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SIC proposes amendments to takeover code for dual-class share companies

THE Securities Industry Council (SIC) on Thursday said it has proposed amendments to the Singapore Code on Takeovers and Mergers to clarify the application of the code provisions to companies with a dual-class share structure (DCS) that have a primary listing on the Singapore Exchange.

One key amendment has to do with relief for shareholders who trigger a mandatory general offer. 

A shareholder may be obliged to make a mandatory offer under the code, if his voting rights in a DCS company increase beyond the mandatory offer thresholds in the code, due either to a conversion of multiple voting (MV) shares to ordinary voting (OV) shares, or a reduction in the number of voting rights per MV share that lowers the total number of voting rights in the DCS company.

SIC thus proposes that where the shareholder is independent of the conversion or reduction event, the requirement to make a mandatory offer would be waived. Should the shareholder not be independent of the conversion or reduction event, the mandatory offer requirement would still be waived if he reduces his voting rights to below the mandatory offer thresholds, or obtains the approval of independent shareholders to waive their right to a mandatory offer within a specified time.

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The second key amendment has to do with certainty to the market and a safeguard for minority shareholders on offer prices.

SIC proposes that where an offeror makes an offer for a DCS company, the offer price for MV shares and OV shares should be the same. This approach provides certainty to market participants and potential offerors. It also acts as a safeguard for OV shareholders by ensuring that any premium paid to MV shareholders is also paid to OV shareholders.

SIC is inviting interested parties to submit written comments to the Council at sic@mas.gov.sg by Aug 17. 

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