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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 company, ensuing within the private firm changing into the listed entity. RTOs are a well-liked way for private companies to realize access to the public market without having to go through the traditional initial public offering (IPO) process.

RTOs are additionally turning into increasingly widespread in Singapore, as they offer a number of advantages over IPOs, including:

A faster and more efficient route to the general public market

Lower prices

Greater flexibility in deal structuring

The ability to retain control of the listed entity

Nevertheless, RTOs are also complicated transactions that contain a number of legal and compliance considerations. This article will focus on the key legal and compliance issues that parties to a Singaporean RTO must be aware of.

Regulatory Framework

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

The acquirer must make a compulsory offer to all shareholders of the goal firm to purchase their shares.

The acquirer must provide a circular to focus on company shareholders setting out the terms of the provide and the reasons for the RTO.

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

The acquirer and the target firm must receive 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 goal company to conduct thorough due diligence on each other before entering into an RTO agreement. This is because RTOs are complex transactions that contain a number of risks, together with:

Financial risks: The acquirer must be sure that the goal company is financially sound and that it will be able to generate ample profits to service its debt and pay dividends to its shareholders.

Regulatory risks: The acquirer should ensure that the target firm complies with all applicable laws and regulations.

Litigation risks: The acquirer should be sure that the goal company will not be going through any significant legal claims.

Corporate Governance

RTOs can also increase a number of corporate governance concerns. For instance, it is important to ensure that the acquirer and the target firm have impartial boards of directors that can provide objective oversight of the transaction. Additionally it is important to ensure that the acquirer will not have a controlling interest within the listed entity after the RTO, as this might lead to conflicts of interest.

Securities Law Considerations

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

The acquirer's supply to target company shareholders must be fair and reasonable.

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

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

Conclusion

RTOs could be a advanced and challenging process, however they'll additionally offer a number of advantages to each acquirers and target companies. It will be significant for parties to a Singaporean RTO to seek legal and financial advice early on in the process to ensure 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 very important seek tax advice to ensure that the transaction is structured in a tax-efficient manner.

Employment: RTOs may have implications for the employees of the target company. You will need to consider how the RTO will impact the phrases and conditions of employment of target firm employees, and to take steps to make sure that all applicable employment laws are complied with.

Mental Property: RTOs also can contain the switch of intellectual property from the goal company to the acquirer. You will need to be certain that all needed intellectual property rights are switchred to the acquirer, and to take steps to protect the acquirer's intellectual property rights after the RTO.

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Website: https://www.singaporelegalpractice.com/2023/09/24/reverse-takeover/

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