ACP END OF COURSE LECTURE

Exam format
- No choices
- All questions compulsory  questions will be shorter
- To pass = pass all the questions
- Timing: 2h x 4 questions (30 mins each)
o JV
o Merger & takeover
o EQ capital market
o Corp governance

ACP EXAM 2016

QUESTION 1: JOINT VENTURE

(A) Forms  Advantage & disadvantage of each JV form
o Contractual alliances
o Partnerships
o Equity JV via JV coy

(B) Key issues in JV agreement

- Initial contributions
- Composition of the board – voting thresholds
- Reserve measure that have to be discussed at the Board / elevated to shareholders

(D) Protection minority shareholder interest in JV

- consider client’s equity stake – 40%
- highlight that if minority holds more than 25% - stat. ability to block special resolution votes
- Other stat rights: to hold meetings, formal regulatory investigations, stat derivative actions, minority
oppression, winding up … etc.
- Non stat rights: ensure that client can speak in management through representation, major business
decisions will require client’s consent – e.g. veto / shareholder reserve matter.
o Protect client’s equity stake from being diluted from subq share issue
o Ensure client receives proper distribution of profit and has access to information
o Where relationship turns sour – client has ability to exit relationship

(E) Ability to transfer shares

- will not transfer shares w/o client’s consent
- initial lock out period  MORATORIUM
- Pre-emption rights and how they work
o Right of first offer
o Right of first refusal
 o  understand the diff. between the both
o  which pre emption right is more advantages to which party

QUESTION 2: TAKE OVER & MERGERS

- MUST ANALYSE!!! WHICH METHOD IS BEST
- SET OUT THE ADVANTAGES & DISADVANTAGES

- whether possible to have asset acq instead of share acq

o why its disadvantages to do asset acq
 some contracts require consent of TP – no guarantee can get contracts
 cannot transfer licences – need to apply from requisite authorities and no guarantee
 stamp duty – where you buy shares no stamp duty, but if buy assets and includes
real property, SD will be incurred
 where all bought assets are sold = SH gets cash
o share sale
 company just has to make recommendation whether accept / reject the share offer
 cleaner than asset acq. From perspective of BOD

- Privatising company – best method

 3 options
o vol general option
 what a VGO is
 condition upon 50% but can fix at higher level of acceptance
 where client wants 100% of coy, client set condition at 90% to trigger compulsory
acquisition – squeeze out
 where condition not met then don't buy any shares
 condition met – compulsory acquisition
o scheme of arrangement
 all or nothing method
 voting thresholds – majority in no. > 50% and voting shareholders must hold > 75%
in shares in coy
o voluntary delisting
 explain that meeting convene by entire company
 whether company should be delisted
 voting thresholds – 75% present and voting // not more than 10% voting against
 in actual fact. .. need 90% voting in favour of
 once resolution passed, incentivises minority shareholders/ disagreeable
shareholders to ‘give up resisting’ and tender acceptances of the offer
 draw back - no guarantee that will get 100% of company. Once resolution passed
company only gets delisted. Whether you get company or not depends on exit offer
 whether compulsory acquisition will be met at voluntary general offer stage
 o Here SH has 65%  question to ask yourself: which is easiest to achieve?
o Scheme  can you hit majority in number because each shareholder will be counted as one
individual – i.e the > 50%?? Because can most probably hit 75% in value
o VGO  to hit CACQ – need 90% - should discuss to see likelihood

QUESTION 3: DISCLOSURE OBLIGATIONS SGX COY

- Factual situation this year
- Can use bullet points where running out of time!!
- Discuss what the problems are
o Don’t discuss the history behind the legislation
o Spot the issue  identify the rule that needs to be applied  apply it correctly

- Discussion of the product recall

- How he can restructure his board
- Disclosure obligations
- S.203 SFA – selective disclosure
- Trading halts
- Product guidance
- Guideline 2.2 of the Code of Corporate Governance
o (remember when Code can be disapplied)
o How many IDs should form the board
o Composition of committees, etc.
- Rule 703 – listing manual

QUESTION 4: ECM  RAISING CAPITAL IN A POST-IPO SITUATION

- points distributed evenly over the different parts
- objective marking, if hit point, get the part
- To see if you know basic elements
- Structure & content of question will be the same – Q4 2016 paper
- 3 ways to raise capital in equity capital market

- 3 methods of fund raising

o renounceable rights
o preferential offering / non renounceable rights issue
o placement of shares  just a couple of sentences to explain what a placement is
 where does money come from
 just discuss the methodology  not asking for thesis
 don’t need offer document – sophisticated investors
 Rule 812
 who funds can be raised from?
 Whether listed companies directors can participate
o Know the restrictions in the Listing rules
 Limits on amount that can be raised
 Know the 2 limits that apply
 Advantages and disadvantages