Securities Industry Council clarifies regulatory concerns in Mapletree REIT merger

In a statement on Thursday (15 Feb), the Singapore Securities Industry Council (SIC) detailed the procedural nuances and compliance challenges encountered during the merger between Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT), which successfully led to the establishment of the Mapletree Pan Asia Commercial Trust (MPACT) on 21 July 2022.

“The Merger was effected through the acquisition by MCT of all the units of MNACT by way of a trust scheme of arrangement in accordance with the Singapore Code on Take-overs and Mergers and the deed of trust constituting MNACT,” the SIC explained, emphasizing the compliance with the regulatory framework.

The initial announcement of the proposed merger was made on 31 December 2021, setting the stage for a complex regulatory journey with Allen & Gledhill LLP (A&G) and DBS Bank Ltd. acting as the legal and financial advisers to the MCT management, respectively.

The council emphasized the advisory discrepancy on the need for a “whitewash waiver,” a critical point of regulatory focus. This waiver sought to exempt independent shareholders from receiving a mandatory takeover offer for the company’s ordinary shares not already held or controlled by the undertaking shareholders and their concert parties.

Subsequently, the narrative took an intriguing turn when the need for a whitewash waiver was identified, following conflicting advice provided to MCT management.

On 18 October 2021, DBS had initially advised the necessity of a whitewash waiver, which was later contradicted by A&G’s advice at a meeting on 24 November 2021, stating no need for such a waiver.

This confusion was only clarified after further review, leading to A&G’s recommendation on 6 January 2022 that a whitewash waiver was indeed necessary, a decision ratified by the SIC granting the waiver and incorporating the Whitewash Condition into the merger agreement.

Further, the SIC identified breaches related to the announcement of conditions and the standard of care in documentation accuracy, underscoring the critical nature of these oversights.

“The omission of the Whitewash Condition would be regarded as a material breach,” the SIC declared, highlighting the stringent compliance requirements.

Despite these challenges, the SIC chose not to pursue further action, citing the prompt measures taken by the advisers to address the breaches and the enhancements made to their internal processes so as to prevent a repeat of the lapse.

The advisory misstep by A&G, particularly given its leadership’s prominence in Singapore’s corporate governance landscape, notably its chairman and senior partner Christina Ong‘s involvement with the Corporate Governance Advisory Committee and the SGX Catalist Advisory Panel, is particularly perplexing.

This lapse, juxtaposed against the backdrop of expected governance and advisory expertise, raises questions about the adherence to regulatory standards and practices.

Observing SIC’s lenient approach towards the involved parties, Mr Mak Yuen Teen, an associate professor at the National University of Singapore Business School, pointed out a prior breach of the code by A&G where the supervising partner voluntarily stepped back from work related to the Code for 11 months.

Additionally, a blogger raised concerns about potential conflicts of interest on Mr Mak’s LinkedIn post, given that A&G’s former chairman, Mr Lucien Wong, who is also the Attorney General, serves on the board of the Monetary Authority of Singapore (MAS) overseeing SIC.