MAS tightens M&A rules with 1% cap on target break fees

Bidders issuing “no increase” or “no extension” statements face new restrictions. 

The Monetary Authority of Singapore (MAS) has revised its Code on Take-overs and Mergers to cap break fees, tighten rules on offeror statements, and set a six-month deadline for shareholder meetings on schemes of arrangement.

Under the revised rules, total break fees payable by an offeree company must not exceed 1% of its value.

In addition, the offeree board and its financial adviser must explain to the Securities Industry Council (SIC) why the break fee is in shareholders’ best interests.

The SIC may also impose a 28-day deadline on a potential offeror that has not clarified its intentions for a prolonged period, requiring it to either announce a firm offer or confirm that it will not proceed.

The amendments will take effect on 16 July. 

Meanwhile, shareholder meetings for schemes of arrangement must also be held within six months of announcement.

Offerors that issue “no increase” or “no extension” statements will be restricted from making a later offer that effectively improves or extends the original bid.

If an indicative offer price was disclosed before a firm offer, the final offer price cannot be lower than the indicated price.

The revisions follow a consultation launched by the SIC on 5 May 2025. MAS said the proposals were generally supported and that the final amendments incorporate feedback received.