SIC Consults on Changes to Singapore Code on Take-Overs and Mergers to Enhance Shareholders’ Protection

Introduction

The Securities Industry Council (“SIC“) is conducting a consultation exercise on its proposals in the “Consultation Paper on Revision of the Singapore Code on Take-overs and Mergers” that was issued on 5 May 2025. The consultation exercise ends on 5 June 2025.

Taking into account market developments and evolving international practices in other jurisdictions (notably, Hong Kong and the United Kingdom (“UK“)) since the Singapore Code on Take-overs and Mergers (“Code“) was last revised in 2019, the proposed amendments to the Code seek to enhance the regulation of take-overs and mergers in Singapore.

This Update outlines some of these key proposals.

Prohibiting Deal Protection Measures save in Limited Circumstances

Although deal protection measures such as break fees, exclusivity arrangements, and implementation or bid conduct agreements might be utilised to encourage an initial offer or a competing offer, the SIC has observed that excessive usage could deter competition from other potential offerors. This would ultimately disadvantage the shareholders of the offeree company.

As such, the SIC proposes to generally prohibit deal protection measures or offer-related arrangements, except in limited circumstances. This marks a significant shift in relation to offer-related arrangements from the current regime where only break fees are regulated.

In particular, the Consultation Paper proposes that the SIC will not normally allow an implementation agreement if it:

1. requires the offeree company to cooperate with the offeror in implementing the offer or to assist with the preparation of the offer documentation;
2. imposes an obligation relating to the conduct of the offeree company’s business prior to an offer being unconditional (or a scheme of arrangement (“Scheme“) becoming effective);
3. includes a warranty in relation to information provided by the offeree company to the offeror;
4. requires a commitment by the offeree company to publish a Scheme document by a certain date or to hold meetings by a certain date;
5. restricts the offeree company from making announcements or communicating with shareholders or others in relation to the offer (save to the extent it falls within the excluded arrangements referred to below);
6. restricts the payment of dividends by the offeree company; and
7. requires the offeree company to assist the offeror with integration planning.

The following arrangements would be excluded from the general prohibition on offer-related arrangements:

1. commitments to maintain the confidentiality of information which comply with the Code;
2. commitments not to solicit employees, customers or suppliers;
3. commitments to provide information or assistance for the purpose of obtaining authorisation or regulatory clearance;
4. directors’ irrevocable commitments and letters of intent, where the directors of an offeree company are acting in their personal capacity as shareholders in the offeree company;
5. arrangements imposing obligations only on an offeror or any person acting in concert with it, other than in the context of a reverse take-over;
6. agreements relating to existing employee incentive arrangements; and
7. agreements between an offeror and the trustees of the offeree company’s pension schemes relating to the future funding of the pension scheme.

Break fees will also be generally prohibited as part of offer-related arrangements. The SIC proposes to only grant consent to break fee arrangements in more prescriptive circumstances as follows:

1. Competing offerors: Where an offeror has announced an offer which is not recommended by the offeree board, the offeree company will normally be permitted to enter into a break fee arrangement with a competing offeror at the time of the announcement of the competing offeror’s firm intention to make a competing offer, if the following “break-fee conditions” are satisfied:

• • the aggregate value of the break fee is not more than 1% of the value of the offeree company calculated by reference to the price of the competing offer (or, if there are two or more competing offerors, the first competing offer), at the time of the firm intention offer announcement; and
  • the break fee is only payable if an offer becomes or is declared unconditional.

2. Formal sale process: Where, prior to an offeror making an offer announcement, the board of an offeree company has announced a formal sale process, the SIC will normally consent for the offeree company to enter into a break fee arrangement with one offeror (who had participated in the process) at the time of the offer announcement, provided that the “break-fee conditions” described above are satisfied. The SIC may, in exceptional circumstances, consent to the offeree company entering into other offer-related arrangements with that offeror.
   
   
3. Asset sales in competition with an offer: If, after an offeror has made an offer announcement, the board of the offeree company announces that it has agreed terms on which it intends to sell all or substantially all of the company’s assets and/or businesses, the SIC will normally consent to the offeree company entering into a break fee arrangement with the asset purchaser at the time of the announcement, provided that the “break-fee conditions” described above are similarly satisfied.

Improving Certainty and Timeliness in Mergers and Acquisitions (“M&As”) Effected via Schemes

Where an offer is implemented pursuant to a Scheme, the SIC proposes to clarify that, except with the SIC’s consent:

1. the Scheme meeting should be held within six months of the announcement of the Scheme; and
2. an offeror is required to undertake the procedural steps necessary for the Scheme to be effective once all relevant conditions have been satisfied or waived.

The proposal seeks to avoid prolonged offer periods and to prevent the situation where an offeror might seek to rely upon a long-stop date to lapse its offer where only an immaterial condition is outstanding or by refusing to take the required steps.

Codifying Certain Practices for Offeror Who Made Holding Announcement

Put Up or Shut Up

Currently, when a potential offeror makes a holding announcement, it is required to provide monthly updates on whether it is ready to make a firm intention to make an offer or it decides not to proceed with the offer. The Code currently does not provide for a deadline for when the potential offeror is required to clarify its intentions. If the offeror has not clarified its intentions for a prolonged period, the SIC’s current practice is to impose a put up or shut up (“PUSU“) deadline for the offeror to clarify its intentions.

The SIC proposes codifying the PUSU deadline approach with more certainty on its timeline. Following consultation with the potential offeror and the offeree company, the SIC may direct the potential offeror to: (i) announce a firm intention to make an offer; or (ii) make a no intention to bid statement, by the 28^th day from the date of the SIC’s direction. The SIC reserves the right to impose an earlier or later deadline where appropriate.

Codifying the SIC’s Approach to Announced Indicative Offer Price

The SIC generally does not allow the disclosure of an indicative offer price before an announcement of a firm intention to make an offer has been made, except in exceptional circumstances. Exceptions have been made, for example, where an offeror or offeree company is required by a foreign regulator to disclose an offer price prior to the announcement of a firm intention to make an offer.

The SIC proposes codifying the following requirements, taking a similar approach as Hong Kong and the UK:

1. the subsequent offer made by the potential offeror must be on the same or better terms than the indicative price; and
2. the potential offeror is subject to a 28-day PUSU deadline from the date of the disclosure of the indicative price.

Subsequent Offer to be Delayed for Offeror Who Made “No Increase” or “No Extension” Statements

The Code currently provides for a 12-month delay on a subsequent offer by an offeror whose offer has been withdrawn or lapsed. However, the SIC would normally lift such restriction if the subsequent offer was recommended by the offeree company board.

The SIC proposes that such an exemption would not apply where an offeror, who had earlier made a “no increase” statement or “no extension” statement, wishes to make a subsequent improved offer within the 12-month period even with the recommendation of the board of the offeree company. In such circumstances, the SIC would usually require the offeror to delay making the subsequent offer until the later of: 

1. three months from the date on which the previous offer was withdrawn or lapsed; or
2. the end of the offer period of any competing offer existing at the time that the previous offer was withdrawn or lapsed.

The proposal seeks to address the concern that shareholders and investors of the offeree company would have relied on the offeror’s “no increase” or “no extension” statement to make their investment decisions at the time of the earlier offer. Further, the proposal ensures that, where a competing offer existed at the time that the previous offer had been withdrawn or lapsed, the competing offeror should be allowed to complete its offer undisturbed, before the offeror can make a subsequent offer.

Enhancing Disclosure of Information to Offerors

Equality of Information to Offerors

Rule 9.2 of the Code currently requires an offeree company to ensure that information given to one offeror or potential offeror is, on request, furnished equally and promptly to any other bona fide offeror or potential offeror (“subsequent offeror“). The subsequent offeror will be required to specify the questions to which it requires answers.

The SIC proposes to revise Rule 9.2 to allow a subsequent offeror to request for all the information provided to another offeror or potential offeror, instead of asking specific questions. In addition, it is proposed that the offeree company will be required to provide promptly to the requesting offeror such information provided to the first offeror at the time of request, and any further information provided in the seven days following the request. This seeks to reduce the administrative burden on parties and ensure that the offeree board’s obligation to share information ceases after a proportionate period of time in the absence of a further request.

In connection with the obligation to furnish information to the subsequent offeror, the SIC has also proposed certain clarifications as follows:

1. extend the rule to site visits and management meetings, and require an equivalent site visit or management meeting to be provided to the subsequent offeror if one offeror has been afforded a site visit or management meeting;
2. allow the offeree company to set up a common data room of which access is granted to all offerors to comply with Rule 9.2; and
3. permit the offeree company to impose conditions that safeguard the confidentiality of the information on the recipients of such information under Rule 9.2.

Disclosure of Aggregate Offer-Related Fees to Offerors

Fees payable to advisers appointed by an offeree company in connection with an offer could significantly diminish the value of the offeree company if they are substantial. The SIC therefore proposes to subject such fees to the scrutiny of parties to the offer. The offeree company will be required to disclose to all offeror(s) (including potential offerors) an estimate of the aggregate offer-related fees and expenses that can potentially be incurred by the offeree company in connection with an offer. These would include fees and expenses for financial and corporate broking advice, legal advice, accounting advice, other professional services, etc. 

Clarifying Information Required for Shareholders’ Meetings Approving Frustrating Actions

Rule 5 of the Code currently prohibits the taking of any action without the approval of shareholders at a general meeting that could effectively result in any bona fide offer being frustrated. However, the SIC has observed that there is currently little guidance on the information to be provided to shareholders to approve the frustrating action. As such, it is proposed that where shareholder approval is to be sought in a general meeting for the taking of a frustrating action, the board of the offeree company must:

1. obtain competent independent advice as to whether the financial terms of the proposed frustrating action are fair and reasonable;
2. consult the SIC regarding the date on which the general meeting is to be held; and
3. send a circular to shareholders containing the following information as soon as practicable after the announcement of the proposed action:

• • full details of the proposed action;
  • the opinion of the board of the offeree company on the proposed action and its reasons for forming the opinion;
  • current status of the offer or possible offer; and
  • any other information necessary to enable shareholders to make an informed decision.

Other Proposals

Other proposals in the Consultation Paper include, among other things:

1. refining the definitions of “associate”, “close relatives” and “control”;
2. codifying the SIC’s practice of treating an asset valuation as not current if it is more than three months old;
3. preventing an offeror from circumventing the restrictions around subsequent offers by purchasing the material assets of an offeree company;
4. regulating an asset sale that is in competition with an offer for voting rights; and
5. regulating the use of videos and social media in disseminating information in relation to an offer.

Concluding Words

The SIC’s proposals represent a welcome development in seeking to address market developments and evolving international practices in the public markets M&A space.

The proposals remain at the consultation stage, and the SIC has invited interested parties to send their comments on the proposed changes to the Code by 5 June 2025.

If you have any queries or comments on the SIC’s proposals and/or their implications for your company, or wish to join us in providing feedback on the Consultation Paper, please reach out to our Team members set out on this page.