Takeovers and mergers code: Changes from March 25

Changes to Singapore's Code of Takeovers and Mergers will take effect on March 25, the Monetary Authority of Singapore has said.

The changes include providing greater certainty when competing takeover offers are on the table.

Introduced after a public consultation by the Securities Industry Council, the changes will encourage the boards of takeover targets to be more proactive in safeguarding shareholders' interest.

To provide more certainty about the procedures and timelines where there are competing offers, changes have been made to "clarify that the offer timetables will be aligned to that of the latest offer".

The code would also start a default auction to get a final offer price from each competing firm, if none is forthcoming from either, in the latter stages of the offer period.

To increase the prospects of a competing offer that will benefit shareholders, the deadline for a competing offer to be announced has been extended.

Changes have been made to provide guidance on board conduct during an offer. For instance, takeover targets may consider "sharing available management projections and forecasts with the independent financial adviser".

The code would require quicker disclosure of any changes to terms that were previously published in an offer. The code has been amended to clarify the standards that are required of pre-conditions in a pre-conditional voluntary offer. It has also been changed to clarify how the offer value for a different class of shares, such as preference shares, should be calculated.

The code was last reviewed in 2012 and the council has been in discussions with practitioners involved in mergers and acquisitions.

With the changes, firms could avoid being locked in a tussle over an acquisition, for instance. In 2013, the council intervened by starting an auction to break the impasse over a proposed takeover of beverage and property conglomerate Fraser & Neave. The tussle was between Overseas Union Enterprise and TCC Assets, controlled by Thai tycoon Charoen Sirivadhanabhakdi. OUE eventually withdrew.

A version of this article appeared in the print edition of The Straits Times on February 26, 2016, with the headline 'Takeovers and mergers code: Changes from March 25'. Print Edition | Subscribe