29 November 2018
Singapore Exchange Regulation (“SGX RegCo”) is seeking public feedback on proposals to enhance the voluntary delisting regime under the Singapore Exchange Securities Trading Limited (“SGX-ST”) Listing Rules (Mainboard) and the SGX-ST Listing Rules (Catalist) (together, “SGX-ST Listing Rules”). The proposals are set out in the consultation paper on “Proposed Amendments to Voluntary Delisting Regime”.
Presently, an issuer listed on SGX-ST may seek a voluntary delisting (“Voluntary Delisting”) from the SGX-ST subject to the requisite majority of its shareholders approving the resolution to delist the issuer (“Voluntary Delisting Resolution”) and the issuer offering a reasonable exit alternative to its shareholders and the holders of any other classes of listed securities to be delisted (“Exit Offer”).
In the consultation paper, SGX RegCo proposes the following changes to two key aspects of a Voluntary Delisting, namely, the Voluntary Delisting Resolution and the Exit Offer.
Comments on the consultation paper must be submitted to SGX RegCo by 7 December 2018. Subject to the feedback received, SGX RegCo expects to implement the changes in 2019.
A Voluntary Delisting process (coupled with an Exit Offer) is one of the mechanisms that may be utilised by an offeror to privatise an issuer or utilised subsequent to another privatisation mechanism. Other privatisation mechanisms include a scheme of arrangement under the Singapore Companies Act or a general offer under the Singapore Code on Take-overs and Mergers.
SGX RegCo is seeking comments on the following changes relating to the Voluntary Delisting regime.
Requiring Voluntary Delisting Resolution to be approved by a majority of independent shareholders present and voting, with offerors and its concert parties being required to abstain from voting
The current SGX-ST Listing Rules provide that the Voluntary Delisting Resolution:
- must be approved by a majority of at least 75% of the total number of issued shares (excluding treasury shares and subsidiary holdings) held by shareholders present and voting; and
- must not be voted against by 10% or more of the total number of issued shares (excluding treasury shares and subsidiary holdings) held by shareholders present and voting (“10% Block provision”).
To strengthen the protection for minority shareholders in the existing Voluntary Delisting regime, SGX RegCo proposes that an offeror and parties acting in concert with it must abstain from voting on the Voluntary Delisting Resolution. The proposed abstention requirement is also in line with the general principles in the SGX-ST Listing Rules relating to interested persons abstaining from voting on transactions that they have an interest in.
Given the proposed abstention requirement, to strike a balance between ensuring that minority shareholders are not unduly prejudiced and the power accorded to the minority shareholders is not unduly disproportionate, SGX RegCo proposes to reduce the existing approval threshold for a Voluntary Delisting Resolution from 75% to a simple majority of 50%, and remove the 10% Block provision. In essence, this would require the Voluntary Delisting Resolution to be approved by a majority of independent shareholders present and voting.
Requiring Exit Offer to be both fair and reasonable
Currently, the Exit Offer must be reasonable, and should normally be in cash. SGX RegCo proposes enhancing the Exit Offer requirements in the SGX-ST Listing Rules such that the Exit Offer must not merely be reasonable, it must also be fair. SGX RegCo also proposes to codify the existing practice to require the Exit Offer to include a cash alternative as the default alternative.
Requiring IFA to opine that Exit Offer is fair and reasonable
Currently, the SGX-ST Listing Rules provide that the issuer should normally appoint an IFA. SGX RegCo proposes to require the issuer to appoint an IFA and the IFA must opine that the Exit Offer is fair and reasonable. The IFA’s opinion must be clear and unequivocal.
The following materials are available on the SGX website www.sgx.com: