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®

Mergers & Acquisitions

in 67 jurisdictions worldwide
Contributing editor: Casey Cogut
2013
Published by
Getting the Deal Through
in association with:

Aabø-Evensen & Co Advokatfirma


ǼLEX
Arfidea Kadri Sahetapy-Engel Tisnadisastra (AKSET)
ASAR – Al Ruwayeh & Partners
Baker Botts LLP
Basham, Ringe y Correa
Bersay & Associés
Biedecki
bizconsult law LLC
Bonn & Schmitt
Bowman Gilfillan
Boyanov & Co
Carey
Casahierro Abogados
Colibri Law Firm
Corpus Legal Practitioners
Costa, Waisberg e Tavares Paes Sociedade de Advogados
David Norman & Co
Debarliev, Dameski & Kelesoska Attorneys at Law
Divjak, Topić & Bahtijarević Law Firm
DLA Piper Ukraine
EDAS Law Bureau
ELİG Attorneys-at-Law
Estudio Trevisán Abogados
Ferrere Abogados
Freshfields Bruckhaus Deringer
Gilbert + Tobin
Gleiss Lutz
GTG Advocates
Hoet Peláez Castillo & Duque
Homburger
Hoxha, Memi & Hoxha
Iason Skouzos & Partners
Jade & Fountain PRC Lawyers
Kettani Law Firm
Khaitan & Co
Kimathi & Partners, Corporate Attorneys
Kim & Chang
LAWIN
LAWIN Lideika, Petrauskas, Valiūnas ir partneriai
Lloreda Camacho & Co
Mares, Danilescu & Asociatii
MJM Limited
Nagashima Ohno & Tsunematsu
Nielsen Nørager Law Firm LLP
Odvetniki Šelih & partnerji, o.p., d.o.o.
Paul, Weiss, Rifkind, Wharton & Garrison
Pellerano & Herrera
Rentsch Legal
RIAALAW
Schönherr
Simont Braun
Simpson Thacher & Bartlett LLP
Slaughter and May
Stankovic & Partners
Stikeman Elliott LLP
Thanathip & Partners Legal Counsellors Limited
Ughi e Nunziante – Studio Legale
Walker Kontos Advocates
Walkers
Weil, Gotshal & Manges
Wong Beh & Toh
WongPartnership LLP
Young Conaway Stargatt & Taylor, LLP
contents

Mergers & Global Overview Casey Cogut and Sean Rodgers Simpson Thacher & Bartlett LLP 4

Acquisitions 2013 EU Overview Stephen Hewes, Richard Thexton and Dan Clarke Freshfields Bruckhaus Deringer 6
Contributing editor Albania Shpati Hoxha Hoxha, Memi & Hoxha 8
Casey Cogut
Simpson Thacher & Bartlett LLP
Argentina Pablo Trevisán, Laura Bierzychudek and Walter Beveraggi Estudio Trevisán Abogados 14
Business development managers
Alan Lee Australia Neil Pathak and David Clee Gilbert + Tobin 20
George Ingledew
Dan White Austria Christian Herbst Schönherr 28

Marketing managers Belgium Sandrine Hirsch and Vanessa Marquette Simont Braun 35
Rachel Nurse
Zosia Demkowicz
Bermuda Peter Martin and Andrew Martin MJM Limited 42
Marketing assistants
Megan Friedman Bolivia Carlos Pinto-Meyer and Cristian Bustos Ferrere Abogados 48
Cady Atkinson
Robin Synnot Brazil Vamilson José Costa, Ivo Waisberg, Antonio de Oliveira Tavares Paes, Jr, Gilberto Gornati and
Joseph Rush
Stefan Lourenço de Lima Costa, Waisberg e Tavares Paes Sociedade de Advogados 52
Administrative assistant
Parween Hicks Bulgaria Yordan Naydenov, Angel Angelov, Nevena Kostadinova and Gergana Petrova Boyanov & Co 58
Sophie Hickey
Canada Richard E Clark and Curtis Cusinato Stikeman Elliott LLP 66
Marketing manager (subscriptions)
Rachel Nurse Merger Control in Canada Susan Hutton Stikeman Elliott LLP 72
Subscriptions@
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Cayman Islands Rob Jackson and Ramesh Maharaj Walkers 75
Head of editorial production
Adam Myers Chile Pablo Iacobelli and Cristián Eyzaguirre Carey 80

Production coordinator China Lawrence Guo Jade & Fountain PRC Lawyers 86
Lydia Gerges

Senior production editor Colombia Enrique Álvarez, Santiago Gutiérrez and Tomás Calderón-Mejía Lloreda Camacho & Co 92
Jonathan Cowie
Croatia Damir Topić and Mate Lovrić Divjak, Topić & Bahtijarević Law Firm 100
Chief subeditor
Jonathan Allen Czech Republic Rudolf Rentsch and Petra Trojanová Rentsch Legal 105
Subeditors
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Tim Beaver
Rebecca Vikjær-Andresen Nielsen Nørager Law Firm LLP 112
Editor-in-chief
Dominican Republic Marielle Garrigó and Mariangela Pellerano Pellerano & Herrera 118
Callum Campbell

Publisher England & Wales Michael Corbett Slaughter and May 121
Richard Davey
Mergers & Acquisitions 2013 France Sandrine de Sousa and Yves Ardaillou Bersay & Associés 131
Published by
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ISSN 1471-1230 Hong Kong John E Lange and Peter Davies Paul, Weiss, Rifkind, Wharton & Garrison

The information provided in this


David M Norman David Norman & Co 163
publication is general and may not apply
in a specific situation. Legal advice should Hungary David Dederick, László Nagy and Eszter Katona Weil, Gotshal & Manges 169
always be sought before taking any legal
action based on the information provided.
This information is not intended to India Rabindra Jhunjhunwala and Bharat Anand Khaitan & Co 175
create, nor does receipt of it constitute, a
lawyer–client relationship. The publishers Indonesia Johannes C Sahetapy-Engel and Kartika Putri Wohon
and authors accept no responsibility for
any acts or omissions contained herein. Arfidea Kadri Sahetapy-Engel Tisnadisastra (AKSET) 184
Although the information provided is
accurate as of May 2013, be advised that
this is a developing area. Italy Fiorella Federica Alvino Ughi e Nunziante – Studio Legale 191

Japan Ryuji Sakai, Kayo Takigawa and Yushi Hegawa Nagashima Ohno & Tsunematsu 197
Printed and distributed by
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Tel: 0844 2480 112 Kazakhstan Saniya Perzadayeva and Aliya Zhumabek Colibri Law Firm 203

Kenya Michael Kontos, David Wayumba and Fahreen Alibhai Bid Walker Kontos Advocates 207
Law
Korea Jong Koo Park and Sang Hyuk Park Kim & Chang 212
Business
Research
CONTENTS

Kuwait Ibrahim Sattout and John Cunha ASAR – Al Ruwayeh & Partners 217

Kyrgyzstan Zhanyl Abdrakhmanova and Arman Kurmangaliev Colibri Law Firm 222

Latvia Raimonds Slaidiņs̆ and Krista Zariņa LAWIN 226

Lithuania Robertas Čiočys LAWIN Lideika, Petrauskas, Valiūnas ir partneriai 232

Luxembourg Alex Schmitt, Chantal Keereman and Philipp Mössner Bonn & Schmitt 240

Macedonia E
 milija Kelesoska Sholjakovska and Elena Miceva
Debarliev, Dameski & Kelesoska Attorneys at Law 245

Malaysia Wong Tat Chung Wong Beh & Toh 251

Malta Ian Gauci and Karl Sammut GTG Advocates 257

Mexico Daniel Del Río, Jesús Colunga and Amilcar García Basham, Ringe y Correa 263

Morocco Nadia Kettani Kettani Law Firm 268

Nigeria Theophilus Emuwa, Chinyerugo Ugoji and Ayoyinka Olajide-Awosedo ǼLEX 274

Norway Ole K Aabø-Evensen Aabø-Evensen & Co Advokatfirma 280

Pakistan Bilal Shaukat and Naz Toosy RIAALAW 290

Peru Percy Castle and Carlos Carrasco Casahierro Abogados 396

Poland Ludomir Biedecki and Radosław Biedecki Biedecki 302

Romania Simona Mares and Lucian Danilescu Mares, Danilescu & Asociatii 308

Russia Igor Akimov and Ilya Lifshits EDAS Law Bureau 315

Saudi Arabia O Ali Anekwe and Babul Parikh Baker Botts LLP 319

Serbia Nenad Stankovic, Dusan Vukadin and Sara Pendjer Stankovic & Partners 326

Singapore Ng Wai King and Mark Choy WongPartnership LLP 333

Slovenia Nataša Pipan Nahtigal and Jera Majzelj Odvetniki Šelih & partnerji, o.p., d.o.o. 341

South Africa Ezra Davids and David Yuill Bowman Gilfillan 348

Switzerland Claude Lambert, Dieter Gericke, Reto Heuberger and Gerald Brei Homburger 354

Tajikistan Denis Bagrov and Khujanazar Aslamshoev Colibri Law Firm 362

Thailand Issariya Vimonrat and Pitch Benjatikul Thanathip & Partners Legal Counsellors Limited 368

Turkey Salih Tunç Lokmanhekim and Elif Çağla Yazdıç ELİG Attorneys-at-Law 371

Ukraine Galyna Zagorodniuk and Dmytro Tkachenko DLA Piper Ukraine 380

United Arab Emirates Michael Hilton and Mohammad Tbaishat Freshfields Bruckhaus Deringer 385

United States Casey Cogut and Sean Rodgers Simpson Thacher & Bartlett LLP 391

United States, Delaware Rolin P Bissell and Elena C Norman Young Conaway Stargatt & Taylor, LLP 396

Uzbekistan Artem Klimenko and Ravshan Rakhmanov Colibri Law Firm 402

Venezuela Jorge Acedo Hoet Peláez Castillo & Duque 407

Vietnam Tuan Nguyen, Phong Le, Hanh Bich, Huyen Nguyen, Hai Ha and Thuy Huynh bizconsult law LLC 411

Zambia Sharon Sakuwaha Corpus Legal Practitioners 417

APPENDIX: International Merger Control David E Vann Jr and Ellen L Frye Simpson Thacher & Bartlett LLP 423

2 Getting the Deal Through – Mergers & Acquisitions 2013


WongPartnership LLP Singapore

Singapore
Ng Wai King and Mark Choy
WongPartnership LLP

1 Types of transaction tered BTs and REITs with 50 or more shareholders or unit-holders, as
How may businesses combine? the case may be, and net tangible assets of S$5 million or more must
also observe the general principles and rules of the Code wherever
Mergers and acquisitions in Singapore are primarily governed by
possible and appropriate.
principles of contract and company law.
All schemes or arrangements, trust schemes and schemes of amal-
The most common forms of business combinations in Singapore
gamation are also subject to the provisions of the Code (although
are as follows:
those that satisfy certain conditions are exempted from these manda-
• a purchase of shares with voting rights in the target company or
tory offer provisions, as well as some other Code provisions).
an acquisition of the business or assets of the target company;
Other relevant legislation to REITs are the Securities and Futures
• a joint venture (which usually involves the incorporation of a
Act and the Code of Collective Investment Schemes issued by the
new company) formed by two or more parties to pursue a com-
MAS. Companies whose shares are listed on the Singapore Exchange
mon commercial goal;
Securities Trading Limited (SGX-ST) must also comply with rules
• a takeover of the target company through an offer for the shares
laid down by the SGX-ST, known as the Listing Manual. Under the
of the target company;
Listing Manual, listed companies are required to disclose, obtain
• a scheme of arrangement under section 210 of the Companies
shareholders’ approval, or both, for transactions such as acquisitions
Act (chapter 50 of Singapore) (the Companies Act);
and disposals that meet certain thresholds.
• a scheme of amalgamation under sections 215A–J of the Com-
Singapore now possesses a codified system of competition law
panies Act; and
under the Competition Act (chapter 50B of Singapore) (the Competi-
• a trust scheme constituting an acquisition of units in a business
tion Act). The Competition Act prohibits, among other things:
trust by way of an amendment of the trust deed constituting the
• agreements which have as their object or effect the prevention,
trust following approval by unit-holders.
restriction or distortion of competition within Singapore;
• conduct which amounts to the abuse of a dominant position in
A scheme of arrangement is a legislative procedure allowing a com-
any market in Singapore; and
pany to be restructured under the Companies Act. The company
• mergers that have resulted, or may be expected to result, in a sub-
may propose the scheme to its shareholders which, if approved by a
stantial lessening of competition within any market in Singapore
statutory majority, is binding on all shareholders once sanctioned by
for goods or services.
the High Court of Singapore.
A scheme of amalgamation is another method of business com-
The Competition Act further established the Competition Commis-
bination introduced under the Companies Act which allows two or
sion of Singapore, which is empowered to enforce the provisions of
more Singapore incorporated companies to amalgamate and con-
the Competition Act and is further empowered to conduct its own
tinue as one company through a voluntary amalgamation process
investigations as to infringements under the Competition Act. Takeo-
without the need for a court order. The amalgamated company,
ver offers falling within the ambit of the Code as well as the Competi-
which can be either of the amalgamating companies or a new com-
tion Act should comply with both the Code and the Competition Act.
pany, will succeed to all the property, rights and privileges as well as
Certain other companies regulated in the telecommunications
assume the liabilities and obligations of each of the amalgamating
and utilities industries are subject to quasi-statutory controls on
companies.
behaviour that is anti-competitive and abuses market power. Certain
regulated industries are also subject to statutory foreign sharehold-
2 Statutes and regulations ing limits.
What are the main laws and regulations governing business
combinations?
3 Governing law
For all companies incorporated, registered or carrying on business What law typically governs the transaction agreements?
in Singapore, the relevant statutes are primarily the Companies Act
Private acquisition
and the Securities and Futures Act (chapter 289 of Singapore) (the
The private acquisition of shares or the business and assets of the
Securities and Futures Act) and their respective subsidiary legisla-
target company is usually effected by a sale and purchase agreement.
tion. Takeovers (including reverse takeovers and partial offers) and
Prior to entering into the acquisition documentation, the parties may
schemes of arrangement structured as takeovers are subject to the
sign heads of agreement, a memorandum of understanding or a letter
Singapore Code on Takeovers and Mergers (the Code) issued by
of intent which are often stated as ‘subject to contract’. However, to
Monetary Authority of Singapore (MAS) pursuant to the Securities
mitigate the risks of a party pulling out of the negotiations without
and Futures Act. While the Code is drafted with listed public compa-
any good reason prior to signing the sale and purchase agreement, the
nies, listed registered business trusts (BTs) and real estate investment
parties may include lock-out or exclusivity clauses and/or break fees
trusts (REITs) in mind, unlisted public companies and unlisted regis-

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Singapore WongPartnership LLP

in the heads of agreement, which are legally binding on the parties. • where the offer is for cash or involves an element of cash, an
Acquisitions may also be structured as put-and-call arrangements. unconditional confirmation that the offeror has sufficient finan-
The contracting parties are free to decide on the governing law of cial resources to implement the offer in full.
these transaction agreements, but the law of the jurisdiction in which
the target company is established or where the assets for sale are An offer document which is dispatched after the issue of the offer
located is typically selected as the governing law of the agreements. announcement must set out in detail the terms of the offer, the inten-
tions of the offeror relating to the target company and its employees,
Public takeovers the shareholdings of the offeror and its concert parties in the target
For public takeovers, the offer announcement and the offer docu- company, certain financial information relating to the offeror itself,
ment have to comply with the terms set out in the Code and there is the conditions attached to the offer and the acceptance procedure as
usually an express statement in the offer document stating that the well as the offeror’s arguments in support of the offer.
offer document is governed by the laws of Singapore. The target company’s independent directors must advise the
shareholders of the target company of their recommendations as to
Scheme of arrangement and scheme of amalgamation the acceptance or rejection of the offer, in the form of an offeree
Since the scheme of arrangement and the scheme of amalgamation board circular, having obtained competent independent advice. All
are both statutory creations under the Companies Act, the docu- the documents mentioned above have to satisfy the highest stand-
ments prepared for the purposes of the schemes have to be in compli- ard of accuracy and present the information contained therein ade-
ance with the Companies Act and the laws of Singapore in general. quately and fairly and contain the minimum information prescribed
under the Code.
The type of information required to be disclosed in a scheme
4 Filings and fees
of arrangement involving public listed companies are substantially
Which government or stock exchange filings are necessary in
similar to those set out in the offer document and the offeree board
connection with a business combination? Are there stamp taxes or
circular, except that a composite scheme document containing the
other government fees in connection with completing a business
requisite information is usually jointly issued by the offeror and the
combination?
target company.
A Singapore company must lodge a return with the Accounting & For a scheme of amalgamation in which an amalgamation pro-
Corporate Regulatory Authority of Singapore (ACRA) when the posal is required, the amalgamation proposal will contain, amongst
company makes any allotment of its shares. other things:
A scheme of arrangement has to be approved by an order of • the terms of the amalgamation;
court and the court order has no effect until it is lodged with ACRA. • the name and share structure of the amalgamated company;
Upon such lodgement, the order will take effect from the date of • certain details of every director of the amalgamated company;
lodgement or such earlier date as may be specified in the court order. • the manner in which the shares of each amalgamating company
For the purpose of effecting a scheme of amalgamation, the are to be converted into shares of the amalgamated company;
amalgamation proposal that has been approved and other relevant and
documents will have to be filed with ACRA, together with payment • details of any arrangement necessary to complete the amalgama-
of a prescribed fee. ACRA will then issue a notice of amalgamation tion and to provide for the subsequent management and opera-
as well as a notice of incorporation (in the case where the amalga- tion of the amalgamated company.
mated company is a new company). The notice of amalgamation
will state the effective date of the amalgamation. The amalgamated Furthermore, any major acquisition or disposal or very substantial
company can also apply to ACRA for a certificate of confirmation acquisition by or reverse takeover (as defined in the Listing Manual)
of amalgamation. of an SGX-ST-listed company for the purposes of the Listing Manual
Certain fees are payable to the Securities Industry Council (the will require the listed company to prepare a shareholders’ circular for
SIC), which administers the Code, upon the lodgement of offer docu- the purposes of seeking its shareholders’ approval for the acquisition
ments and other whitewash circulars with the SIC. or disposal. Such shareholders’ circular will contain information pre-
Please see question 5 in relation to various disclosure require- scribed for such corporate actions as set out in the Listing Manual.
ments in public business combinations.
There is no capital gains tax in Singapore. For stamp duties and
6 Disclosure of substantial shareholdings
goods and services tax, see question 18.
What are the disclosure requirements for owners of large
shareholdings in a company? Are the requirements affected if the
5 Information to be disclosed company is a party to a business combination?
What information needs to be made public in a business
Under the Securities and Futures Act, substantial shareholders, direc-
combination? Does this depend on what type of structure is used?
tors, and chief executive officers of a company listed on the SGX-ST
The type of information to be disclosed to the public will generally must notify the company of their interests or changes in their interests
depend on the business combination used and the structure of the in the company and the company must announce such information
transaction. to the SGX-ST. A substantial shareholder is one who holds an interest
For public takeovers, an offer announcement should contain, in not less than 5 per cent of the voting shares of the company. The
among other things: notification must be made within two business days of becoming
• the terms of the offer; aware of the relevant facts. For the purposes of notifying changes
• the identities of the offeror and its ultimate holding company (if in a substantial shareholder’s interest, only changes which exceed a
any); discrete 1 per cent threshold above the minimum 5 per cent threshold
• details of existing holdings in the target company held by the (for example, when the shareholding crosses 6 per cent, 7 per cent,
offeror and its concert parties; etc) are required to be reported. The disclosure regime also applies
• all conditions to which the offer will be subject; to foreign-incorporated corporations with a primary listing on the
• details of arrangements in relation to shares of both the offeror SGX-ST, as well as to managers of CIS REITs and trustee-managers
and the target company which may be material to the offer (if of registered BTs listed on the SGX-ST.
any); and

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Generally in a takeover, dealings by directors, related companies, 8 Approval and appraisal rights
associates and concert parties of the offeror and the target company What approval rights do shareholders have over business
in the target company’s securities must be publicly disclosed. Where combinations? Do shareholders have appraisal or similar rights in
shares of the offeror are offered as consideration for the target com- business combinations?
pany’s shares, dealings by the target company in the offeror’s shares
Under the Companies Act, any proposals for the issuance of new
must be publicly disclosed.
shares or for the disposal of the whole or substantially the whole of
the company’s undertaking or property must first be approved by an
7 Duties of directors and controlling shareholders ordinary resolution of the shareholders in a general meeting. When
What duties do the directors or managers of a company owe to approval is sought, shareholders may exercise their votes in any man-
the company’s shareholders, creditors and other stakeholders in ner they wish, as shareholders owe no fiduciary duties either to the
connection with a business combination? Do controlling shareholders company or to fellow shareholders in this respect.
have similar duties? For a public takeover, every takeover offer must be conditional
upon a minimal level of acceptance. For both mandatory offers and
There is a statutory obligation imposed on company directors (along-
voluntary offers, the level of acceptance is that which would result in
side the usual directors’ fiduciary duties under common law) to act in
the offeror (and persons acting in concert with it) holding more than
the best interests of the company, which can be equated with the col-
50 per cent of the voting rights. Voluntary offers which are condi-
lective interests of the shareholders of the company. This obligation
tional on a level of acceptance that is higher than the requisite 50 per
is not limited to companies in a merger or takeover situation but is a
cent are subject to approval of the SIC. The offeror has to satisfy the
general fiduciary duty to which all company directors must adhere.
SIC that it is acting in good faith in imposing a high level of accept-
Under the Code, there is a duty to give shareholders of the target
ance. Separate approval thresholds are prescribed for partial offers.
company sufficient information, advice and time to enable them to
Under a scheme of arrangement, the company proposes the
reach an informed decision on an offer. Moreover, during the course
scheme to its shareholders, which, if approved by a majority in num-
of an offer or even before the date of the offer (if the board of the
ber representing at least three-quarters in value of the shareholders
target company has reason to believe that a bona fide offer is immi-
or class of shareholders present and voting either in person or by
nent), the board must not, except pursuant to a contract entered
proxy, is binding on all shareholders or class of shareholders once
into earlier, take any action without the approval of shareholders
sanctioned by the High Court of Singapore.
at a general meeting on the affairs of the target company that could
For a scheme of amalgamation, the amalgamation proposal has
frustrate the offer or deny shareholders an opportunity to decide on
to be approved by the shareholders of each amalgamating company
its merits. Although the board of the target company may delegate
by special resolution or by any other person, if any provision in the
the day-to-day conduct of an offer to individual directors or a com-
amalgamation proposal requires the approval of that person. Before
mittee of directors, the board as a whole must ensure that proper
an amalgamation becomes effective, a member of an amalgamating
arrangements are in place to enable it to monitor that conduct so that
company may apply to the Singapore courts on the ground that giv-
each director may fulfil his or her responsibilities under the Code.
ing effect to the amalgamation proposal would unfairly prejudice
There is also judicial recognition that the directors owe a duty
the member. If the courts are satisfied with the application, it may
to the creditors of the company to ensure that the affairs of the com-
make any order it deems fit, including an order not to give effect to
pany are properly administered and that its property is not dissipated
the amalgamation proposal or modify the amalgamation proposal
or exploited to the prejudice of the creditors, especially when the
or direct the amalgamating company to reconsider the amalgama-
company is insolvent.
tion proposal.
In a scheme of amalgamation, besides the duty to ensure that
As mentioned in question 5, any major acquisition or disposal or
the amalgamation is in the best interests of the amalgamating com-
very substantial acquisition by or reverse takeover (as defined in the
pany, the board of directors of each amalgamating company is also
Listing Manual) of an SGX-ST-listed company will require approval
required to make solvency statements to confirm that the amalgam-
of the listed company’s shareholders.
ating company and the amalgamated company are able to pay their
debts as they become due (during the period of 12 months immedi-
ately after the effective date of the amalgamation in respect of the 9 Hostile transactions
amalgamated company), and that the value of their assets is not (or What are the special considerations for unsolicited transactions?
will not be in the case of the amalgamated company) less than the
In a hostile offer, the announcement of a firm intention to make
value of their liabilities (including contingent liabilities). Every direc-
an offer is usually made by the offeror (whether immediately after
tor who voted in favour of the resolution and the making of the
approaching the target company’s board or not) to restrict the time
solvency statements will have to sign a declaration to confirm his
for the target company’s board to marshal its defences.
opinion and to set out the ground for the opinion.
Usually, after an offer has been received in a hostile takeover, the
The controlling shareholders do not have any similar duties but a
defence includes seeking a ‘white knight’ or stating in the target com-
minority shareholder has statutory recourse in the event of minority
pany’s documentation that the target company’s independent direc-
oppression. The safeguard against minority oppression is a general
tors do not believe that acceptance of the offer is in the best interests
principle which applies to both private and public-listed companies
of the target company or its shareholders, or disclosing favourable
and is not dependent on the company being in a merger or takeover
factual information about the trading position or prospects of the
situation. Similar remedies for minority oppression are also avail-
target company to induce the shareholders to reject the offer. Under
able to unit-holders of registered BTs under the Business Trusts Act
the Code, the target company’s board is prohibited from taking any
(chapter 31A of Singapore) (BTA). Following amendments made to
action to frustrate an offer or deny shareholders an opportunity to
the SFA pursuant to the SF(A) Act 2009 which came into effect from
decide the offer on its merits, such as, but not limited to, issuing
29 March 2010, holders of units in a CIS REIT also have the ability
authorised but unissued shares, disposing or acquiring of assets of
to commence an action for minority oppression.
material amounts or entering into contracts other than in the ordi-
nary course of business. However, such action is allowed if they are
carried out pursuant to a contract entered into before the offer or if
the target company’s shareholders at a general meeting approve the
act. If the board of the target company considers that an obligation

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Singapore WongPartnership LLP

to take such acts or other special circumstance exists, although a 12 Conditional offers
formal contract has not been entered into, it should consult the SIC What conditions to a tender offer, exchange offer or other form of
and obtain its consent to proceed without a shareholders’ meeting. business combination are allowed? In a cash acquisition, may the
Apart from the duty not to frustrate an offer, the target com- financing be conditional?
pany’s board must generally act in the best interests of the target
See question 8.
company’s shareholders as a whole.
Subject to the consent of the SIC, a mandatory offer must not
be subject to any condition other than the condition that the offeror
10 Break-up fees – frustration of additional bidders receiving acceptances which would have the effect of the offeror and
Which types of break-up and reverse break-up fees are allowed? his concert parties holding more than 50 per cent of the voting rights.
What are the limitations on a company’s ability to protect deals from An offeror in a voluntary offer can subject the voluntary offer to a
third-party bidders? number of conditions; however, none of these conditions should be
based on the offeror’s subjective judgement. In addition, the offeror
Break-up fees (imposed on a target company) and reverse break-
should not invoke any condition (except as to a minimum level of
up fees (imposed on an offeror) are generally allowed. However, if
acceptance) causing the offer to lapse unless the circumstances giving
the payment of a break-up fee is triggered, the amount may not be
rise to the offer lapsing are of material significance to the offeror in
enforceable if it has been assessed as a penalty rather than a genuine
the context of the offer, and information about the condition is not
pre-estimate of loss. Furthermore, to protect shareholders of the tar-
available from public records or is not known to the offeror before
get company, the Code also sets out certain rules governing break-
the offer is announced. In most cases, the SIC’s consent or consulta-
up fees, including arrangements which do not actually involve any
tion is required.
cash payment but have a similar or comparable economic effect.
Where the offer is for cash or involves an element of cash, the
Most significantly, a break-up fee must not be more than 1 per cent
offer document must include an unconditional confirmation by an
of the value of the target company calculated by reference to the
appropriate third party (eg, the offeror’s banker or financial adviser)
offer price, and guidelines as to how this 1 per cent limit should
that resources are available to the offeror to satisfy full acceptance
be calculated are set out in the Code. The board of the target com-
of the offer.
pany and the independent financial adviser must also provide certain
A scheme of arrangement must be approved by a majority in
written confirmations to the SIC, including confirmations that the
number of the shareholders or creditors (as the case may be) of the
break-up fee arrangements were agreed as a result of normal com-
company representing three-quarters in value of the shareholders or
mercial negotiations and that the break-up fee is in the best interests
creditors present and voting at the relevant meeting. Even if such
of the shareholders of the target company. Additionally, the break-up
approval is obtained, the scheme will be conditional upon the Singa-
fee arrangement must be fully disclosed in the offer document and
pore High Court’s approval.
the offer announcement. The SIC should be consulted at the earli-
In a scheme of amalgamation, the directors of each amalgamat-
est opportunity where a break-up fee or similar arrangements are
ing company have to resolve that the amalgamation is in the best
proposed.
interests of the amalgamating company and to make a solvency
Another mechanism which may potentially frustrate additional
statement in relation to the amalgamating company and the amal-
bidders is a lock-out or exclusivity clause. A lock-out or exclusivity
gamated company. In addition, every director who votes in favour of
clause prevents the seller from actively seeking or negotiating with
the resolution and the making of the solvency statement has to sign
other prospective buyers for a specified period, thereby giving the
a declaration confirming that certain conditions are satisfied. The
buyer a period of exclusivity in which to negotiate the sale and pur-
scheme is further subject to the approval of the shareholders of each
chase agreement. It should be noted, however, that the negotiation
amalgamating company by special resolution.
of break-up fees and lock-out clauses must be considered in light of
the general duty of the board of the target company not to frustrate
the offer as described in question 7. 13 Financing
If a buyer needs to obtain financing for a transaction, how is this dealt
with in the transaction documents? What are the typical obligations of
11 Government influence
the seller to assist in the buyer’s financing?
Other than through relevant competition regulations, or in specific
industries in which business combinations are regulated, may In a private acquisition of shares or the business and assets of a target
government agencies influence or restrict the completion of business company, it is possible to have a financing condition imposed as part
combinations, including for reasons of national security? of the sale and purchase agreement to ensure that the obligations
to complete the transaction is conditional upon the availability of
The Singapore government has overriding discretion to avoid trans-
financing. In practice, such condition would not be acceptable to
actions against the national security or public policies of Singapore.
most sellers.
Otherwise, government agencies do not generally have such over-
A takeover, scheme of arrangement or scheme of amalgamation
reaching influential or restrictive powers. However, if the target
involving a public company would be subject to compliance with the
company is listed on the SGX-ST, the shareholders’ circular (for
provisions of the Code. Accordingly, the offer document or scheme
any major acquisition or disposal or very substantial acquisition
document (as the case may be) must include an unconditional con-
or reverse takeover (as defined in the Listing Manual)), the scheme
firmation by an appropriate third party (eg, the offeror’s banker or
document (for a scheme of arrangement) and the amalgamation pro-
financial adviser) that resources are available to the offeror to satisfy
posal (for a scheme of amalgamation) will require the approval of
full acceptance of the offer.
the SGX-ST, while the shareholders’ circular (for a takeover) may
The seller usually has limited involvement in the procurement
require the review of the SGX-ST in certain circumstances. The SIC
of financing by the buyer. In practice, the seller may assist in intro-
which administers and enforces the Code has powers under the law
ducing the buyer to banks or financing institutions that are existing
to investigate any dealings in securities that are connected with a
financiers to the target company in the event that the buyer intends
takeover or merger transaction. If the SIC finds that there has been
to obtain financing for the proposed acquisition from the same banks
a breach of the Code, it may have recourse to private reprimand
or financing institutions or it wishes to get the assurance from them
or public censure or, in a flagrant case, to further action designed
that the existing financing terms may continue as a result of the pro-
to deprive the offender temporarily or permanently of its ability to
posed acquisition. In some instances, the concept of stapled financing
enjoy the facilities of the securities market.

336 Getting the Deal Through – Mergers & Acquisitions 2013


WongPartnership LLP Singapore

may be introduced by the financial adviser to the seller to facilitate a A scheme of amalgamation becomes effective after the share-
quicker decision on acquisition financing. holders of the amalgamating companies approve it by special resolu-
A Singapore-incorporated company (whether public or private) tion and the amalgamation proposal and other relevant documents
is prohibited from giving financial assistance (either directly or indi- are filed with ACRA.
rectly) for the purpose of the acquisition of shares in itself or its
holding company. Financial assistance can be given in many forms
15 Cross-border transactions
including gifts, loans, guarantees, giving security, waiving debts or
How are cross-border transactions structured? Do specific laws and
other obligations or where, as a result of the assistance, net assets of
regulations apply to cross-border transactions?
the company giving assistance are reduced to a material extent. For
example, there can be financial assistance if financing is obtained by In a cross-border transaction involving investment in a Singapore
a buyer for an acquisition and the lender requires the assets of the entity or certain business in Singapore, one of the main considera-
target company to be used as security for such financing. tions in the structuring of the transaction is tax issues as the investor
Singapore law provides a specific exemption in certain circum- would want to take advantage of the various double taxation agree-
stances for companies which, provided the legislative procedure is ments which Singapore has entered into with other countries.
followed, allows the shareholders of a company to approve the finan- Certain industries in Singapore have statutory limits imposed on
cial assistance. This is known as the financial assistance whitewash the absolute shareholding of a company permissible by a single entity.
procedure. As the financial assistance whitewash procedure would For example, no person is allowed to hold more than 5 per cent, 12
typically be carried out post-acquisition, Singapore lenders have per cent or 20 per cent of the shares of a Singapore-incorporated
come to accept that they may not necessarily have the security in bank unless so authorised by MAS. Likewise, legislation relating to
place at the point of completion of the acquisition. In many instances, the telecommunication industry puts a cap of 12 per cent or 30 per
parties agree to a time frame pursuant to which the financial assis- cent of the total voting shares in a telecommunications company,
tance whitewash procedure must be undertaken and the security whereas for print media companies the limit is 12 per cent. The limit
documentation executed thereafter. There are detailed technical for- for insurance companies and finance companies is fixed at 5 per cent.
malities to be complied with in order to invoke this exemption, and Further, it will not be permissible for a person to enter into an
specific legal advice should be sought. arrangement that would result in his obtaining effective control of a
manager of a CIS REIT without the prior approval of MAS.
Subject to the relevant legislation for specific industries, there is
14 Minority squeeze-out
no general statutory restriction under Singapore law on the size of a
May minority stockholders be squeezed out? If so, what steps must
shareholding interest that a foreign entity may hold in a Singapore-
be taken and what is the time frame for the process?
incorporated company.
Where a takeover offer is made for a Singapore company and accept- Singapore-incorporated companies are required to have at least
ances are received in respect of 90 per cent of the shares to which one director who is ordinarily resident in Singapore and the company
the offer relates within four months of the making of the offer, the secretary, who cannot be a sole director, must be resident in Singa-
offeror may compulsorily acquire the shares of the non-accepting pore. A foreign issuer applying for primary listing on the SGX-ST
shareholders. For the purpose of computing the 90 per cent accept- must have at least two independent directors, both of whom must
ance threshold, the following are excluded: be resident in Singapore.
• shares held by the offeror;
• shares held by a nominee on behalf of the offeror;
16 Waiting or notification periods
• shares held by a related corporation of the offeror or by a nomi-
Other than as set forth in the competition laws, what are the relevant
nee of that related corporation; and
waiting or notification periods for completing business combinations?
• shares held in the offeree company as treasury shares.
The following is a simplified illustration of the key dates for a public
However, shares subject to an irrevocable undertaking or shares offer in Singapore in accordance with the requirements of the Code
acquired during the offer other than pursuant to acceptances of the (assuming there is no competing offer):
offer can usually be counted towards the 90 per cent acceptance
threshold. Key dates Event
Notices must be served on the non-accepting shareholders
Day 0–21 Earliest possible date for offer announcement.
within two months of reaching the 90 per cent threshold and the
non-accepting shareholders have a right to apply to the court for an Offer document dispatched (no earlier than 14 days but
Day 0
no later than 21 days after offer announcement).
order that the bidder shall not be entitled to acquire the shares or to
specify terms of acquisition different from those of the offer. Last date for dispatch of response document by target
Day 14
company.
A similar regime applies to the compulsory acquisition of units
in a CIS REIT or a registered BT under the BTA if an offeror mak- Day 28 Earliest date for first closing date.
ing a general offer for units in such CIS REIT or registered BT First dealing day after
Announcement of acceptance levels and (if appropriate)
obtained acceptances of 90 per cent or more of the units offered. first closing date (and all
extension of offer.
subsequent closing dates)
Consequently, the key advantage of the takeover regime, namely, the
ability to carry out a compulsory acquisition, will now apply to CIS Last day for revision of offer. An offer, if revised, must
be kept open for 14 days. Since the offer period
REIT and registered BTs. Day 46 (assuming first
must end on day 60 unless it has previously become
Separately, where a scheme of arrangement is approved by a closing date is day 28)
unconditional as acceptances (except for special
majority in number representing three-quarters in value of the credi- circumstances), the last day for revision is day 46.
tors or shareholders of the company (as the case may be) present or Last date for fulfilment of acceptance conditions,
Day 60
voting by proxy in a scheme meeting and is subsequently approved otherwise last closing date.
by the High Court of Singapore, the scheme will be binding on all If an offer becomes unconditional on day 60, the
the creditors or shareholders of the company. In the event that the Day 74
closing date will fall 14 days thereafter.
scheme calls for the transfer of all the company’s shares, the entire Last day of settlement. Settlement will take place 10
share capital of the company will be transferred to the acquirer Day 84 days after an offer becomes unconditional or receipt of
(including the shares of any dissenting shareholder). valid acceptances (whichever is the later).

www.gettingthedealthrough.com 337
Singapore WongPartnership LLP

The following is a simplified illustration of the key dates for a scheme The rate of stamp duty for the transfer of land is 1 per cent for
of arrangement for a Singapore-incorporated company listed on the the first S$180,000, 2 per cent for the next S$180,000 and 3 per cent
SGX-ST that will be delisted after the scheme becomes effective: thereafter. Stamp duty must be paid if title needs to be proved or the
agreements or documents are to be produced in evidence before a
Key dates Event court in, or registered in, Singapore.
If an amalgamation of companies pursuant to the Companies
Boards of acquirer and target company formally approve
terms of the scheme. Scheme implementation agreement Act involves a transfer or conveyance of shares in a Singapore-incor-
signed after close of trading day and joint announcement porated company or immoveable property situated in Singapore, ad
Day 0 released. valorem stamp duty will be chargeable on the transfer or conveyance
Day 1 – 25 Preparation of scheme document. of shares or immoveable property unless such amalgamation quali-
fies for relief from stamp duty under the Stamp Duties (Reconstruc-
Day 28 Submission of scheme document to the SGX-ST.
tion or Amalgamation of Companies) Rules. The corporate tax rate
Day 28 – 49 Review by the SGX-ST of the scheme document.
for companies for the year of assessment 2012 is 17 per cent, and
In-principle approval of the SGX-ST (assuming the SGX-ST companies will receive a one-off non-taxable SME cash grant pegged
Day 50 reverts in three weeks).
at 5 per cent of total revenue for the year of assessment 2012 (subject
Application to Singapore High Court to convene scheme to a cap of S$5,000). Partners in a partnership will be subject to
Day 52 meeting of target company. tax in their personal capacity and, depending on their income tax
Court hearing and obtaining of court order to convene bracket, they will be subject to a progressive tax rate up to a maxi-
scheme meeting (assuming early court hearing date is mum of 20 per cent in the year of assessment 2012.
Day 59 obtained in one week).
The transfer of assets may be subject to goods and services tax
Scheme meeting of shareholders of target company to (GST), which is currently at the rate of 7 per cent. However, the
Day 75 approve scheme. transfer of a business as a going concern is treated as an excluded
Court hearing to sanction scheme (assuming early court transaction outside the scope of the Goods and Services Tax Act
Day 82 hearing date obtained in one week). (chapter 117A of Singapore) and not subject to GST if it satisfies
Lodgement of court order with ACRA and effective date of certain conditions.
Day 92 scheme.

19 Labour and employee benefits


17 Sector-specific rules What is the basic regulatory framework governing labour and employee
Are companies in specific industries subject to additional regulations benefits in a business combination?
and statutes?
Singapore companies do not have employee work councils, although
Companies in specific industries are subject to additional regulations participation in trade unions is common in certain sectors, such as
and statutes. For instance, banks carrying on business in Singapore manufacturing. Under the Industrial Relations Act (chapter 136 of
have to be licensed under the Banking Act (chapter 19 of Singa- Singapore), recognised trade unions can negotiate with employers for
pore) or the Monetary Authority of Singapore Act (chapter 186 of a collective agreement on certain industrial matters.
Singapore) and have to comply with the provisions of these Acts, Employees in Singapore enjoy certain protections in business
their respective subsidiary legislation, as well as notices and directives or asset purchases (as opposed to share acquisitions) under the
from the MAS. Other legislation for specific industries include the Employment Act (chapter 91) (the Employment Act). Such protec-
Telecommunications Act (chapter 323 of Singapore) for companies tions include:
providing telecoms systems and services; the Media Development • the automatic transfer of employment contracts of the employees
Authority of Singapore Act (chapter 172 of Singapore) for companies employed in the business or assets transferred on their existing
in the mass media industry; and the Insurance Act (chapter 142 of terms to the buyer, together with all rights and duties attached;
Singapore) for companies carrying on insurance business in Singa- • continuity in the employees’ period of employment; and
pore. The above statutes or subsidiary legislation and codes promul- • consultation rights with trade unions or other employee repre-
gated under them contain restrictions as to change of shareholdings sentatives prior to the transfer.
and control of companies.
It should be noted that, under the Employment Act, the term
‘employee’ is narrowly defined; for example, employees in mana-
18 Tax issues
gerial or executive positions are generally not covered under the
What are the basic tax issues involved in business combinations?
Employment Act except in limited circumstances. For employees not
Transfer taxes (or stamp duty) are payable on certain written falling within the definition under the Employment Act, the protec-
agreements and transfer documents for the sale of shares. A disposal tion afforded to them will be governed by the terms of their employ-
of shares effected by the cancellation and issue of new shares to the ment contracts.
transferee will be treated as a transfer of shares, and stamp duty is Transfer of employees under the Employment Act takes place
payable on any document that effects, whether directly or indirectly automatically upon the transfer of the business. In all other cases,
and whether wholly or partially, any arrangement for the disposal transfers must be effected prior to, or simultaneously with, the com-
of shares. Stamp duty is also payable on the conveyance or transfer pletion of the sale of the business, although this is subject to contract.
of land. It is also provided under the Employment Act that no employee
The rate of stamp duty for the transfer of shares in a company who has been in continuous service with the same employer for less
incorporated in Singapore is currently 0.2 per cent. The amount of than three years is entitled to retrenchment benefits if retrenched
stamp duty payable is calculated based on the higher of the consid- from the company. The quantum of retrenchment benefits is not
eration paid per share or the net asset value of each share (determined specified in the Employment Act and if not provided for in the con-
by reference to the latest available audited financial statements of the tract of employment, it will be a matter for negotiation between the
company). The transfer of shares for qualifying M&A deals will be individual employee and employer.
eligible for stamp duty relief capped at S$200,000 per year. This relief
is available for qualifying M&A deals executed from 1 April 2010 to
31 March 2015 (both dates inclusive).

338 Getting the Deal Through – Mergers & Acquisitions 2013


WongPartnership LLP Singapore

Update and trends

The start of 2013 saw the conclusion of the takeover tussle for ASEAN and the wider Asian region. This is expected to contribute to an
Fraser & Neave Limited, with TCC Assets Limited becoming the uplift in deal momentum for M&A activity in Singapore. With continued
successful controlling shareholder of the company. This was the improvement in economic ties between Asian countries, coupled
largest M&A transaction in Singapore’s corporate history and also the with the excitement over new markets such as Myanmar and the
first Singapore takeover with an auction procedure being proposed turnaround of more mature economies such as Indonesia, Malaysia,
to resolve competing bids. For the rest of 2013, the outlook for Thailand and the Philippines, we expect continued growth in Singapore-
M&A activity in Singapore remains positive. With financing costs led M&A activities in such countries.
remaining reasonably low, we expect to see more M&A activity driven There were no major changes to the legal and regulatory
by opportunistic and strategic considerations. Companies that have landscape affecting business combinations in 2012. Two
strong balance sheets and private equity funds with under-invested amendments were announced in August 2012 to the Listing Rules
capital will probably contribute to such M&A activity. We also expect to of the Singapore Exchange Securities Trading Limited affecting
see M&A activity driven by private equity firms seeking to exit portfolio reverse takeovers of Singapore listed companies and very substantial
investments before market conditions become more challenging. acquisitions by Singapore listed companies. Rule 1015 of the Listing
Looking beyond Singapore, we are witnessing more cross-border Manual was amended to clarify the distinction between a reverse
M&A activity in the region. In the midst of the negative economic takeover and a very substantial acquisition as well as to reflect the
outlook on the Western front brought about by a slow US economic new Mainboard admission criteria for reverse takeovers; Rule 1017
recovery and the prolonged eurozone crisis, Asia continues to be of the Listing Manual was amended to formalise the requirement
an attractive region to invest in. The region has been growing in that reverse takeovers of Singapore listed companies are subject
importance in the world and we have seen many multinational to the same level of due diligence and admission criteria as initial
companies, both foreign and Asian, seeking sustainable future public offerings. Developments that occurred in 2012 that will have
growth for their businesses by expanding their presence here an effect in 2013 and 2014 include the acceptance by the Ministry of
through strategic acquisitions. In this regard, Singapore has been an Finance of almost all of the recommendations made in the Report of
important nerve centre for both Asian and international acquirers of the Steering Committee for Review of the Companies Act (and a draft
Asian businesses as many of the deals are structured and financed bill is now anticipated later in 2013), and the passing of the Personal
in Singapore. Contracting parties are comfortable with the level of Data Protection Act which, come mid-2014, will impose obligations on
transaction management, negotiation and documentation offered the collection, use, and disclosure of personal data and transfer of the
by Singapore law firms and as such, we are likely to see Singapore same outside Singapore.
remaining as a major hub of M&A activity for transactions in both the

20 Restructuring, bankruptcy or receivership members, and, if approved by a statutory majority, it is binding on


What are the special considerations for business combinations all creditors or members once sanctioned by the High Court of Singa-
involving a target company that is in bankruptcy or receivership or pore. A scheme of arrangement is subject to the Code unless certain
engaged in a similar restructuring? conditions are met and, in such cases, exemptions from complying
with material obligations of the Code can be obtained from the SIC
A company may be wound up or liquidated in three ways: members’
which administers the Code. For a company listed on the SGX-ST,
voluntary winding-up, creditors’ winding-up and a court-ordered
the SGX-ST may suspend the trading of the listed securities of the
winding-up.
company when there is an application filed with a court for the liqui-
Once a company is in liquidation, the power to run the company
dation of the company and the amount of debt alleged is significant.
is taken from the board of directors and transferred to the liquidator.
A company typically enters into receivership when a receiver is
The duties of the liquidator are to wind up the company’s business,
appointed by the debenture holder or trustee for the debenture hold-
realise the assets, pay off the creditors and return whatever is left to
ers, or by the court upon the application of the debenture holder or
the members. A takeover of a public company which is being wound
trustee for the debenture holders. The main function of the receiver
up is unlikely to occur as there cannot be an offer to acquire the
is to gather in the assets subject to the charge, realise them and pay
company’s shares without the court’s approval. The court may sanc-
off the creditors, but it has no power to run the company’s business.
tion the share transfer if the bidder is capable of meeting its liabilities
There are no similar prohibitions of share transfer for a company
as a contributory. However, a takeover of a company that is being
going through receivership.
wound up can be structured as a scheme of arrangement. A scheme
A financially troubled company may also be placed under judi-
of arrangement is a legislative procedure allowing a company to be
cial management where a judicial manager is appointed by the court
restructured. The liquidator proposes the scheme to the creditors or

Ng Wai King waiking.ng@wongpartnership.com


Mark Choy mark.choy@wongpartnership.com

12 Marina Boulevard Level 28 Tel: +65 6416 8000


Marina Bay Financial Centre Tower 3 Fax: +65 6532 5711
Singapore 018982 www.wongpartnership.com

www.gettingthedealthrough.com 339
Singapore WongPartnership LLP

to take control of the company from the directors in order to try and for himself or others, any gratification as an inducement or reward
achieve one of the following: salvage the company as a going con- for doing or forbearing to do any act in relation to his principals’
cern; effect a more advantageous asset realisation situation than if the affairs or business, or for showing or forbearing to show favour or
company was subject to a winding-up process; or aid the approval disfavour to any person, both the agent and the giver will be guilty
of a scheme of arrangement with the shareholders and creditors. No of an offence under the PCA. The agent will be guilty even if he did
restrictions on the transfer of a company’s shares are imposed when not have the power or intention to do or forbear to do such act or
it is under judicial management. that the favour or disfavour was not in relation to his principals’
The Code does not provide for situations in which the target affairs or business. Under the PCA, extra-territorial jurisdiction can
company is undergoing liquidation or receivership or is under judi- be exercised against Singapore citizens who committed corruption
cial management. offences outside of Singapore.
Where a substantial corporate shareholder injects funds into a Any person found guilty under the PCA will be liable to a fine
subsidiary or an associated company as part of a rescue package, it not exceeding S$100,000, or an imprisonment term not exceeding
may be that the consideration for such funds will be in the form of five years, or both. If the person found guilty under the PCA is a
newly issued shares from the company. In the event that the issue of member of a public body, the imprisonment term can be increased
such shares puts the corporate shareholder in the position of having to seven years. In addition, the courts can order a person who is
to make a mandatory offer under the Code, a waiver or whitewash of convicted of an offence under the PCA by the acceptance of any
the obligation to make such an offer may be requested. The specific gratification to pay a penalty equivalent to the value of such gratifica-
requirements which will have to be met in order for such a waiver to tion, or to order the confiscation of properties found to be benefits
be granted are listed in the Code. of corruption offences from convicted corrupt offenders under the
Corruption, Drug Trafficking and Other Serious Crimes (Confisca-
tion of Benefits) Act (chapter 65A of Singapore). The principal of an
21 Anti-corruption and sanctions
agent who has received any gratification in contravention of the PCA
What are the anti-corruption, anti-bribery and economic sanctions
may also recover as a civil debt the gratification in money value from
considerations in connection with business combinations?
the agent or the person who gave the gratification.
The key legislation in Singapore that deals with corruption is the Corruption risk is a relevant consideration in a business combi-
Prevention of Corruption Act (chapter 241 of Singapore) (PCA). nation, particularly in cross-border transactions that involve com-
The Corrupt Practices Investigation Bureau is an independent body panies with subsidiaries or operations in regions where corruption
empowered under the PCA to investigate corrupt practices in the is pervasive. An acquirer of a target company with corruption risks
public and private sectors in Singapore and implement preventive will assume the liabilities that extend to such risks, such as potential
measures against corruption. loss of valuable contracts obtained through questionable practices.
It is an offence under the PCA for a person to corruptly solicit or Therefore, it is important to mitigate such risks through pre-deal
receive or give, promise or offer any gratification as an inducement due diligence investigations and the establishment of anti-corruption
to or reward for doing or forbearing to do anything in respect of compliance measures in the target company post-deal.
any matter or transaction. If an agent corruptly accepts or obtains,

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