The Securities Industry Council (SIC) has released a consultation paper suggesting updates to the Singapore Code on Take-overs and Mergers, which was last revised in 2019.

These proposed changes aim to reflect current market trends, bring local practices in line with global standards, and strengthen oversight of take-over and merger activity.

Developed after discussions with market experts, the proposals focus on preserving competitive dynamics, speeding up transactions, and ensuring shareholders receive clearer disclosures throughout the process.

Key Proposed Amendments to the Code on Take-overs and Mergers

A major amendment targets deal protection mechanisms like break fees, which can discourage competing bids.

Such measures would generally be off-limits, except in limited cases—like formal sale processes or securing a white knight—with break fees capped at 1% of the offer’s value.

To increase certainty in take-overs conducted through schemes of arrangement, the SIC suggests requiring scheme meetings to take place within six months of the announcement.

After shareholders approve the deal, offerors must promptly act to implement the scheme.

Some proposals also aim to reduce market speculation. Offerors who make “no increase” or “no extension” statements would be bound by them and face a six-month cooling-off period before making any revised offer.

Potential offerors who issue holding announcements must state their intentions within 28 calendar days.

If an indicative offer price is announced beforehand, any formal offer must match or exceed that amount—unless the SIC allows a lower offer under exceptional circumstances.

The SIC also wants to tighten rules around frustrating actions, like asset sales that could disrupt shareholders’ ability to assess a competing offer.

In such scenarios, the offeree board would need to reveal the expected cash return to shareholders and seek independent advice if the action requires shareholder approval.

Other frustrating actions covered under the proposals include major acquisitions or disposals, capital structure changes, and revisions to dividend policies.

Additional proposed updates include revised definitions, rules requiring any information shared with one offeror to be shared with all competing bidders, mandatory disclosure of offer-related fees, guidance on the validity and valuation date for reports, and clearer rules on using social media and other channels for offer-related news.

Public feedback on these changes is open until 5 June 2025.

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