When a business opportunity has been identified, the buyer and the target can structure the acquisition in several ways. The buyer may either purchase the shares in the target from its shareholders or purchase assets directly from the target. It may also consider a long-form amalgamation as a means to merge the target and its own acquisition vehicle but this remains an untested procedure in Singapore.

Accordingly, the share and asset acquisition route remain the usual forms of acquisition on an arm's length basis. Auction sales are increasingly seen in the Singapore market. Depending on the stage of the process, it is fairly common to see indicative non-binding bid letters in the early stage and binding offer letters in the later stage of the competitive sale process depending on the auction situation.

Scheme of arrangements - there is also a statutory mechanism under the Companies Act 1967  (CA) for a scheme of arrangement, whereby the court is empowered to make certain ancillary orders to facilitate a scheme for the purposes of reconstruction of a company, if under the scheme the whole or any part of the undertaking or property of the transferor company is to be transferred to the transferee company. This process is not commonly used in the context of an acquisition because of the procedures. In terms of process, the CA and local case law have not provided a comprehensive framework of instruction as to how schemes of arrangements are to be passed.

Statutory amalgamation — the CA outlines procedures for a form of amalgamation of companies in Singapore. Before the amendments were introduced, commercial transactions commonly referred to as a merger were, in fact, asset acquisitions. The CA allows for a more efficient statutory form of amalgamation. It provides for the amalgamation of two or more Singapore incorporated companies into a single entity that may be either one of the amalgamating companies or a new company. Note that despite the introduction of the statutory form of amalgamation, the existing forms of asset transactions known as 'mergers' will still continue to be relevant. One reason for this is that where the merger is between companies that are not in the same group, directors of the new amalgamated company may have certain reservations about making solvency statements for the combined entity. Another reason is that the amalgamation regime also creates some uncertainties that have yet to be dealt with conclusively — in particular, there are still certain accounting concerns as to how the cancellation of shares in the amalgamating companies will be accounted for, particularly if the horizontal form of amalgamation is used.

In Singapore, a limited liability company is a separate entity from its shareholder(s). Equity participation by Singaporeans is generally not a requirement. A foreign company can thus set up a wholly owned subsidiary in Singapore. Joint ventures may also be established using a limited liability company and indeed this is the usual structure for joint ventures in Singapore.

There is no minimum capitalization requirement and shares of a company no longer require par or nominal value. Bearer shares are not recognized.

A Singapore company must have a minimum of one director resident in Singapore. An expatriate in Singapore on an employment pass will also meet this requirement. If the requirement is not satisfied, the Accounting and Corporate Regulatory Authority and the courts may compel members of a company to appoint one director that is resident in Singapore. Members of a company may also be made liable for the debts of the company if it continues operating for more than six months without a resident director. All directors must be natural persons. Where the company has only one director, that director must not also function as the company secretary.

The sale and purchase of shares in a target company will take place between an existing shareholder and a third-party potential shareholder. A share acquisition involves a transfer of ownership only of the shares in the target. The sale and purchase will not involve the creditors of the target company unless there are pre-existing covenants with them requiring their approval for a change of control of the company. A transfer of shares in the target also transfers all of the target's assets and liabilities to the buyer. As a legal person, the target has the capacity to incur contractual, tortious and criminal liabilities, some of which may not have been properly disclosed to the buyer.

Some investors may prefer to purchase specific assets in a target company as opposed to shares in the target. The purchase of assets enables them to avoid the liabilities of the company and to 'cherry pick' only the viable parts of the business. Buyers of assets will not generally inherit the target's liabilities.

An asset acquisition requires the passing of title to assets from the target to the buyer. The target's assets may include land and premises, stock and work-in-progress, book debts, intellectual property rights, goodwill, insurance, leases, hire purchase and other contracts, employees, shares in other entities, and plant and machinery. It will therefore be necessary to transfer each asset, or category of asset, from the target to the buyer by way of different conveyances, assignments and transfers.

This can be rather cumbersome. In addition, a share acquisition may be necessary if the target's assets are not amenable to transfer, for example if the target has non-transferable government licenses or has entered into licensing or distribution arrangements that are not assignable.