Compulsory acquisition loophole back in spotlight as TTJ minorities get lowball offer

HERE we go again. On May 20, TTJ Holdings announced that its controlling shareholder is making a voluntary cash offer for the company at a steep discount to its book value; and that the offeror will exploit an often-used loophole to reach the compulsory acquisition threshold more easily.

The offer – if it succeeds – will wrest shares in the structural steel specialist from minority shareholders at a price well below their intrinsic value, and further erode confidence in the effectiveness of Singapore’s market regulators when it comes to protecting small investors.

Under Section 215 of the Companies Act, an offeror can exercise the right of compulsory acquisition once it obtains 90 per cent of a target company's shares that it and its related companies did not already own.