30 July 2019
On 11 July 2019, Singapore Exchange Regulation (“SGX RegCo”) announced changes to the voluntary delisting regime for issuers listed on Singapore Exchange Securities Trading Limited (“SGX-ST”).
Under the SGX-ST Listing Rules (Mainboard) and the SGX-ST Listing Rules (Catalist) (collectively, “SGX-ST Listing Rules”), an issuer listed on the SGX-ST (“ListCo”) may seek a voluntary delisting from the SGX-ST, subject to the requisite majority of its shareholders approving the resolution to delist the ListCo (“Voluntary Delisting Resolution”) and the ListCo offering a reasonable exit alternative to its shareholders and the holders of any other classes of listed securities to be delisted (“Exit Offer”). On 11 July 2019, the Voluntary Delisting and Exit Offer requirements in the SGX-ST Listing Rules were revised to incorporate SGX RegCo’s changes.
A voluntary delisting process (coupled with an Exit Offer) is one of the mechanisms that an offeror may use to privatise a ListCo. It may also be used together with another privatisation mechanism, including a scheme of arrangement under the Singapore Companies Act or a general offer under the Singapore Code on Take-overs and Mergers (“Take-over Code”). The SGX-ST Listing Rules were revised to provide clarification on the application of the revised Voluntary Delisting and Exit Offer requirements to a voluntary liquidation, scheme of arrangement or a general offer under the Take-over Code.
On 9 November 2018, SGX RegCo issued a consultation paper on “Proposed Amendments to Voluntary Delisting Regime” to seek feedback on proposals relating to the changes to the Voluntary Delisting Resolution and Exit Offer requirements. On 11 July 2019, SGX RegCo issued its response to feedback on the consultation paper and announced changes to the voluntary delisting regime.
Voluntary Delisting Resolution requirements
Under the revised SGX-ST Listing Rules, SGX-ST may agree to a voluntary delisting application by a ListCo if the Voluntary Delisting Resolution has been approved by a majority of at least 75% of the ListCo’s total number of issued shares (excluding treasury shares and subsidiary holdings) held by the shareholders present and voting at the general meeting of the ListCo. To enhance minority shareholder protection, the offeror and parties acting in concert with it (“Offeror Concert Party Group”) are required to abstain from voting on the Resolution.
Exit Offer requirements
The SGX-ST Listing Rules have been enhanced such that an Exit Offer must not merely be reasonable, it must also be fair. The practice to require the Exit Offer to include a cash alternative as the default alternative has also been codified as a Listing Rule requirement. The SGX-ST Listing Rules require a ListCo to appoint an independent financial adviser (“IFA”) to advise on the Exit Offer and the IFA must opine that the Exit Offer is fair and reasonable. To ensure that IFA opinions are well understood by investors, SGX-ST expects that the bases for determining fairness as well as reasonableness of the Exit Offer be detailed separately, where appropriate.
Application of Voluntary Delisting Resolution and Exit Offer requirements to scheme of arrangement
The Voluntary Delisting Resolution requirements do not apply to a delisting pursuant to a scheme of arrangement under the Singapore Companies Act because the voting requirements under the Singapore Companies Act are comparable. However, the Exit Offer requirements (including the requirement for a cash alternative in an Exit Offer) apply to a delisting pursuant to a scheme of arrangement as such requirements are not found in the Singapore Companies Act.
Application of Voluntary Delisting Resolution and Exit Offer requirements to other privatisation mechanisms
The SGX-ST Listing Rules clarify that the Voluntary Delisting Resolution and Exit Offer requirements do not apply to a delisting pursuant to a:
- voluntary liquidation; or
- general offer made under the Take-over Code where the offeror is exercising its right of compulsory acquisition.
The following materials are available on the SGX website www.sgx.com:
- SGX media release “SGX RegCo requires exit offers to be fair and reasonable, shareholder vote to exclude offeror and concert parties” dated 11 July 2019
- SGX Regulator’s Column media release “Privatisations through General Offers” dated 11 July 2019
- SGX Response to Comments on Consultation Paper on Proposed Amendments to Voluntary Delisting Regime
- SGX-ST Listing Rules (Mainboard): Amendments to Voluntary Delisting Regime
- SGX-ST Listing Rules (Catalist): Amendments to Voluntary Delisting Regime