On 25 June 2014, the Securities Industry Council of Singapore (the “SIC”) issued a new Practice Statement providing guidance on conditions that apply to an opinion given by an independent financial adviser (the “IFA”) in relation to take-over offers, whitewash waivers and disposals of assets under the Singapore Code on Take-overs and Mergers (the “Code”). The SIC Practice Statement applies to transactions announced from 9 July 2014.

The Code requires an offeree company to obtain an IFA opinion in the following circumstances:

  • When it receives a take-over offer or is approached with a view to a take-over offer being made;
  • In a “whitewash” resolution to be passed pursuant to Appendix 1 of the Code where the independent shareholders of the offeree company vote on a resolution to waive their rights to receive a take-over offer in certain transactions (the “Whitewash Resolution”); and
  • Where the SIC’s consent is sought for a disposal of the offeree company’s assets to one or some of its shareholder (without the arrangement being extended to all of its shareholders) where such assets may be of no interest to the offeror under Note 5 on Rule 10 of the Code.

The new SIC Practice Statement requires the IFA opinion issued in the above circumstances to conclude clearly and unequivocally whether the take-over offer, the transaction subject to the Whitewash Resolution or the terms governing the disposal of the offeree company’s assets are “fair and reasonable”. The term “fair and reasonable” should be analysed as two distinct concepts, and not be regarded as a composite term.

Reference material

The requirements for a “fair and reasonable” opinion by the IFA in each of these circumstances are elaborated on in the SIC Practice Statement that is available from the Monetary Authority of Singapore website www.mas.gov.sg by clicking here.