SINGAPORE: An Introduction to Corporate/M&A: Domestic
Singapore M&A volumes jumped in 2024, with the financial and real estate sectors leading the way. Interest was evident in both inbound and domestic M&A activity.
The following are some developments in 2024 to take note of when evaluating M&As in Singapore.
New Laws to Bolster National Security
Parliament passed the Significant Investments Review Act (SIRA) in 2024. Prior to that, Singapore did not have a general framework to address investments relating to national security.
The legislation addresses increasing threats to national interests and incorporates Singapore’s hallmark approach of pragmatic regulation. Unlike the approach taken by other jurisdictions, SIRA is based on designating specific entities based on national security considerations. The entities must be established in Singapore, carry on any activity in Singapore, or provide goods and services to any person in Singapore. By designating entities rather than sectors or activities, the government intended to minimise adverse impacts on businesses and investors, while retaining the flexibility to update the list of designated entities.
In respect of designated entities, SIRA provides for oversight of direct and indirect ownership or control changes, requiring notification to or prior approval from (depending on threshold) the newly created Office of Significant Investments Review ‒ applicable to local and foreign parties alike. In addition, appointments of key personnel (such as board directors and the CEO) of the designated entity will be subject to the Minister’s approval. As of 15 November 2024, nine entities have been designated under SIRA, including players in the oil and gas and defence-related industries.
SIRA additionally authorises the Minister to review transactions involving ownership or control of non-designated entities if the entity has acted against the national security interests of Singapore within a two-year period following the transaction ‒ akin to “call-in” powers in the legislation of jurisdictions such as the UK. The Minister is granted powers to direct or restrict the transfer or disposal of equity interest, voting control or business or undertaking in the entity, restrict the disclosure of any information relating to the affairs of the entity to any person, or make other directions that the Minister considers appropriate.
In addition, the Transport Sector (Critical Firms) and Cybersecurity (Amendment) Acts were also passed in 2024. Both incorporate similar designated entity regimes ‒ although, in the latter case, the lists of entities and systems are not made public for security reasons.
Antitrust and Competition
The Competition and Consumer Commission of Singapore (CCCS) continued its rigorous scrutiny of mergers in 2024. The clear takeaway from the rulings issued by the CCCS is that, even though the merger control regime under the Competition Act (CA) is based on voluntary notification, it is far from being toothless. Parties should undertake a merger control assessment early and allocate risks appropriately to address any consequences from the regulator’s review.
Briefly, Section 54 of the CA prohibits mergers expected to result in a substantial lessening of competition (SLC) within any market in Singapore for goods or services. Even though notification to the CCCS is not mandatory, parties should conduct a self-assessment and ‒ if they consider that the merger may infringe the CA ‒ they should notify the CCCS, which will then make an assessment.
In 2023, Grab Holdings (“Grab”) (which operates a widely used ride-hailing and food delivery app) proposed to acquire 100% of Trans-Cab Holdings (TCH), a large private taxi operator in Singapore. Parties applied for a decision by the CCCS on whether the proposed acquisition would infringe Section 54 of the CA. Upon completing the Phase 1 review, the CCCS raised competition concerns with the parties on the proposed acquisition. Grab’s proposed commitments were not accepted by the CCCS as adequately addressing the identified concerns and a Phase 2 review was commenced in early 2024.
In July 2024, the CCCS issued a provisional Statement of Decision, finding that the proposed acquisition was likely to result in an SLC in the market for the supply of ride-hailing platform services to drivers and passengers in Singapore. The
CCCS took the view that the proposed acquisition would significantly reduce competition between ride-hailing platforms and hence would strengthen and entrench Grab’s dominant market position. Subsequently, Grab and TCH aborted the proposed transaction.
Under the CA, the CCCS also has the ability to investigate an unnotified merger and to issue interim directions to ensure that actions of the merging parties do not prejudice any actions they may undertake.
In February 2024, the CCCS issued Interim Measures Directions (IMDs) to Grab and Delivery Hero and Foodpanda entities in relation to the possible acquisition by Grab of Delivery Hero’s food delivery business in Southeast Asia (including Singapore). The IMDs were issued despite the merger not having been notified to the CCCS. Following reports referencing a possible transaction by which Grab might acquire control of Foodpanda, the CCCS undertook an investigation and came to the view that the transaction ‒ if carried out ‒ might result in an SLC in the market for the supply of online food ordering and delivery services in Singapore (characterised by few large players, high entry barriers and strong network effects).
The IMDs contained measures primarily aimed at keeping the businesses separate prior to the CCCS completing its review of the transaction. They ceased to have effect when the parties notified the CCCS that they were not proceeding with the proposed transaction.
The CCCS’ action is likely to have been influenced by a previous transaction in 2018 also involving Grab, when it acquired Uber’s Southeast Asian business and signed and closed the transaction on the same day ‒ ie, before the CCCS was able to review the transaction. Both Grab and Uber were fined for infringing the CA.
ESG Trends
Environmental ‒ green data centres
Singapore released its Green Data Centre Roadmap in 2024. The government had earlier lifted a three-year pause in data centre (DC) growth due to environmental concerns, and the Green Data Centre Roadmap signalled a notable policy shift, generating heightened interest in DC investments in the regional DC hub.
The Green Data Centre Roadmap sets out Singapore’s aim to add at least 300 MW of additional DC capacity in the near term. The government will prioritise energy and water efficiency and use of green energy, as well as work with industry and provide incentive schemes and grants to data centre operators and users that meet its conditions. The Green Data Centre Roadmap recognises that DCs are critical to digital services and operations both in Singapore and globally, but that they cannot continue to grow in an unsustainable manner.
For DC operators and users intending to expand in Singapore, it will be critical to ensure that their DC set-up and operations meet the country’s sustainability requirements.
Social ‒ worker protections
Singapore employment protections continued to be bolstered with the introduction of the Tripartite Guidelines on Flexible Work Arrangement Requests, a mandatory four weeks of government-paid paternity leave for eligible fathers as well as additional government-paid shared parental leave, and a new SkillsFuture Jobseeker Support scheme to provide eligible retrenched employees with government-funded temporary financial support.
Platform workers providing ride-hail or delivery services also had their work conditions enhanced. The passing of the Platform Workers Act provided them with protections such as work injury compensation, representation, and contributions to the Central Provident Fund (Singapore’s mandatory social security savings scheme).
The first Workplace Fairness Bill to protect against workplace discrimination and establish fair employment practices was also released in 2024. It is expected to come into force in 2026‒27.
Governance ‒ climate reporting
Climate-related disclosures (CRD) for listed entities and large non-listed companies (with an annual revenue of at least SGD1 billion and total assets of at least SGD500 million) in Singapore will be mandatory from financial years 2025 and 2027 respectively, using requirements aligned with International Sustainability Standards Board (ISSB) standards. CRD on Scope 1 and Scope 2 greenhouse gas (GHG) emissions will be required at the outset, with Scope 3 GHG emissions phased in subsequently. Mandatory external limited assurance on Scope 1 and Scope 2 GHG emissions will also be phased in.