Revised takeover code: Dealmakers welcome targeted guidance instead of ban on deal protection

Singapore’s revised takeover code is expected to strengthen governance and competition in merger and acquisition (M&A) transactions without making deals harder to execute, lawyers and corporate finance advisers said.

Rather than impose a blanket ban on deal protection measures, the revised code to enhance competition and disclosures by the Monetary Authority of Singapore (MAS) opted for targeted guidance after industry feedback.

This is seen as a pragmatic compromise that industry experts said preserves commercial flexibility without fundamentally shifting the balance between bidders and target boards.

Announced on Jun 16, MAS – on the advice of the Securities Industry Council (SIC) – issued a revised Singapore Code on Take-overs and Mergers, which will take effect on Jul 16.

Andrew Ang, co-head of M&A at WongPartnership, noted that SIC initially considered adopting a general prohibition on deal protection measures and other offer-related arrangements to be in line with the UK.

“Instead, SIC elected to provide guidance to offeree boards as to how they should consider certain deal protection measures in the face of potential anti-competitive effects,” he said.

The revisions and conclusions follow a public consultation launched by SIC on May 5, 2025. It said it observed a growing trend where boards entered into arrangements that could significantly restrict their ability to engage with competing bidders or communicate with shareholders.

Mark Liew, CEO of PrimePartners Corporate Finance, said that the changes are “intended to address the anti-competitive effects of deal protection measures that have been seen in certain transactions”, adding that they “generally improve certainty, timelines and disclosures in M&A transactions for stakeholders".

He cited the bidding contest for Singapore Press Holdings (SPH) from 2021 to 2022 as an example of the type of issues that the revised code is intended to address.

During the contest at the time, certain clauses of the agreement between SPH and the initial bidder Keppel gave rise to concerns from rival Cuscaden Peak that these were against the interests of SPH shareholders.

Tighter safeguards

Among the most significant changes to the code is the cap on total break fees payable by an offeree company to an offeror at 1 per cent of the offeree’s value – a contrast from the previously more flexible approach.

The offeree board and its financial adviser must also explain to SIC why the fee is in shareholders’ best interests – a bar that Liew said would likely reduce the frequency of such fees in practice.

Christopher Kummer, the founder of Mergers & Acquisitions Association (Singapore), said that the new cap on break fees helps to make capital markets “more efficient”.

“Singapore is converging on the common 1 per cent benchmark, while US break fees remain three to four times higher,” he added. “Capping it at 1 per cent makes it almost negligible – too small either to keep rivals out or to bring in a favoured bidder.”

A break fee is a defence mechanism to protect a deal; it can support an uneconomic deal due to high opportunity cost and deter competing bidders from coming forward, he added.

The revised code also provides guidance on anti-competitive exclusivity arrangements, with SIC retaining the power to mandate remedial action if such agreements deter competing offers.

For schemes of arrangement, shareholder meetings must now be convened within six months of its initial announcement, and both parties must immediately execute all necessary steps to make the scheme effective without delay.

Higher bar for disclosures

Christopher Koh, a partner at Allen & Gledhill, said that the changes simply codify the existing practice of SIC.

The more consequential additions, he noted, are the new disclosure requirements.

These include disclosures on any actions during the offer which would require shareholder approval, disclosures on expenses incurred by the offeree, and guidance on maintaining equality of information between competing bidders, he said.

Beyond disclosures, Koh pointed out that there are changes regulating the use of social media by offerors, which extend the current restrictions on advertising an offer to cover social media.

Neil Synnott, regional chief commercial officer for the Asia-Pacific at IQ-EQ, said these revisions are a clear step towards a more competitive and transparent M&A environment, but would shift the focus now towards the execution process.

“Limiting break fees and strengthening disclosures should improve price discipline and reduce structural advantages for incumbent bidders,” he said.

However, he cautioned that more competition does not automatically mean more completed deals.

“With fewer protections in place, bidders may become more selective and cautious, particularly early in the process,” said Synnott. “We may see more contested situations, but also greater execution risk.”

The new six-month timeline for schemes of arrangement also means deal teams will need to complete due diligence, structuring and stakeholder engagement earlier, while enhanced disclosure requirements raise the bar on governance, he added.

No fundamental shift

WongPartnership’s Ang said that going forward, the new changes could allow for offeree boards to be more circumspect when considering deal protection mechanisms requested by potential offerors.

But he said they do not fundamentally alter the balance of power between bidders and target boards.

The revised code, he added, cuts both ways for offeree boards.

“On the one hand, the changes relating to deal protection measures will give offeree boards some added authority to reject such provisions vis-a-vis a potential offeror.

“On the other hand, the changes relating to frustrating actions and the scheme approval timeline will require the offeree boards to act more evenhandedly and responsibly.”

Similarly, Koh described the final framework as a balanced outcome.

“The end position represents a balanced approach which has considered the views of market practitioners, while ensuring that target boards are able to exercise their fiduciary duties and effectively maintain competitive tension.”

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

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