SIC alters takeover rules for dual class share firms

It wants to add relief for shareholders required to make general offers.

The Securities Industry Council (SIC) eyes amendments to the Singapore Code on Takeovers and Mergers to clarify its application to companies with a dual class share structure (DCS companies) that have a primary listing on the Singapore Exchange (SGX).

According to an announcement, SIC proposed to include relief for shareholders who trigger a mandatory general offer. Where the shareholder is independent of the conversion or reduction event, the requirement to make a mandatory offer would be waived.

A shareholder may be obliged to make a mandatory offer under the code, if his voting rights in a DCS company increases beyond the mandatory offer thresholds in the Code, due to a conversion of multiple voting shares (MV shares) to ordinary voting shares (OV shares) or a reduction in the number of voting rights per MV share that lowers the total number of voting rights in the DCS company.

SIC said, “Should the shareholder not be independent of the conversion or reduction event, the mandatory offer requirement would still be waived if he reduces his voting rights to below the mandatory offer thresholds, or obtains the approval of independent shareholders to waive their right to a mandatory offer within a specified time.”

SIC also proposed that where an offeror makes an offer for a DCS company, the offer price for MV shares and OV shares should be the same.

“This approach provides certainty to market participants and potential offerors,” it said. “It also acts as a safeguard for OV shareholders by ensuring that any premium paid to MV shareholders is also paid to OV shareholders.”

Written comments will be accepted by the SIC on 17 August 2018, Friday. The consultation paper is available on the council’s website.