SGX RegCo proposes delisting rule changes to boost minority shareholders

Parties linked to the delisting offer may soon be banned from voting.

Singapore Exchange Regulation (SGX RegCo) is consulting the market on rule changes to voluntary delisting resolution and exit offer in a bid to better protect the interest of minority investors who are often shortchanged in such exits, an announcement revealed.

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Under the proposal, minority shareholders, directors and controlling shareholders who are not the party making or linked to the offer can vote on the voluntary delisting resolution at the shareholder meeting. This means that the offeror and parties pushing for the delisting cannot participate in the vote.

SGX Regco also proposed that the approval threshold required for the voluntary delisting to proceed be amended to a majority of 50% from 75%. The industry regulator also suggested the removal of the block provision wherein delistings will not proceed if the move is voted against by holders of more than 10% of the total number of issued shares present and voting.

With regards to exit offer, SGX RegCo intends to require that the exit offer made in conjunction with a voluntary delisting be ‘reasonable and fair’ in order for the voluntary delisting to proceed.

“An offer is ‘fair’ is the price offered is equal to or greater than the value of the Offeree Securities,” Securities Industry Council said.

In considering whether an offer is ‘reasonable’, the independent financial advisor (IFA) should consider other matters such as the existing voting rights in the offeree company and the ‘market liquidity of the Offeree Securities’, as well as its value, Securities Industry Council added.

“Different parties will have different interests when it comes to listings and delistings and we need to constantly balance the various interests,” SGX RegCo CEO Tan Boon Gin said in a statement. “The changes we are proposing aim to align, as much as possible, the interests of the offeror and the shareholders particularly the minorities.”

The public consultation will close on 7 December. SGX RegCo expects to implement the new rules in 2019.