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Singapore Code On M&A Transactions

The following are the key rules and regulations related to M&A in Singapore, as well as the regulatory authorities responsible for enforcing them-

Companies Act 1967 of Singapore (Companies Act)
Insolvency, Restructuring, and Dissolution Act 2018 of Singapore (IRDA)
Securities and Futures Act 2001 of Singapore (SFA)
Singapore Code on Take-overs & Mergers (Take-over Code)
Competition Act 2004 of Singapore (Competition Act)
In private mergers and acquisitions, parties can agree to any deal protection measures they deem appropriate. Break fee arrangements and exclusivity agreements are examples of these agreements. However, a break fee arrangement in a Singapore private M&A transaction is uncommon.

Specific break fee arrangements rules govern public M&A transactions involving a target company subject to the Take-over Code. Break fees should be minimal, usually not more than 1% of the offer price divided by the target company’s value.

The Board of the target company and the IFA must describe the basis for the break fee and disclose it in the offer announcement and offer document. Any proposal for a break fee should be discussed with the SIC as soon as possible.

In most cases, parties involved in acquiring shares or assets of a privately held company enter into a sale and purchase agreement. There are three options for structuring the acquisition of privately held companies: a minority squeeze-out, a scheme of the arrangement, or a statutory amalgamation procedure.

Transaction processes vary depending on the transaction structure, the complexity of the issues, the type of business the target operates, the number of parties involved, and whether they involve bilateral negotiations or auction sales.

Acquisitions involve the parties entering a confidentiality or non-disclosure agreement, followed by due diligence, drafting, negotiation, and execution of definitive transaction documents. These take time, depending on the target company’s size, international presence, and the deal’s complexity.