MAS revises take-over and merger rules

What are the key changes you should know about and be preparing for?

The new rules impose stricter disclosures related to long options and derivatives, and greater disclosure coverage by lowering the shareholder threshold requirement to 5% from 10%.

The revisions were issued on the advise of the Securities Industry Council (SIC), said the Monetary Authority of Singapore (MAS). The amendments take effect starting April 9, 2012.

Here are the full list of changes to the Code from MAS:

Codify existing practices
(a) clarify that the SIC may take further actions against a person who breaches the Code in addition to depriving him of his ability to enjoy the facilities of the securities market in flagrant cases;
(b) state that advisers who breach the Code may be required to abstain from Code-related work;
(c) set out the Rules which if breached would normally result in compensation being directed by the SIC;
(d) publicise the factors which the SIC would consider in determining whether to permit an offeree company shareholder (who is not part of management) to invest in the bid company to the exclusion of all other offeree company shareholders;

Keep pace with product innovation and market developments
(e) clarify the application of the Code to real estate investment trusts and business trusts;
(f) clarify when an option or derivative transaction is subject to Rule 14 on mandatory offers, and require persons who would cross the mandatory offer thresholds as a result of such transactions to consult the SIC beforehand;

Enhance disclosure
(g) require disclosure of dealings in long options and derivatives over offeree company shares during the offer period by associates who hold 5% or more in the offeree company;
(h) require the offeror to disclose the number and percentage of his shareholdings which have been charged as security, borrowed or lent;
(i) lower the shareholding threshold for a shareholder to disclose dealings in the offeree company shares during the offer period from 10% to 5%;

Provide greater flexibility
(j) provide for a class exemption to shareholders of a company from the requirement to make a mandatory offer as a result of the company buying back its shares; and

Other changes
(k) set out the circumstances where shareholders voting together on a board control-seeking resolution might be regarded as parties acting in concert. Clarity in this regard would facilitate
greater shareholder engagement.