What are the key rules/laws relevant to M&A and who are the key regulatory authorities?
Parties are generally free to negotiate the terms and conditions of M&A transactions, subject to compliance with mandatory laws and regulations. The key rules/laws relevant to M&A in Singapore and the regulatory authorities that administer them are summarized below.
Companies Act 1967 of Singapore (Companies Act)
The Companies Act is applicable to all companies incorporated, registered or carrying on business in Singapore. The Accounting and Corporate Regulatory Authority of Singapore (ACRA) is the authority with regulatory oversight and is responsible for the administration of the Companies Act.
Insolvency, Restructuring and Dissolution Act 2018 of Singapore (IRDA)
The IRDA is an omnibus legislation that consolidated all personal and corporate insolvency and debt restructuring legislation into a single statute, which came into force on 30 July 2020. The IRDA seeks to align the insolvency and debt restructuring procedures previously found in separate pieces of legislation and enhance Singapore's insolvency and debt restructuring regime with the introduction of provisions relating to super-priority rescue financing and worldwide moratoriums. The IRDA, together with the Companies Act, provides for the protection of creditors by its various capital preservation provisions, such as the rule preventing the undervalued sale of a business and the prohibition against unfairly preferring one creditor over another in the event of a company's insolvency and, particularly in relation to M&As, provisions on the prohibition of financial assistance by a company to the acquirer in the purchase of its shares.
Securities and Futures Act 2001 of Singapore (SFA)
Part 8 of the SFA sets out the primary legislative provisions relating to takeover offers in Singapore. Section 138 of the SFA provides for the establishment of the Securities Industry Council (SIC), the regulatory body which oversees and administers the Singapore Code on Take-overs and Mergers (elaborated below). The SIC is part of the Monetary Authority of Singapore (MAS).
Competition Act 2004 of Singapore (Competition Act)
If the transaction gives rise to competition and anti-trust issues, the Competition Act could also apply. Specifically, Section 54 of the Competition Act prohibits mergers that have resulted in or may be expected to result in, a substantial lessening of competition within any market in Singapore for goods and services.
The Competition and Consumer Commission of Singapore (CCCS) is the regulatory body overseeing the administration and enforcement of the Competition Act in Singapore. While there is no mandatory requirement for mergers to be notified to the CCCS, merger parties may voluntarily notify their transaction to the CCCS for a decision on whether the transaction will substantially lessen competition in Singapore. Parties to an M&A transaction should conduct self-assessments against the guidelines published by the CCCS to determine if there may be a substantial lessening of competition and a merger notification is necessary. Parties who choose not to notify mergers that raise competition concerns would risk the CCCS subsequently investigating the transaction on its own initiative. In the event that the CCCS finds that the merger will likely or has led to a substantial lessening of competition in Singapore, the parties may be liable to face financial penalties or other directions imposed by the CCCS which may include divestiture orders.
Significant Investments Review Act 2024 (SIRA)
The SIRA, which came into force on 28 March 2024, introduces a new layer of scrutiny for significant investments in strategic sectors. This Act aims to safeguard Singapore's national security and critical economic interests by regulating ownership and control over designated entities which are deemed vital to Singapore's national security and public interest. In general, M&A transactions involving the acquisition of control in a designated entity such that the buyer becomes a 12%, 25% or 50% controller in such entity, would be subject to government approval. Transactions completed without the requisite approvals will be rendered void. Buyers are also required to notify the Minister for Trade and Industry after they become a 5% controller in a designated entity. In addition, sellers must also seek approval from the Minister when they cease to become a 50% or 75% controller.
Investors and companies must therefore integrate SIRA-related assessments into their due diligence processes to determine whether a transaction falls within the purview of SIRA. Non-compliance with the SIRA, including failure to notify the authorities or proceeding with a transaction without obtaining the necessary approvals, can result in significant fines, divestment orders, or other corrective measures.
Singapore Code on Take-overs and Mergers (Takeover Code)
The Takeover Code, which is issued by the MAS, applies to the acquisition of voting control of:
- corporations (including corporations not incorporated under Singapore law) with a primary listing of their equity securities in Singapore;
- registered business trusts with a primary listing of their units in Singapore; and
- real estate investment trusts.
While the Takeover Code was drafted with listed public companies, listed registered business trusts and real estate investment trusts in mind, unlisted public companies and unlisted registered business trusts having more than 50 shareholders or unitholders and net tangible assets of S$5 million or more must also observe the letter and spirit of the General Principles and Rules of the Takeover Code wherever it is possible and appropriate. The Takeover Code does not apply to take-overs or mergers of other unlisted public companies and unlisted business trusts, or private companies. The Takeover Code adopts a self-regulatory regime, and the primary responsibility for ensuring compliance with the Takeover Code rests with parties (including company directors) to a take-over or merger and their advisers, not the SIC.
The Takeover Code does not have the force of law. However, the SIC has the power to impose sanctions for any breaches of the Takeover Code. These sanctions include private reprimands, public censure, or, where the breach is flagrant, further action as the SIC thinks fit, such as actions designed to deprive the offender temporarily or permanently of its ability to enjoy the facilities of the securities market and/or requiring existing and former holders of the securities of the offeree company to be compensated.
In the case of breaches by advisers (including lawyers), the SIC may require such adviser to abstain from taking on Takeover Code-related work for a period of time.
Listing Manual of the Singapore Exchange Securities Trading Limited (Listing Manual)
Where the buyer, seller or target company is listed on the Singapore Exchange Securities Trading Limited (SGX-ST), the listing rules of the SGX-ST as set out in the Listing Manual will be applicable in relation to the transaction. In particular, relevant disclosures will have to be made if the transaction is considered an interested person transaction, discloseable transaction, major transaction or very substantial acquisition or reverse takeover, within the meaning of the listing rules.
Industry Specific Regulations
In Singapore, M&A transactions involving the acquisition of ownership and/or control in entities in certain industries may be subject to various industry-specific regulations, particularly in sectors that are highly regulated due to national security, economic stability, or consumer protection concerns. Some key industry-specific regulations that apply to M&A transactions include:
(i) Banking & Financial Services
Prior approval from the MAS is required where a person gains effective control of an entity holding a Capital Markets Services (CMS) licence, by virtue of, inter alia, holding directly or indirectly, 20% or more of the issued share capital or voting power in the CMS licence-holder. The MAS strictly regulates ownership changes in CMS-licensed firms to ensure that shareholders meet fit and proper criteria, and to reduce risks associated with money laundering, financial instability, or improper market influence.
Under the Banking Act 1970 of Singapore, a person (whether resident in Singapore or not) acquiring 5% or more of a Singapore-incorporated bank's shares or becoming a substantial shareholder of a Singapore-incorporated bank, must obtain prior approval from the MAS. As for other non-bank financial institutions regulated by the MAS, there are generally no express foreign ownership requirements save for certain exceptions.
(ii) Telecommunications and Media
M&A transactions in the telecommunications and media sector are regulated by the Infocomm Media Development Authority (IMDA). For instance, where a transaction involves the transfer of equity interests in a designated telecommunications licensee, approval from the IMDA is required, if a person becomes a 12% controller (as defined under the Telecommunications Act 1999 of Singapore) or a 30% controller of such licensee, or if a person obtains effective control of a designated telecommunications licensee.
Under Part 10 of the Broadcasting Act 1994 of Singapore, the IMDA's prior approval is required for any person to become a substantial shareholder of a broadcasting company, or for a person to enter into any agreement or arrangement to act together with any other person with respect to the acquisition, holding or disposal of, or the exercise of rights in relation to, their interests in voting shares of an aggregate of more than 5% of the total votes attached to all voting shares in a broadcasting company. Prior approval from the IMDA is also required for becoming a 12% controller or indirect controller of a broadcasting company. Further, the IMDA will not grant a broadcasting license to domestic broadcasting companies if they are controlled by foreign investors or if foreign investors hold more than 49% of the company's shares or voting power, unless with the Minister's approval.
(iii) Electricity and Gas
Similarly, M&A transactions in the electricity and gas sectors in Singapore are subject to strict regulatory oversight by the Energy Market Authority (EMA). This is to ensure continued energy security, market stability, and compliance with competition laws. Companies in these sectors which are seeking to undertake M&A transactions must obtain the relevant approvals from EMA. For instance, pursuant to the Electricity Act 2001 of Singapore, approval of the EMA is required where a person becomes a 12% controller (as defined under the Act), or 30% controller or an indirect controller of a designated electricity licensee, or for the acquisition as a going concern of the business or any part of the business of a designated electricity licensee.
What is the current state of the market?
The global M&A market is showing signs of a steady but slow recovery after a period of subdued activity in previous years. In 2024, global M&A activity experienced a moderate uptick, reflecting a 12% increase in deal value to approximately US$3.4 trillion1. The easing of inflation, lower interest rates, and recovering valuations through much of last year have heightened expectations among dealmakers around the globe for increased M&A activity in 2025.
The Asia-Pacific (APAC) region remains a pivotal contributor to global M&A activity. In 2024, APAC region recorded over 11,000 deals, totaling approximately US$889.4 billion2. While this represented a 6.9% decrease in deal value compared to 2023, the latter half of the year saw a resurgence in activity, with several countries experiencing notable growth. China took the lead with a deal volume of US$278.1 billion, followed by significant contributions from Japan, India, and Australia. While deal volume declined across all regions in 2024, APAC stood out with a relatively modest decrease. Unlike North America and South & Central America, which experienced double-digit declines, APAC's decline was the smallest among all regions, reflecting its comparatively stronger performance in a challenging global market3.
M&A activity in Southeast Asia (SEA) fell to a 15-year low in 2024, with deal volumes decreasing by 34% year-on-year to approximately US$22 billion in the first half of the year. This decline was more pronounced than in the broader Asia-Pacific region. In the first nine months of 2024, SEA deal value dropped by 51% compared with the same period in 20234. Despite the challenges, SEA is poised for increased M&A activity, driven by strong economic prospects, digital transformation, and a rise in cross-border transactions within the region. The region's GDP is projected to grow by 4.9% in 2025, fueled by robust domestic demand.5 The technology sector is expected to experience high levels of deal activity as companies capitalize on further digital adoption.
Regulatory reforms such as Vietnam's Law on Investment and the Philippines' Foreign Investment Act have heightened the appeal of the region to foreign buyers. SEA has emerged as an attractive destination for international entities seeking expansion opportunities, particularly investors from the wider Asia-Pacific region such as China and Japan.6 Singapore continues to lead M&A activity in the SEA region, accounting for 35% of the total M&A deal volume in 2024.7 This is largely driven by its favourable investment climate and well-developed financial sector. In 2024, M&A transactions involving Singapore companies reached approximately US$51 billion, marking a 29% increase from the same period in 2023.8 As at early 2025, Singapore's M&A market has demonstrated robust growth, solidifying its status as a regional hub for such activities in SEA.
The M&A landscape in Singapore is expected to remain active in 2025, driven by factors such as digital transformation, advancements in artificial intelligence, and the need for investment in key sectors like energy and technology. As interest rates stabilize and the macroeconomic picture becomes clearer, valuations are anticipated to become more certain, fostering increased dealmaking within SEA and driving further growth.
Click here to view the chapter in full.
Footnote(s):
1. https://www.mckinsey.com/capabilities/m-and-a/our-insights/top-m-and-a-trends
2. https://www.pwc.com/ph/en/deals-corporate-finance/deals-publications/2024-ap-ma-report.html?
3. Ibid.
4. Ibid.
5. Ibid.
6. https://www.bcg.com/publications/2024/m-and-a-regional-markets-overview?utm
7. https://www.pwc.com/ph/en/deals-corporate-finance/deals-publications/2024-ap-ma-report.html
Originally published by Legal 500.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
