Mergers and Acquisitions

1.Movements of M&A in Singapore

■  Overview

Singapore is a financial center in Southeast Asia and center of network between China, Thailand, Indonesia and other Asia countries. It is not different from other Asia countries that there is no limitation of industries for the foreign investments in Singapore. Therefore, it can be said that it is a national policy of Singapore to support foreign investments. Although the corporation tax rate is 17% in Singapore, there is tax reduction policy based on different industries. Consequently, more and more companies would like to choose Singapore to set up subsidiaries.

■ Schedule and basic process of M&A

 

■ Limitations of investment environment in Singapore

There is no different treatment of investment between domestic fund and foreign investment. But there are certain restrictions of some industries.

❶ Industry of media

For the industry of media, the investment limitation and the assumption of board of directions are ruled by different laws. If investments cross certain proportion, it is required to acquire permission no matter domestic fund or foreign investment.

  • Broadcasting business
  • Share-holding and rate of voting Less than 49% for foreign investment
  • Acquisition, holding and disposal of rate of voting less than 5%
  • Acquisition of shares and rate of voting less than 12%
  • Newspaper business
  • Two kinds of shares issued: common stock and voting stock. Only Singaporean or corporation that acquired permission of minister can hold the voting stock.
  • Acquisition, holding and disposal of rate of voting less than 5%
  • Acquisition of shares and rate of voting less than 12%

❷ Industry of infrastructure

It is no limitation for foreign companies to invest industry of electricity and gas. However, there is only one company that is in charge of electric supply in Singapore. It becomes a barrier to start new investments.

  • 5%~12% of shares holding to submit notification
  • 12%~30% of shares holding or acquisition of rate of voting.

2. Methods of M&A in Singapore

There are three methods of M&A to acquire the right of control of listed companies.

  • Purchase publicly ② Scheme of arrangement ③ Amalgamation
  • Purchase publicly

❶ Conditions of purchase publicly by force:

  • Purchasers should acquire the rate of voting of target corporations more than 30%.
  • Purchasers have already hold the rate of voting for 30%~50% and will acquire the rate of voting above 1% within 6 months.

❷ Purchase publicly optionally

In order to acquire part of shares of target corporation, purchase publicly optionally can be conducted. Purchase publicly optionally of some parts of corporations need the permission of Securities Industry Council.

  • Scheme of arrangement

Scheme of arrangement is a system that target corporation has a right to change the organization of company.

Contests of scheme of arrangement:

❶ Purchasers pay cashes to target corporation or issue the new shares and then the existing shares of target corporation will be deleted.

❷ Purchaser issue the new shares or transfer the shareholders of target corporation to purchasers and then it is possible to lead the result of the exchange of shares.

  • Amalgamation

It is necessary to acquire the special resolution of two parties of amalgamation (agreement of shareholders more than 75%). It is not a condition to acquire permission of a court, which is different with scheme of arrangement. And it must make a Solvency Statement to mention the ability of payment of broad of directors for both parties.

Transfer of assets:

It is possible to transfer all of the business or some assets of business by common voting of shareholders. It is necessary to do the procedure of right transfer to do the special succession of assets. Furthermore, in the case of undertaking of all of business, labor contracts with employees should also be undertaken. As a matter of course, only the employees that applied for Employees Act in Singapore will be undertaken.

Division of business:

There is no system for the division of business in Singapore. And it is possible to transfer the assets and liabilities partly. In the case, it is necessary to acquire the agreement of shareholders more than 50% and the valuation of shares, which are held by shareholders, more than 75%.

3. Processes of our services

Detection of risks of management and financial

Estimation of valuation of target corporations

Price negotiation with target corporations

Response to financial due diligence with a project team

To learn more about our incorporation assistance and a range of services related to M&A in Singapore, send us a message or call us at +81-3-5369-2930.