The Singapore Code on Take-overs and Mergers (“Code”) was introduced in 1974 and last revised in 2012. In July 2015, the Securities Industry Council (“Council”) identified certain areas in the Code that needed to be refined or updated in view of market developments and evolving international practices, and proposed amendments via a public consultation (“Consultation”). The Consultation ended on 6 August 2015.

On 25 February 2016, the Monetary Authority of Singapore (“MAS”) issued a revised Code incorporating feedback received from the public consultation. The amendments to the Code will take effect on 25 March 2016.

This update looks at the key changes to the Code.

Competing Offers Timetable & Auction Procedure

Timetable for competing offers

The revised Code will clarify that in competitive offer situations, the timetables of the offers will be aligned to that of latest offer (based on the despatch of the offer document of the latest competing offeror).

Modified Auction Procedure

In 2013, in response to the stalemate that arose in regard to the competing offers for Fraser & Neave (“F&N”), the Council imposed an auction procedure (“F&N Auction Procedure”) to resolve the situation.

The F&N Auction Procedure mirrored closely the auction procedure set out by the Panel on Takeovers and Mergers in the UK (“UK Panel”) in the case of Cove Energy plc in 2012, where a similar situation arose. The UK Panel subsequently issued a consultation paper to codify the auction procedure, and the auction procedure was included in the UK Takeover Code on 1 January 2015.

Respondents to the Consultation were largely supportive of the proposal to prescribe an auction procedure if a competitive situation exists in the later stages of the offer period, unless alternative procedures are agreed between parties to the offer.

A new Rule  20.5 and  Appendix 4 will therefore  be  introduced  to  codify the new Modified  Auction Procedure.

Key features of the Modified Auction Procedure

The key features of the Modified Auction Procedure are:

  • The auction will comprise 5 rounds of bidding, with one round of bidding taking place each day, over the 5 business days immediately following Day 46, which is the final day on which an offeror can revise its offer (the final day on which an offer can be declared unconditional as to acceptances is Day 60);
  • Both offerors can offer a revised offer in the 1st round. In the 2nd to 4th round of auction, an offeror may announce a revised offer only if the other offeror has announced a revised offer in the previous round.
  • If the auction enters into the 5th and final round, both competing offerors will be entitled to announce a revised offer.
  • If on any day of the auction there are no revised offers announced, the auction will end.
  • Revised offers announced in the 1st to 4th round must be unconditional. If the auction enters the 5th and final found, a competing offeror is permitted to submit a revised offer subject to the condition that such revised offer would be announced only if the other competing offeror also submits a revised offer.
  • Flexibility to include new forms of consideration but no formula bids during the auction.
  • No minimum increment over latest competing offer.
  • No dealing in shares or procuring irrevocable commitments in relation to shares in the offeree company during the auction process.

Extension on PUSU Deadline

A new Note on Rules 3.1, 3.2, and 3.3 to stipulate the revised deadline for clarification by potential competing offerors will be introduced.

In the case of a contractual offer, the put up or shut up (“PUSU”) deadline will be revised to be the 53rd day (instead of the 50th) from the date the first offeror (“Offeror 1”) despatches its initial offer document. In the case of a scheme of arrangement, trust scheme or an amalgamation, the deadline will be no later that the 7th day prior to the date of the shareholders’ meeting to approve such scheme or amalgamation.

The Council is of the view that an extension of the PUSU deadline will be beneficial to the offeree company shareholders. Providing more time for a potential competing offeror to consider and finalise the terms of an offer with the knowledge of Offeror 1’s revised offer may increase the prospects of offeree company shareholders receiving a competing offer. The offeree company shareholders would have sufficient time i.e. 7 days to decide on the first offer in the event the potential offer fails to materialise.

No Acquisition of Shares by a Former Potential Competing Offeror after Day 53

Note 1 to Rule 33 will also be revised to include the additional condition that a potential competing offeror must not have acquired an interest in any shares of the offeree company after making a no intention to bid statement, if he subsequently wishes to make an offer within 6 months from the statement with the agreement of the offeree board.

Guidance on Board Conduct During an Offer

No Restriction on Offeree Boards to Solicit a Competing Offer

In the Consultation, the Council noted that it was possible that offeree boards might misconstrue Rule 5 of the Code (Frustration of Offers by an Offeree Board) to prohibit the soliciting of a competing offer, as the Rule prohibits any action that could effectively result in any bona fide offer being frustrated or the shareholders being denied an opportunity to decide on its merits, without shareholder approval.

The Council therefore proposed to clarify in the Code that offeree boards may consider the feasibility of soliciting a competing offer or running a sale process and that doing so will not amount to frustration of the initial offer. Most respondents were supportive of this proposal, and a new Note on Rule 5 has been introduced.

Availability of Management Projections and Forecasts

A new Note 7 on Rule 7.1 has been introduced to highlight that an offeree board may consider sharing management projections and forecasts with the independent financial advisor for the purpose of the latter’s advice on the offer.

No Increase and No Extension Statements

The Code has also been amended to provide that in cases where an offeree board announces material new information after Day 39, an offeror should be able to set aside a no increase or no extension statement, as long as the statement was made after Day 39. The right to set aside the statement in such event must also be reserved in the statement.

More Timely Disclosures

Prompt Disclosure of Material Changes

To ensure that shareholders and investors are apprised of material information on a timely basis, the Code has been amended to require prompt disclosure of (i) any material changes to information previously published in connection with the offer, and (ii) any material new information which would have been required to be disclosed in any previous document or announcement published during an offer period, had it been known at that time.

Settlement of Acceptances

The Code has also been amended to adopt a 7-business day settlement period instead of the previous 10 calendar day settlement period. This is to avoid practical difficulties for an offeror when part of the 10 calendar day settlement period coincides with public holidays. The new settlement period is in line with the practice in Hong Kong.

Codifying and Streamlining Existing Practices

The Code has also been amended to:

  • clarify the standards that are required of pre-conditions in a pre-conditional voluntary offer;
  • allow the offeree company to seek approval for the posting of the offer document at an earlier date in a pre-conditional offer; and
  • clarify how the offer value for a different class of shares (e.g. preference shares) should be calculated.


More details on the revised Code can be found at the following hyperlinks:

  1. Consultation Paper on Revision of the Singapore Code on Takeovers and Mergers
  2. Consultation Conclusions on Revision of the Singapore Code on Takeovers and Mergers
  3. Revised Singapore Code on Takeovers and Mergers