SINGAPORE (July 11): The Singapore Exchange Regulation (SGX RegCo) has announced changes to two rules related to the voluntary delisting of listed companies.

To take effect immediate, the two changes were implemented after consultation with market participants and the public.

Firstly, the offeror and parties acting in concert with the offeror must abstain from voting on the voluntary delisting resolution.

The 10% block in its voluntary delisting rules has also been removed.

However, the approval threshold is still maintained at 75% of total number of shares held by independent shareholders present and voting.

In its respond to feedback, SGX says retaining the 10% block provision is not appropriate as it may be difficult for minority shareholders to collectively obtain the 10% block when the issuer is tightly controlled, as stated in the consultation.

Furthermore, as the offeror concert party group is now barred from voting on the voluntary delisting resolution, it may be disproportionate to retain the 10% block provision.

Secondly, SGX says exit offers made in conjunction with voluntary delistings must not only be “reasonable”, but also “fair”.

Previously, an exit offer was only required to be reasonable but not fair.

An offer is “fair” if the price offered is equal to or greater than the value of the offeree securities, according to the Securities Industry Council.

SGX says justification for fairness and reasonableness of the offer will also have to be detailed separately.

It will also work with relevant industry bodies to develop guidance and standards for IFAs and their opinions.

Respondents say this will increase protection for minority shareholders as it is likely to lead to a better exit offer.

Tan Boon Gin, CEO of SGX RegCo, says, “In arriving at the new voluntary delisting framework, SGX RegCo was cognisant of the need to ensure that exit offers are fair and reasonable, so as to better align the interests of the offeror and independent shareholders. The feedback we received raised the question of whether delisting is a sufficiently important decision of the issuer to warrant a high approval threshold. We concluded that the approval threshold should be kept at 75%, to give independent shareholders a say in the delisting in all situations.”

See: The voluntary delisting rules and privatisation through general offers