Source of article: Business Times
Writer credits: Tay Peck Gek
For a long time, minority shareholders have publicly raised concerns that section 215 of the Singapore Companies Act has been used as a blunt instrument to compel dissenting minority shareholders to accept a lowball offer by controlling management shareholders who propose to privatise and delist a Singapore listed company.
The proposed amendments announced by the Ministry of Finance and the Accounting and Corporate Regulatory Authority to section 215 of the Singapore Companies Act will make it fairer and more equitable for minority shareholders in a privatisation exercise.
The current regime has been rather lop-sided in favour of controlling management shareholders who wish to take a listed company private. The majority controlling shareholders get around the 90% threshold requirement under the present section 215 by having a special purpose vehicle(“SPV”) that does not own any share in the target company set up to mount a take-over. As shares owned or controlled by the majority controlling shareholders (and their concert parties) are not shares held or acquired (i) by a nominee on behalf of the SPV, or a (ii) a related corporation or a nominee of the related corporation of the SPV, it makes it easier for the SPV to cross the 90% acceptance threshold when the management controlling shareholders and their concert parties accept the offer from the SPV offeror.
Once the proposed amendments are legislated, management controlling shareholders who wish to take a listed company private cannot “game the system” by using a SPV to mount a takeover and subsequently forcing dissenting minority shareholders to accept a low ball offer that may not be commensurate with the true market value of the listed company and/or its foreseeable good prospects.
I gave my views to the Singapore Business Times in the attached article published on 16 February 2023.
MOF, Acra accept proposals that make it harder to buy out minority shareholders in an offer