28 March 2018
With effect from 1 May 2018, the Securities Industry Council (“SIC”) will implement a regime that will allow SIC to grant exempt status for a period of time to fund managers and/or principal traders that form part of a large multi-service financial group advising on a take-over offer, from certain prohibitions, restrictions and obligations imposed by the Singapore Code on Take-overs and Mergers (“Code”) on dealings by parties involved in an offer and persons acting in concert with such parties (“Exempt Status Regime”).
Details of the Exempt Status Regime are set out in the “Practice Statement on the Exemption of Connected Fund Managers and Principal Traders under the Singapore Code on Take-overs and Mergers” (“Practice Statement”) issued in February 2018.
Under the Code, a financial or other professional adviser (including a stockbroker), together with persons controlling, controlled by or under the same control as the adviser, are presumed to be “acting in concert” with a client in a take-over transaction in respect of their shareholdings. Where the adviser is part of a larger financial group, the presumption of “acting in concert” extends to all entities within that group, including its fund managers and principal traders (“Connected Fund Managers and Connected Principal Traders”). As a result, dealings in the securities of the offeree or offeror company by the Connected Fund Managers and Connected Principal Traders may have implications under the Code.
Currently, a financial or professional adviser and its Connected Fund Managers and Connected Principal Traders who wish to apply for exemption from the provisions of the Code do so on a case-by-case basis.
With effect from 1 May 2018, SIC may grant exempt status to Connected Fund Managers and Connected Principal Traders on an annual basis if the applicant provides a signed confirmation from the group senior compliance officer on, among other things, the independence of the fund managers and/or principal traders.
The Connected Fund Managers and Connected Principal Traders who are granted exempt status (“EFM” and “EPT” respectively) will not normally be regarded as “acting in concert” with the client of the group’s corporate finance department that is advising on a take-over offer. The exempt status granted under the Exempt Status Regime will apply to all transactions which are entered into on or from 1 May 2018. Although an EFM and EPT may not be regarded as “acting in concert” with the client of the corporate finance department of the financial adviser group in which an EFM and EPT belongs to, they may still be subject to certain disclosure obligations prescribed under the Code.
Fund managers and principal traders who wish to qualify for exempt status should submit an application to SIC prior to 1 May 2018. Submissions should
be made early so as to avoid any delay which may result in them obtaining their exempt status beyond 1 May 2018.