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Legal and Compliance Considerations in Singaporean Reverse Takeover Offers

A reverse takeover (RTO) is a corporate transaction in which a private company acquires a public firm, resulting in the private company becoming the listed entity. RTOs are a popular way for private firms to achieve access to the public market without having to undergo the traditional initial public providing (IPO) process.

RTOs are also changing into more and more in style in Singapore, as they offer a number of advantages over IPOs, including:

A faster and more efficient path to the general public market

Lower costs

Better flexibility in deal structuring

The ability to retain control of the listed entity

However, RTOs are additionally advanced transactions that contain a number of legal and compliance considerations. This article will discuss the key legal and compliance points that parties to a Singaporean RTO needs to be aware of.

Regulatory Framework

RTOs in Singapore are regulated by the Securities and Futures Act (SFA) and the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST). The SFA and the Listing Manual set out a number of requirements that parties to an RTO should comply with, together with:

The acquirer should make a mandatory supply to all shareholders of the goal company to purchase their shares.

The acquirer should provide a circular to target company shareholders setting out the terms of the supply and the reasons for the RTO.

The goal firm must hold an additionalordinary general assembly to approve the RTO.

The acquirer and the goal firm should obtain approval from the SGX-ST for the listing of the acquirer's shares on the SGX-ST.

Due Diligence

It is essential for each the acquirer and the target firm to conduct thorough due diligence on one another before getting into into an RTO agreement. This is because RTOs are advanced transactions that involve a number of risks, including:

Monetary risks: The acquirer should be certain that the goal company is financially sound and that it will be able to generate sufficient profits to service its debt and pay dividends to its shareholders.

Regulatory risks: The acquirer must be sure that the goal company complies with all applicable laws and regulations.

Litigation risks: The acquirer must make sure that the goal firm will not be going through any significant legal claims.

Corporate Governance

RTOs can also increase a number of corporate governance concerns. For example, it is important to make sure that the acquirer and the goal company have unbiased boards of directors that may provide objective oversight of the transaction. It is usually vital to make sure that the acquirer will not have a controlling interest in the listed entity after the RTO, as this could lead to conflicts of interest.

Securities Law Considerations

In addition to the general legal and compliance considerations mentioned above, there are a number of securities law considerations that parties to a Singaporean RTO ought to be aware of. These embody:

The acquirer's provide to focus on firm shareholders must be fair and reasonable.

The acquirer should disclose all material information about itself and the goal firm to focus on company shareholders.

The acquirer must not have interaction in any insider trading or market manipulation activities.

Conclusion

RTOs generally is a complicated and challenging process, however they'll additionally provide a number of advantages to each acquirers and goal companies. It is vital for parties to a Singaporean RTO to seek legal and financial advice early on in the process to make sure that they comply with all applicable laws and regulations.

Additional Considerations

In addition to the general legal and compliance considerations discussed above, there are a number of different factors that parties to a Singaporean RTO ought to consider, including:

Taxation: RTOs can have advanced tax implications for both the acquirer and the goal company. It is important to seek tax advice to ensure that the transaction is structured in a tax-efficient manner.

Employment: RTOs can even have implications for the employees of the target company. It is important to consider how the RTO will impact the terms and conditions of employment of target company employees, and to take steps to ensure that all applicable employment laws are complied with.

Mental Property: RTOs can also contain the transfer of intellectual property from the goal firm to the acquirer. It is very important be certain that all obligatory intellectual property rights are transferred to the acquirer, and to take steps to protect the acquirer's intellectual property rights after the RTO.

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