LAW firm Allen & Gledhill (A&G) and DBS were found to have breached the Singapore Code on Take-overs and Mergers while acting as advisers to the manager of Mapletree Commercial Trust (MCT) in the trust’s merger with Mapletree North Asia Commercial Trust in 2022.

At the time, A&G was acting as legal adviser, and DBS, the financial adviser to MCT’s manager for the deal.

The breaches involved a whitewash waiver to make the general offer for a trust scheme of arrangement, which resulted in the merged entity known as Mapletree Pan Asia Commercial Trust today. 

In a Thursday (Feb 15) statement published on the Monetary Authority of Singapore’s website, the Securities Industry Council (SIC) announced that a “key partner” of the A&G team advised MCT’s manager wrongly on Nov 24, 2021, by saying that a whitewash waiver was not required for the merger.

Following a query by MCT on Jan 6, 2022, it has emerged that the advice was wrong – because a whitewash waiver subject to approval by MCT unitholders was, in fact, necessary.

SIC noted that “as an act of contrition”, this individual on A&G’s team later volunteered to abstain from undertaking Code-related work for 12 months from Jan 13, 2022 – and also on the same day, immediately ceased to advise MCT’s manager on the trust scheme.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Though the partner was unnamed throughout SIC’s statement, it was mentioned that the individual specialised in capital markets, real estate investment trusts and business trusts.

While DBS was aware that a whitewash waiver would be required for the deal and initially gave advice to that effect, SIC highlighted that the bank did not raise the issue with A&G, nor did it further question the law firm on the matter.

“A&G and DBS, as the professional advisers to the MCT manager on the merger, had collective responsibility to ensure that the MCT manager complied with the Code. The council is of the view that on this occasion, both A&G and DBS fell short of the standards expected of advisers.”

SIC did not take further action against both parties, given that they took “prompt action” to mitigate the breaches.

It also noted that A&G and DBS have “since taken steps to improve their internal processes and controls to prevent a similar incident from reoccurring”.

Though MCT’s manager was also found to have breached the Code by failing to include the whitewash condition in its joint announcement on Dec 31, 2021, SIC also decided not to take further action against it.

It was the manager’s review of the transaction which uncovered A&G’s mistake, noted the securities’ watchdog, adding that the manager later took “prompt remedial action” to apply for the waiver and thereafter sought approval for the addition and announcement of the whitewash condition.

SIC said in conclusion: “The council would like to remind all advisers of the critical role they play in working together to ensure their clients comply with the Code. Advisers need to be vigilant and exercise due care at all times to ensure that their clients comply with the Code.  

“In this connection, they are expected to be conversant not only with the requirements of the Code, but also with how these requirements are applied in practice.”