FAQs: Obligations of Investors or Owners of Designated Entities
The FAQs are intended to provide guidance to parties on the policy provisions and the administration of SIRA. They do not constitute as legal advice.
If you have further clarifications, feel free to contact us at contact@osir.gov.sg.
What parties need to notify or seek approval from the Minister for transactions relating to designated entities?
Notification or approval obligations are imposed on:
Prospective controllers of designated entities
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If they acquire an equity interest or voting power that meets prescribed thresholds; or
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Become an indirect controller.
Existing controllers of designated entities
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If they dispose of equity interest or voting power below the prescribed thresholds.
Acquirors of (any part of) the business or undertaking of the designated entity, as a going concern
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If they acquire, as a going concern, any part of the business or undertaking of the designated entity.
Designated entities
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After becoming aware of a change in ownership or control; or
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If it is seeking to sell (any part of) the business or undertaking, as a going concern.
What are the prescribed thresholds for notification or approval for the acquisition of equity interest or voting power in a designated entity?
Parties will need to notify or seek approval if they are involved in transactions
that meet the prescribed thresholds for the designated entities.
The default obligations are:
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Notifying the Minister within 7 calendar days after becoming a 5% controller in a designated entity; and
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Seeking the Minister’s approval before becoming a 12%, 25%, or 50% controller in a designated entity.
While the above are default thresholds set out in the Significant Investments Review Act, the Minister has the flexibility to vary such thresholds for specific entities as the situation warrants, and if so, these will be prescribed in subsidiary legislation.
Parties may wish to refer to Acquiring Equity Interest or Voting Power in a Designated Entity for a step-by-step process flow.
Transactions involving the acquisition, as a going concern, of (any part of) the business or undertaking of a designated entity, will also require prior approval.
What are the prescribed thresholds for notification or approval for the sale of equity interest or voting power in a designated entity?
Parties will need to seek approval from the Minister prior to disposing equity interest or voting power in a designated entity which will result in them ceasing to be a 50% or 75% controller.
While the above are default thresholds set out in the Significant Investments Review Act, the Minister has the flexibility to vary such thresholds for specific entities as the situation warrants, and if so, these will be prescribed in subsidiary legislation.
Parties may wish to refer to Disposal of Equity Interest or Voting Power in a Designated Entity for a step-by-step process flow.
What are the obligations when buying a business from a designated entity?
The acquiror, together with the designated entity, will need to seek approval from the Minister prior to the acquisition, as a going concern, of (any part of) the business or undertaking of the designated entity.
Parties may wish to refer to Acquisition of the Business or undertaking of a Designated Entity for a step-by-step process flow.
Are the notification and approval obligations applicable to divestments, mergers, and acquisitions?
Regardless of the form of transaction, whenever a prescribed ownership or control threshold is met, or will be met, the relevant notification or approval obligation will apply.
Is notification or approval needed if a transaction was only completed after the entity’s designation date, but was entered into before it was designated?
Notification or approval would only need to be sought if:
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The transaction was entered into on, or after the designation date of the entity; and
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If the transaction meets the prescribed ownership and control thresholds.
Parties may refer to Overview of Ownership & Control Obligations under SIRA for the prescribed ownership or control thresholds. The thresholds are default thresholds and may differ for specific entities.
If any clarification is required, parties may contact OSIR at contact@osir.gov.sg
Is notification or approval needed if a party is investing into a holding company of a designated entity?
Whether an intermediate holding company or an ultimate parent company will be subject to the ownership and control obligations in the Act is fact-specific, depending on the extent and nature of control they have in the designated entity.
For example, where an intermediate holding company or an ultimate parent company owner’s total investment holding reaches a prescribed threshold, the relevant notification or approval obligations may apply.
The obligations of a potential investor, intermediate holding company or an ultimate parent company to notify or seek approval apply regardless of whether the actions were the result of the intermediate holding company, the ultimate parent company or any other party.
Parties may refer to Overview of Ownership & Control Obligations under SIRA for the prescribed thresholds. The thresholds are default thresholds and may differ for specific entities.
What are the obligations of the parent entities of designated entities?
Only obligations related to changes in direct ownership or control specifically apply to parent entities. For example, if a parent entity seeks to sell off some of its shares in the designated entity and would fall below a prescribed threshold as a result, prior approval would be required for the sale.
Similarly, if a parent entity seeks to increase its shareholding in a designated entity which causes it to cross a prescribed threshold as a result, prior approval would be required.
Parties may refer to Overview of Ownership & Control Obligations under SIRA for the prescribed thresholds. The thresholds are default thresholds and may differ for specific entities.
Parent entities may seek clarification from OSIR at contact@osir.gov.sg before the commencement of any formal application.
Does a party have obligations when their equity interests in a designated entity changes as a result of actions by third parties?
A party’s obligations arise whether the change in shareholdings or control is the result of its own actions or the actions of any other party.
Examples:
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Where a party’s interest meets a prescribed threshold as the result of not participating in a share issuance; or
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Where a party’s interest meets a prescribed threshold as the result of not participating in a share buyback.
Parties may refer to Overview of Ownership & Control Obligations under SIRA for the prescribed thresholds. The thresholds are default thresholds and may differ for specific entities.
Does a party need to notify or seek approval when acquiring an equity interest if there is no intention to vote or exercise control over the designated entity?
Any party investing in a designated entity, whether they seek control over the designated entity or otherwise, must comply with the obligations under the Significant Investments Review Act if they meet the prescribed thresholds.
Parties may refer to Overview of Ownership & Control Obligations under SIRA for the prescribed thresholds. The thresholds are default thresholds and may differ for specific entities.
Does a party need to seek approval for the acquisition of equity interest which is exercisable only in the future (e.g. convertible loan, or options)?
Under the Significant Investments Review Act, a party will be deemed to have equity interest as long as it has the right to acquire the equity interest or voting power.
This may arise under an option, convertible loan or other arrangement where the equity interest is transferred to (or to the order of) the party, regardless of when the right is exercisable and whether there are conditions tied to it.
Hence, a party entering into any such arrangement will need to notify or seek approval if the equity interest meets the prescribed thresholds.
Parties may refer to Overview of Ownership & Control Obligations under SIRA for the prescribed thresholds. The thresholds are default thresholds and may differ for specific entities.
What other regulations may affect transactions?
Parties involved in transactions pertaining to an entity that is not designated under the Significant Investments Review Act, but covered by other domestic sectoral legislation may need to notify or seek approval from the relevant regulator in accordance with the relevant domestic sectoral legislation.
Please refer to Sectoral Legislation with O&C provisions to see examples of other domestic sectoral legislation in Singapore and their respective regulators.