[Last updated: 1 June 2022, unless otherwise noted]

A public takeover bid in Singapore can take one of the following forms:

• a voluntary general offer in which a bidder voluntarily makes an offer for all the voting securities issued by the target company (and securities issued by the target company conferring the right to acquire voting securities of the target company);
• a mandatory general offer, which a bidder is required to make if, as a result of an acquisition of securities, it crosses (alone or in concert with others) a threshold of at least 30% of the voting securities of the target company, or where it already holds 30%-50% of the voting securities of the target company (alone or in concert with others), acquires 1% of the voting securities of the target company within a rolling six-month period;
• a scheme of arrangement under section 210 of the Companies Act, in which the bidder enters into an implementation agreement with the target company to acquire all the voting securities issued by the target company, either by cancelling the existing securities of the target company with new securities issued to the bidder, or transferring the securities of the target company to the bidder;
• an amalgamation under sections 215A to 215J of the Companies Act, in which the bidder enters into an amalgamation proposal with the target company, and the target company is merged with the bidder, with the bidder (or a special purpose vehicle) as the surviving entity; and
• a voluntary delisting whereby an exit offer is made by the target company or majority holders to buy out the minority holders in the target company.

4.1 Voluntary general offer

• A voluntary general offer must be conditional upon the bidder acquiring at least 50% of the target company's voting securities.
• The bidder is free to make the voluntary general offer subject to a higher minimum acceptance threshold, and other sufficiently objective conditions, subject to prior approval by the SIC. Prior approval by the SIC is not required in the case of customary conditions such as merger control clearance, approval of security holders for new issuances of securities and approval from the SGX-ST for listing.
• The bidder is, in principle, free to determine the price and the form of consideration offered to the target shareholders (absent any pre-existing controlling interest in the target), subject to the following:
  • The offered price may be paid in cash, securities or a combination of both, unless the bidder or a person acting in concert with it had acquired more than 10% of the voting rights in the target company for cash within the six-month period prior to making its offer, in which case the offer must be made for cash or a cash alternative.
  • The offered price must not be less than the highest price paid by the bidder or persons acting in concert with it during the offer period (starting on the date of the takeover announcement) or within the three months prior to the commencement of the offer period.
  • If, during the offer period, the bidder or persons acting in concert with the bidder acquire or commit to acquire securities to which the offer relates at a higher price, then the offered price must be raised to that higher price.
  • If the target company has different categories of securities, comparable offers must be made for each class of securities, subject to prior consultation with the SIC.

4.2 Mandatory general offer

• A mandatory general offer is triggered as soon as:
  • a person or group of persons acting in concert (or persons acting for their account), as a result of an acquisition of voting securities of the target company, directly or indirectly holds more than 30% of the voting securities of the target company; or
  • where a person or group of persons acting in concert (or persons acting for their account) already hold, directly or indirectly, between 30% to 50% of the voting securities of the target company and acquires 1% of the voting securities of the target company within a rolling six-month period.
• The mandatory general offer must be made conditional upon the bidder acquiring at least 50% of the target company's voting securities. Save for merger control clearance (if required), no other conditions are allowed and a mandatory general offer cannot be subject to a higher minimum acceptance threshold.
• The main exceptions to the mandatory general offer obligation include situations where:
  • the stake of more than 30% is acquired as a result of acceptances under a voluntary general offer;
  • the stake is acquired from another member of the concert party group, provided that the leader of the concert party group or the largest individual shareholding does not change, and the price paid for the shares is not at a significant premium;
  • the stake in the target company is acquired indirectly through obtaining control over an intermediate holding company that holds more than 30% in the target company, i.e., an indirect acquisition, and the target company does not contribute significantly to the assets, market capitalization, sales or earnings of the intermediate holding company;
  • the stake is acquired pursuant to a subscription of new shares, i.e., a rights offering or issue of new securities as consideration for an acquisition, and the waiver of the requirement to make a mandatory general offer is obtained through an independent vote of the holders of securities in the target company in compliance with the whitewash procedure under the Code;
  • the stake is acquired within the framework of a corporate restructuring, i.e., a pro rata distribution of voting securities in a downstream company to the upstream company's shareholders, and approval is obtained from the independent holders of securities in the target company in compliance with the whitewash procedure under the Code; and
  • in the case of companies with a dual class share structure with a separate class of shares that carry multiple votes, there occurs a voluntary conversion or automatic conversion of multiple voting shares into ordinary shares which carry one vote each or a reduction in the number of votes attached to each multiple voting share, which results in an increase in the percentage of voting rights of a shareholder and persons acting in concert with them, and such shareholder is independent of the conversion or reduction. Where such shareholder is not independent, the waiver of the requirement to make a mandatory general offer may be obtained through an independent vote of the holders of securities in the target company in compliance with the whitewash procedure under the Code. A mandatory general offer is also not required if the shareholder and/or their concert parties dispose within six months (or such longer period of time as the SIC may allow in exceptional circumstances) of the date of the conversion or reduction such number of shares as is necessary to reduce their aggregate voting rights in the target company to a level which is below the mandatory general offer thresholds.

The SIC should nonetheless be consulted in all the above cases.

• The offer consideration payable by the bidder in a mandatory general offer must meet the following criteria:
  • The offered price must be paid in cash or accompanied by a cash alternative.
  • The offered price must not be less than the highest price paid by the bidder or persons acting in concert with it during the offer period (starting on the date of the takeover announcement) or within the six months prior to the commencement of the offer period.
  • If, during the offer period, the bidder or persons acting in concert with the bidder acquire or commit to acquire securities to which the offer relates at a higher price, then the offered price must be raised to that higher price.
  • If the target company has different classes of securities, comparable offers must be made for each class of securities, subject to prior consultation with the SIC.
  • in the case of companies with a dual class share structure, the offer price will be the highest price that the bidder and/or its concert parties have paid for voting rights in the target company in the six months prior to the earlier of the date of the announcement of the conversion or reduction, or the date of the conversion or the reduction. If the bidder and its concert parties did not acquire shares in the target company in the six months prior to such date, the SIC will generally require the offer price to be the simple average of the daily volume weighted average traded prices of the target company on either the latest 20 trading days or whatever number of trading days there were within the 30 calendar days prior to the earlier of the date of the announcement of the conversion or the reduction, or the date of the conversion or the reduction. The SIC, however, reserves the right to disregard any inexplicably high or low traded prices during the said 30 calendar days when computing the offer price.

4.3 Scheme of arrangement

• Although the provisions of the Code apply to schemes of arrangement, it is usual for the bidder to obtain from the SIC exemptions from compliance with certain provisions of the Code, e.g., provisions relating to the takeover timetable and type of consideration required, etc.
• Under section 210 of the Companies Act, a scheme of arrangement must be conditional upon the approval from a majority in number of holders representing at least 75% of the voting securities of the target company or the class of voting securities present and voting.
• The following stages are involved in effecting a public takeover by way of a scheme of arrangement:
  • the target company applies to the court to convene the requisite meetings of the classes of holders;
  • the relevant classes of holders hold meetings to approve the scheme of arrangement; and
  • the target company applies for the court's sanction if the holders of all the classes approve the scheme of arrangement by the requisite majorities.
• Once the scheme of arrangement is approved and sanctioned by the court, all the holders of securities of the target company are bound by the scheme, including those who voted against it.

4.4 Amalgamation

• Although the provisions of the Code apply to amalgamations, the bidder may obtain from the SIC exemptions from compliance with certain provisions of the Code, e.g., provisions relating to the offer timetable.
• An amalgamation under sections 215A to 215J of the Companies Act must be conditional upon the approval of the holders of securities of each of the bidder and the target company representing at least 75% of the voting securities of each company present and voting.
• The boards of the bidder and the target company are also required to make solvency statements, in relation to their own companies and also in relation to the amalgamated company.
• If a bidder wishes to achieve full control over the target company, the bidder should designate the bidder or a special purpose vehicle as the surviving entity. If the consideration is in the form of cash and accepted, the minority holders of securities of the target company would be cashed out. If the consideration is in the form of securities in the amalgamated company, there would likely be a dilution in the aggregate holdings of the minority holders.
• The amalgamation process under sections 215A to 215J of the Companies Act is yet to be used in a public takeover bid.

4.5 Voluntary delisting

• A voluntary delisting under Rule 1307 of the Listing Manual must be conditional upon the approval by a majority representing at least 75% of the total voting securities of the target company (excluding treasury shares and subsidiary holdings) held by holders present and voting. The bidder and parties acting in concert with it must abstain from voting on the resolution.
• The exit offer must include a cash alternative as the default alternative
• The target company must appoint an independent financial adviser to advise on the exit offer and the independent financial adviser must opine that the exit offer is fair and reasonable.
• An exit offer under Rule 1309 of the Listing Manual is an offer that falls within the ambit of the Code. However, the SIC would normally waive compliance with certain provisions under the Code, subject to conditions.