inform shareholders of the implications, including the offeror’s intentions. For example, if the issuer has lost free float but the 75% Acceptance Condition has not been met, that the issuer may be subject to prolonged suspension if the offeror is unable to obtain the 75% Acceptance Condition and does not intend to take steps to restore free float.
Arising from market feedback, SGX RegCo also wishes to highlight that in computing whether the 75% Acceptance Condition has been satisfied, market purchases from independent shareholders, purchased on and from the date the General Offer was made (i.e. the date of despatch of the offer document), can be taken into account.
These disclosures give shareholders all facts necessary to make an informed judgement on the merits or demerits of any General Offer, which would be relevant to their consideration on whether to accept the General Offer. SGX RegCo would expect takeovers professionals to advise their clients appropriately.
Tan Boon Gin
Chief Executive Officer
SGX RegCo
