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SIC implements changes to Singapore Code on Take-Overs and Mergers on 16 July 2026 to enhance shareholder protections

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Singapore Client Update                                                                                     JULY 2026

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© RAJAH & TANN SINGAPORE LLP
MERGERS & ACQUISITIONS
SIC Implements Changes to Singapore Code on Take-Overs and Mergers on 16 July 2026
to Enhance Shareholder Protections
Executive Summary

On 16 June 2026, the Monetary Authority of Singapore, on the advice of the Securities Industry
Council ("SIC"), issued a revised Code on Take-overs and Mergers ("Code"). The amendments to the
Code, which will take effect from 16 July 2026, aim to protect the competitive process of take-over and merger transactions, improve the certainty and timeliness of schemes of arrangement
("Schemes"), and enhance disclosures to investors and shareholders.

The amendments follow from SIC's consultation exercise from 5 May 2025 to 5 June 2025 on the proposed changes set out in the "Consultation Paper on Revision of the Singapore Code on Take-overs and Mergers" ("Consultation Paper"). A total of 24 respondents provided feedback on the proposals, which were generally supported. For more information on the Consultation Paper, please refer to our May 2025 Legal Update titled "SIC Consults on Changes to Singapore Code on Take-Overs and Mergers to Enhance Shareholders' Protection".

This Update summarises the key changes to the Code, which relate to: (i) deal protection measures;
(ii) Schemes; (iii) offeror statements; (iv) frustrating actions and asset sales; (v) disclosures and information provided; and (vi) other matters.

Deal Protection Measures

Deal protection measures, such as break fees and exclusivity arrangements, are commonly utilised in
Singapore to encourage an initial offer or a competing offer. However, the excessive usage of such measures could deter competition from other potential offerors, which would ultimately disadvantage the shareholders of the offeree.

In the Consultation Paper, SIC had proposed to impose a general prohibition against deal protection measures and other offer-related arrangements, except in limited circumstances. Following feedback from respondents to the Consultation Paper, SIC has decided not to proceed with that general prohibition. SIC accepted feedback that the anti-competitive effects of deal protection practices in the
Singapore market are currently limited and agreed that the board of directors of the offeree ("Offeree
Board") should continue to have the freedom to assess if the grant of deal protection measures or other offer-related arrangements is in the best interests of the shareholders.

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Therefore, instead of a blanket prohibition as originally proposed in the Consultation Paper, SIC has introduced more targeted amendments and guidance to reduce the anti-competitive effects of some deal protection measures and other offer-related arrangements. The key finalised changes are summarised below.

1. Aggregate values of all break fees must not exceed 1%: A break fee is a cash sum payable by the offeree to an offeror if certain specified events occur which have the effect of preventing the offer from proceeding or causing it to fail. The existing Rule 13 of the Code on break fees will be retained, but with effect from 16 July 2026, where the offeree agrees to more than one break fee, the aggregate value of all break fees payable by the offeree must not exceed 1% of the value of the offeree. The 1% value is calculated by reference to the price of the first competing offer at the time of the announcement of a firm intention to make an offer. Further, the Offeree Board and its financial adviser must explain in the submission to SIC why the break fee is in the best interests of the offeree's shareholders.

2. Asset sales in competition with an offer: Where in competition with an offer or a possible offer, the Offeree Board announces that it has agreed terms on which it intends to sell all or materially all of the company's assets and/or businesses, SIC will normally consent to the offeree entering into a break fee arrangement with the asset purchaser at the time of the announcement, provided that the conditions in Note 5 on Rule 13 of the Code are satisfied.