Singapore Exchange to require exit offers to be ‘fair and reasonable’

SGX building on Shenton Way in SingaporeSGX building on Shenton Way in Singapore

Singapore Exchange has changed its voluntary delisting rules, with immediate effect, to require exit offers to be both reasonable and fair, and to require offerors to abstain from voting on voluntary delisting resolutions, the exchange said Thursday.

“To ensure investors understand the opinions of Independent Financial Advisors (IFAs), SGX expects the bases for determining the fairness and the reasonableness of the offer be separately detailed,” the exchange said. “SGX will also work with relevant industry bodies to develop guidance and standards for IFAs and their opinions.”

To determine whether an offer is “reasonable,” IFAs should consider the value of the securities and other issues, including the market liquidity and the existing voting rights held by the offeror, SGX said. “Fair” is an opinion on whether the price offered is equal to or at a premium to the value of the securities, it added.

In addition, SGX said the offeror and its concert parties must now abstain from voting on voluntary delisting resolutions.

The approval threshold will remain at 75 percent of shares held by independent shareholders present and voting, while the 10 percent “block” would be removed, SGX said. The block was a requirement that the resolution couldn’t be voted against by more than 10 percent of shares, the statement said.

If the new conditions aren’t met and the free float of the company falls below the minimum threshold of 10 percent, SGX RegCo may suspend trading, but still require the issuer to meeting its obligations under the listing rules, including restoring the free float above the minimum, SGX said.

The changes were made after consulting with market participants and the public, SGX said.

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