Singapore

Squeeze-out Guide
IBA Corporate and M&A Law Committee 2014

Contact
Andrew M. Lim

Christopher Koh

Allen & Gledhill LLP

[email protected]

[email protected]
Contents Page

INTRODUCTION 2

RIGHT TO BUY 2

RIGHT TO BE BOUGHT 3

ADDITIONAL CONSIDERATION FOR COMPANIES LISTED ON SGX-ST 4

SQUEEZE-OUT TIMETABLE 4

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INTRODUCTION
This guide sets out an overview of the Singapore regulations dealing with the concept of
squeeze-out of minority shareholders in a Singapore company. The relevant provisions are found
in Section 215 of the Companies Act, Chapter 50 of Singapore (the Companies Act).

RIGHT TO BUY
Under Section 215(1) of the Companies Act, an offeror is entitled to acquire shares of shareholders
of a Singapore incorporated target company that have not accepted an offer for their shares (the
Dissenting Shareholders) if that offer has been accepted by shareholders holding 90% of the
shares in the company, subject to certain circumstances.

Right of squeeze-out - Under what circumstances can it be exercised?

Section 215(1) provides that the statutory right of squeeze-out can be exercised by the offeror
when a scheme or contract involving the transfer of all of the shares in the target company to the
offeror has been approved (i.e. accepted) by holders of not less than 90% of the shares of the
target company (other than the shares already held at the date of the offer by the offeror or its
nominee, holding company, subsidiary or fellow subsidiary, and excluding any treasury shares)
(the Squeeze-Out Threshold). This right must be exercised within four months after the making
of the offer.

What is the price of acquisition during squeeze-out?

The offeror is required to acquire the shares on the same terms (including price) as it acquired the
shares of the shareholders under the scheme or contract or on such other terms that were offered
to the Dissenting Shareholders in the offer document (if they are different from those offered to the
other shareholders).

PROCEDURE FOR THE RIGHT OF SQUEEZE-OUT

Steps and periods:

The maximum period to exercise the right of squeeze-out is two months after the
Squeeze-Out Threshold is achieved.

In the case of an offer for a Singapore incorporated company, the offer document must state
whether the offeror intends to enforce its right of squeeze-out in the event that the conditions
in Section 215 of the Companies Act are met.

If the offeror achieves the Squeeze-Out Threshold and chooses to exercise its squeeze-out
right, the offeror must deliver a Notice to Dissenting Shareholders (Form 57) to each
Dissenting Shareholder.

The Dissenting Shareholders have the right to request for a list of all Dissenting
Shareholders.

The Dissenting Shareholders may within one month from the date of Form 57 or 14 days
from the date on which the list of Dissenting Shareholders is provided (whichever is the

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 later), object to the squeeze-out by filing an application with the High Court of Singapore (the
High Court).

If there is no objection or any objection is dismissed by the High Court, the offeror may, after
the expiration of one month after the date on which Form 57 is given or 14 days after the list
of Dissenting Shareholders is given to a Dissenting Shareholder (whichever is later), send a
copy of Form 57 to the target company together with an instrument of transfer. The
instrument of transfer may be executed, on behalf of each shareholder by any person
appointed by the offeror, and on its own behalf by the offeror. Upon receipt of the duly
executed instrument of transfer and the consideration for the remaining shares from the
offeror, the target company is obliged to register the offeror as the holder of the remaining
shares.

As required by Section 215(5) of the Companies Act, the target company holds the
consideration for the acquisition in a separate bank account on trust for the Dissenting
Shareholders until claimed by them.

Expenses and guarantees

Each party bears his own expenses incurred in a squeeze-out. Singapore law does not
oblige the offeror to bear the expenses although, in practice, the bulk of the expenses are
incurred by the offeror.

Consequences of the exercise of a right of squeeze-out

When the shares of the target company are listed, the shares will be delisted following the
exercise of the right of squeeze-out.

RIGHT TO BE BOUGHT
Section 215(3) of the Companies Act provides for the rights of the Dissenting Shareholders to be
bought out by the offeror if the offeror holds 90% or more of the shares of the target company
pursuant to a scheme or contract.

Right to be bought - Under what circumstances can it be exercised?

Under Section 215(3) of the Companies Act, where an offeror and its nominee acquired 90% of the
shares (excluding treasury shares) in the target company pursuant to a scheme or contract
(including shares already held by the offeror or its nominee, holding company, subsidiary or fellow
subsidiary at the date of the acquisition), the Dissenting Shareholders are entitled to demand that
their shares be bought out by the offeror.

What is the price of acquisition?

The offeror must acquire the shares on:

the same terms (including price) as it acquired the shares of the shareholders under the
scheme or contract;

such other terms agreed between the offeror and the Dissenting Shareholders; or

such other terms ordered by the High Court (on the application of the offeror or the

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 Dissenting Shareholders).

Procedure for the right to be bought

Steps and periods:

The offeror must, within one month from the date of the offeror acquiring 90% or more of the
shares in the target company, issue a Notice to Non-Assenting Shareholder (Form 58) to
each Dissenting Shareholder of the target company to inform them of their rights to be
bought.

A Dissenting Shareholder is required to exercise his right within three months from the
giving of Form 58 to him.

ADDITIONAL CONSIDERATION FOR COMPANIES LISTED ON

In addition to observing the provisions in Section 215 of the Companies Act, a listed target
company should, upon the offeror invoking its squeeze-out right, apply to the SGX-ST for the
delisting of the company after completion of the squeeze-out process by the offeror.

SQUEEZE-OUT TIMETABLE
Timeline Action

D Offeror announces intention to exercise squeeze-out rights

E Offeror announces exercise of squeeze-out rights

Offeror despatches Form 57 and Form 58*

* Typically, the Dissenting Shareholders are not required to take action in response to Form 58
if Form 57 is given to them concurrently.

E + 1 day If the target company is listed, the target company applies to the SGX-ST for
approval to delist

E + 29 days Target company opens trust account to hold the consideration for the shares by
this date

Offeror pays consideration to the target company for the shares to be

E + 1 month Last date for a Dissenting Shareholder to apply to the High Court to object to the
squeeze-out or make a written request to the target company for a written
statement of the names and addresses of all other Dissenting Shareholders as
shown in the Register of Members (the Dissenting Shareholders List)

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Timeline Action

E + 1 month Target company confirms with the offeror at the close of business whether any
or (** + 14 days) Dissenting Shareholder has requested for the Dissenting Shareholders List
(X)
** The above timing assumes that no Dissenting Shareholder has requested for the Dissenting
Shareholders List or applied to the High Court to object to the squeeze-out. If a Dissenting
Shareholder has requested for the Dissenting Shareholders List, he is entitled to apply to the
High Court to object to the squeeze-out within 14 days of the supply of the Dissenting
Shareholders List. The date on which the offeror is entitled to acquire the shares of the
Dissenting Shareholders is the latest of: (i) the expiry of one month after the date of Form 57;
(ii) 14 days after the Dissenting Shareholders List was supplied to any Dissenting
Shareholder, or (iii) any pending court application by a Dissenting Shareholder being
disposed of.

X + 1 day Offeror transmits a copy of Form 57 and the duly executed share transfer form
to the target company

For scripless shares, target company issues a letter of instructions to debit the
compulsorily acquired scripless shares into The Central Depository (Pte)
Limiteds (CDP) suspense account and credit the shares into the offerors
account

For scrip shares, target company issues a letter of instructions to the target
companys share registrar (the Share Registrar) to register the offeror as the
holder of scrip shares in the Register of Members

X + between 2 Target company transfers the consideration to CDP/Share Registrar for the
days to 2 weeks settlement of scripless/scrip shares to be compulsorily acquired to enable
CDP/Share Registrar to pay the Dissenting Shareholders

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