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JiutianC
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laksaman57
Supreme |
07-Jul-2021 12:23
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https://www.singaporelawwatch.sg/Headlines/reits-should-be-careful-with-trust-schemes-of-arrangement
Reits should be careful with trust schemes of arrangement Source: Business Times Article Date: 01 Jul 2021 Author: Rae Wee Given added scrutiny of such schemes, Reits should consider if it is most appropriate method to achieve their objectives. Real estate investment trusts (Reits) in Singapore may have to be more careful when they undertake a trust scheme of arrangement in future as such schemes will likely draw more scrutiny, say corporate lawyers. This follows the recent privatisation of Soilbuild Business Space Reit (Soilbuild Reit) in March, where the Singapore High Court had raised concerns over the use of the one-proxy rule and the legal basis for a Reit trust scheme to be carried out. While the privatisation went through, the High Court said during the hearing that the one-proxy rule has the " potential to cause prejudice" . A Soilbuild Reit unitholder had earlier opposed the trust scheme sanction application on the grounds that the one-proxy rule, which allows for the appointment of only one proxy per unitholder, should not have been used for the trust scheme meeting. The court hearing was thus adjourned to allow time for the Reit manager to compile and provide further information to the court. A partner of a major law firm, who declined to be named, drew similarities between the Soilbuild Reit case and an earlier case in January this year relating to shipping company Pacific International Lines (PIL). The court had then directed that the voting instructions received by nominee holders of bonds issued by PIL be recorded by the scheme manager for the court' s consideration. In light of the doubts raised by the court during the Soilbuild Reit hearing, the partner said that " Reits seeking to undertake a scheme of arrangement should carefully consider whether the process and procedures it intends to adopt are fair, and how they will affect the question of whether the voting results obtained at the scheme meeting are an accurate reflection of the level of support for the scheme for final court sanction purposes" . Similarly, lawyers at Rajah & Tann Asia noted in an April commentary that while the one-proxy rule is an established industry practice, " an applicant for a trust scheme may need to consider taking steps to satisfy the court that its application of the proxy regime did not disenfranchise minority unitholders" . During the case, the High Court had also taken " great interest in a separate question as to where the legal basis of a Reit trust scheme can be found" , according to another commentary by INC Law, which represented the dissenting unitholder. Section 210 of the Companies Act covers the premise for schemes of arrangement within companies, but there is no such similar statute for Reit trust schemes. Instead, reference to a Reit trust scheme can be found in Singapore' s code on takeovers and mergers, though it is neither primary nor subsidiary legislation, it noted. The High Court had thus added that it was " mindful of the fact that (it had) doubts about the basis on which the rights of unitholders can be expropriated, even under a trust scheme" . Jaryl Lim and Lim Ming Yi, associate and associate director at INC Law, also raised a separate question as to whether a trust scheme can be " legitimately adopted in the context of a Reit" which deals with real estate property and property rights, noting: " Should dissenting unitholders have their property rights seized just because a majority of unitholders say so? " This calls into question an even more fundamental legal issue as to whether a Reit should be considered a corporate or a trust structure, because that in turn determines whether company law - where the majority rule is often the default rule - should apply, or whether trust law should apply instead." At present, there is existing legislation for the acquisition of Reits under section 295A of the Securities and Futures Act, which requires approval of investors holding 90 per cent of the Reit' s units. Thus, the duo at INC Law noted that Reit clients looking to do a takeover should " seriously consider whether a trust scheme is the most appropriate method to achieve their objective" . " One can no longer rule out the possibility of a formal challenge in court involving the legitimacy of a trust scheme, in which case a Reit client should be prepared to defend such an objection and show why a trust scheme may be adopted in lieu of an acquisition under section 295A," they added. In Singapore, the one-proxy rule is typically deployed as a tool to satisfy the " headcount test" . The local regulatory regime requires a scheme of arrangement to cross two thresholds. It must be approved by creditors or shareholders representing three-fourths in value of those voting at a scheme meeting it must also be approved by a simple majority, in number, of the scheme company' s creditors or shareholders present or voting at the meeting. This second threshold is commonly known as the headcount test. In order to facilitate calculations for the test, custodian banks or nominee companies that hold shares on behalf of multiple shareholders are considered as a single shareholder and are usually only allowed to vote one way. However, the Singapore court has the power to waive the headcount test, under a revision to the Companies Act in 2016. Rajah & Tann' s lawyers therefore noted that " an applicant may also need to consider whether to apply for the court to direct a different regime of proxy voting for the company scheme (or) trust scheme meeting" . For instance, the use of multiple proxies could be considered instead, which would allow for the votes at such scheme meetings " to be counted on a ' see-through' basis, to allow for clients of the relevant intermediaries to each submit their votes directly as if they were direct unitholders" , they said in their commentary. The Soilbuild Reit case is not the first instance of the one-proxy rule coming under fire. During the failed merger of Sabana Reit and ESR Reit last year, activist fund managers Quarz Capital Management and Black Crane Capital had similarly raised concerns over potential " voting irregularities" as a result of Sabana Reit' s one-proxy rule. Since then, the market has become more aware of the pitfalls of the one-proxy rule. When jewellery group Aspial Corp took its subsidiary World Class Global (WCG) private, it provided clear information on how votes by share custodians would be treated. In a May announcement, WCG noted that relevant intermediaries, such as that of nominees, " need not cast all the votes it uses in the same way" . WCG said if an intermediary cast more votes for the scheme than against it, that intermediary would have been considered as casting one vote in favour of the scheme, and vice versa. If the intermediary cast equal votes for and against the scheme, WCG would have treated it as casting one vote for and one vote against the scheme. Of course, such clarity does not amount to fairness to investors. On the contrary, it merely highlights everything that is wrong with current practice. INC Law' s Mr Jaryl Lim and Mr Lim Ming Yi said that it would " be of great benefit to Reit clients and lawyers alike if the relevant authorities could weigh in on the legal basis of the use of a trust scheme and one-proxy rule in the context of a Reit" . "This will provide greater clarity as to the possible legal mechanisms for the take-overs or mergers of Reits in the future."" |
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ipolaris
Senior |
08-Apr-2021 09:40
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Lousy sucker management! Will never support them again if they ever return like aztech | ||||
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Starship
Supreme |
07-Apr-2021 15:34
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ipolaris
Senior |
07-Apr-2021 15:29
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I' m sure many small unitholders had voted against, also those from investingnote forum. The problem is those major unitholders voted for so the ikan bilis got fried
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laksaman57
Supreme |
07-Apr-2021 13:24
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Lesson learnt. For those who bought with CPF, don't be lazy to go to investment bank to submit vote. If you didn't, the one-proxy rule maybe in the manager favor. | ||||
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laksaman57
Supreme |
07-Apr-2021 13:05
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Too late to realize it
Should have voted against
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ipolaris
Senior |
07-Apr-2021 11:57
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But it' s like a scam for them to give up to 11% dividend then later they retun you a fraction of the capital only. Then it' s not 11% but only maybe 2% div to lure investors to be loyal to them over these yrs. Not right leh
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pwnthis
Member |
03-Apr-2021 00:07
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I think if you count all the dividends you have received so far, you should have some profits even at the current price right? | ||||
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laksaman57
Supreme |
01-Apr-2021 23:50
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One-Proxy rule won | ||||
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ipolaris
Senior |
31-Mar-2021 14:50
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https://www.businesstimes.com.sg/companies-markets/soilbuild-reit-trust-scheme-court-order-granted-delisting-expected-april-14 SOILBUILD Business Space Reit' s (Soilbuild Reit) trust scheme of arrangement has been sanctioned by the court on March 30, the Reit' s manager said in a Singapore Exchange filing on Tuesday night. As the trust scheme court order has been granted, trading in Soilbuild Reit units has been suspended for the purposes of determining the entitlements of unitholders, as at the record date of March 30. In Soilbuild Reit' s indicative timeline, the disposal of its Australian assets - in conjunction with the trust scheme - is expected to be completed on March 31. The adjusted scheme consideration is expected to be paid to unitholders on April 12, and Soilbuild Reit units are expected to be delisted on April 14.
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raykee
Veteran |
30-Mar-2021 16:36
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so how now.... suspended till? when know the privatisaion fail? | ||||
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kwwongm
Veteran |
27-Mar-2021 14:03
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If court decide the egm is wrongful, it will be a big setback to the lim and manager.
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Joelton
Supreme |
27-Mar-2021 09:30
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Soilbuild Reit hearing adjourned to March 30 after objection from unitholder
THE court hearing on the application to sanction Soilbuild Business Space Reit' s (Soilbuild Reit) trust scheme of arrangement has been adjourned to March 30, 9am.
This came after a Soilbuild Reit unitholder opposed the trust scheme sanction application on the ground that the " one-proxy rule" , which allows for the appointment of only one proxy per unitholder, should not have been used for the trust scheme meeting.
The Business Times understands lawyer Florian Leber had filed an objection to the scheme.
On Thursday, the court adjourned the hearing of the real estate investment trust&rsquo s (Reit) manager to compile and provide further information to the court.
Robson Lee, a partner in Gibson Dunn' s Singapore office, said: &ldquo This is a rather unusual case where a court hearing to sanction a scheme was adjourned on such a ground. I believe this is unprecedented.&rdquo
The applicant for an adjournment must establish a prima facie ground that there is a basis for the court to ascertain the legality of the scheme meeting, he noted.
The trust scheme of arrangement involves the proposed acquisition of the Reit' s units by an entity indirectly owned by Soilbuild Group' s executive chairman Lim Chap Huat and Blackstone Real Estate.
On March 11, Soilbuild Reit unitholders voted in favour of the proposed privatisation offer by Mr Lim and Blackstone. They made an offer to take the Reit private with a scheme consideration of S$0.55 per unit in December 2020.
In an extraordinary general meeting, unitholders representing some 648.5 million units or 91.94 per cent voted in favour of the trust deed amendments related to the proposed privatisation. Unitholders representing some 56.8 million units or 8.06 per cent voted against the resolution.
Court approval is the remaining condition for the trust scheme to become effective.
On Thursday, the court adjourned the hearing for the application to March 30 for the Reit manager to compile and provide further information to the court.
The one-proxy approach has come under the spotlight in recent months over concerns that not all unitholder voices are accurately represented. This was prevalent in the case of Sabana Shari' ah Compliant Industrial Real Estate Investment Trust (Sabana Reit) and ESR-Reit' s proposed merger.
Fund managers Quarz Capital and Black Crane Capital, who claimed to represent 11 per cent of Sabana unitholders at the time, voiced concerns over the " one-proxy rule" for custodians or nominee companies. They worry that custodians will be unable to reflect all unitholders' votes on the proposed merger.
At present, Singapore' s regulatory regime requires that a scheme of arrangement must cross two thresholds. It must be approved by creditors or shareholders representing three-fourths in value of those voting at a scheme meeting. And it must also be approved by a simple majority, in number, of the scheme company' s creditors or shareholders present or voting at the meeting - the so-called headcount test.
In theory, the headcount test protects minority shareholders from being easily outvoted by those with large holdings. In practice, and particularly in the present environment, it can distort the outcome of a vote.
Soilbuild Reit listed on the Singapore Exchange&rsquo s mainboard in 2013. Its portfolio consists of Singapore and Australia properties used primarily for business space purposes. In Singapore, the Reit&rsquo s portfolio includes business park Solaris - which is located in the Fusionopolis cluster, as well as industrial properties such as West Park BizCentral and Tuas Connection.
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kwwongm
Veteran |
26-Mar-2021 13:17
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https://soilbuildreit.listedcompany.com/news.html/id/825674
With the court now.... |
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raykee
Veteran |
25-Mar-2021 10:54
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nothing we can do...... many who trust it since IPO all burnt... | ||||
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Ysw1988
Member |
20-Mar-2021 09:50
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Hmm so what will happen next? How are we getting back our money? Do we need to fill any form? | ||||
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LionInvestments
Member |
15-Mar-2021 10:04
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Terrible day for corporate governance in Singapore. How can a squeeze out be forced on minorities without even half of minorities having voted in favour...? it looks to me that the quorum of at least half of non related parties was not met to have a valid vote on this... In most countries you cannot force a delisting until at least 90% or 95% of all shareholders have accepted your offer...
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Joelton
Supreme |
12-Mar-2021 09:22
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Soilbuild Reit unitholders vote in favour of privatisation, Australia assets disposal
UNITHOLDERS of Soilbuild Business Space Reit (Soilbuild Reit) have voted in favour of the proposed privatisation offer from Blackstone Real Estate and Lim Chap Huat, the executive chairman of the real estate investment trust' s (Reit) sponsor Soilbuild Group.
The proposed offer is via a trust scheme of arrangement. This means the outcome is determined by minorities as Mr Lim and his concert parties abstained from voting.
In an extraordinary general meeting held on Thursday, unitholders representing some 648.5 million units or 91.94 per cent voted in favour of the trust deed amendments related to the proposed privatisation. Unitholders representing some 56.8 million units or 8.06 per cent voted against the resolution.
Last month, independent financial adviser KPMG called the offer " fair and reasonable" . It recommended Soilbuild Reit' s independent directors to advise unitholders to vote in favour of the scheme of arrangement at the time.
Mr Lim and Blackstone Real Estate made an offer to take the Reit private with a scheme consideration of S$0.55 per unit in December 2020.
At the time of the announcement, the offer represented a premium of about 34.5 per cent, 34.8 per cent, 53.2 per cent and 29.1 per cent over the volume-weighted average price per Soilbuild Reit unit respectively for the one-month, three-month, six-month and 12-month period up to and including Aug 31.
In conjunction with the trust scheme, Soilbuild Reit entered into an agreement with related entities of Blackstone to dispose of its Australian assets.
On Thursday, unitholders representing about 262.9 million units or 83.67 per cent voted in favour of the disposal, while unitholders representing about 51.3 million units or 16.33 per cent voted against the disposal.
Trading in the units of Soilbuild Reit was halted before the market opened on Thursday.
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raykee
Veteran |
11-Mar-2021 23:14
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can a complain be lodge to sgx?
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djinthehouse
Member |
11-Mar-2021 15:25
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Yes was approved with less than 60% voter | ||||
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