Takeover Code Offers to Privatize Listed Issuers to Adhere to Voluntary Delisting Requirements

SGX Regco will require privatization by way of general offers under the Singapore Takeover Code which do not result in a compulsory acquisition of all remaining shares,  to comply with the voluntary delisting requirements in principle, before it will allow an issuer to be delisted. In effect, this means that the offeror must receive acceptances from independent shareholders that represent at least 75% of the total number of issued shares held by independent shareholders (“75% Independent Acceptances”). Additionally, an IFA must have opined that the offer is fair and reasonable (“Fair & Reasonable Offer”).

In its Regulators Column, SGX Regco notes that the requirements for 75% Independent Acceptances and a Fair and Reasonable offer are conjunctive requirements for shareholder protection. A general offer that sets a fair and reasonable price may nonetheless not receive the requisite shareholder acceptance; conversely, even if the general offer finds favour with a substantial majority of shareholders, a fair and reasonable price is still necessary to take out the remainder of the shareholders who do not accept the general offer.

For an issuer’s shares to remain listed and tradable, an issuer must maintain a free float where at least 10% of its issued shares are held in public hands (as defined in the Listing Manual) (“Free Float”). For companies which are the subject of privatization takeovers and which do not meet the 75% Independence Acceptances and/or Fair & Reasonable Offer, but have lost their Free Float,  they will be required to maintain their Free Float in accordance with the Listing Manual and/or subject to regulatory compliance, the offeror may also explore other options for privatization, for example, an exit offer that complies with the Listing Rules.