Writer credits:  Kang Wan Chern

I shared my views with the Singapore Straits Times in the attached story published on JUL 4, 2023.

In Summary:

SGX RegCo published a new guide in its Regulator’s Column on 3 July 2023 on the appointment of Independent Financial Advisers (“IFAs”) and what would be expected of IFAs in their reports.

It is significant that SGX RegCo highlights the importance of the IFA opinion where the proposed transaction involves existing controlling shareholders or management. The IFA’s opinion must be objective based on its professional judgement, substantiated with detailed analysis and disclosure on the methodologies used and the factors and grounds for forming an opinion, which must contain a clear and unequivocal conclusion. The IFA’s opinion must not be tailored to support the views of a commissioning party or any other interested party to arrive at a desired outcome. Any fee arrangements that create a conflict of interests (for example, payment of fees contingent on the outcome of the transaction) would disqualify the IFA. The IFA is required to disclose any material relationships or pecuniary interests or benefits that could be relevant to the IFA’s independence in connection with the issuance of its opinion.

The new guidelines would not be a panacea to low-ball offers. Shareholders would have to ultimately decide if they should accept an offer based on their personal circumstances and views whether to remain as shareholders in a company that may be taken private if the takeover or exit offer is successful. On the same principle as the recent changes to the “squeeze-out” provisions in the Companies Act, the new rules announced by RegCo seek to level the playing field to make it more equitable for shareholders who are faced with a takeover or exit offer to be in a position to make a better informed decision on the merits of the offer. The new rules do not micro-manage the terms of a general or exit offer. The raison d’etre for the new rules is to set up guard rails against offerors using unfair means to orchestrate a desired outcome that could be prejudicial to minority shareholders and retail investors.       

I shared my views with the Singapore Straits Times in the attached story published on 5 July 2023.