Since 2017, there has been a wave of consolidation and privatisation of real estate investment trusts (“REITs“), business trusts, and stapled trusts which have been effected through trust schemes of arrangement (“Trust Schemes“).
In Singapore, while there is a prescribed statutory framework for schemes of arrangement involving companies (“Company Schemes“), there is no prescribed statutory framework for Trust Schemes. The market practice to date has therefore been to follow closely the established practice and process for Company Schemes for similar M&A transactions. This often includes the application of the one-proxy rule in voting, where each unitholder (i) shall be entitled to appoint only one proxy to vote at the Trust Scheme meeting, and (ii) may only cast all the votes it uses at the Trust Scheme meeting in one way.
Although the one-proxy rule is consistent with industry practice (for Company Schemes as well as Trust Schemes), an issue which may arise is whether its application distorts the voting results, in particular, where investors hold units indirectly through a custodian or nominee (“Relevant Intermediary“).
In this Update, we look at how commercial parties can mitigate the risk of challenge to a Company Scheme/Trust Scheme on the basis that the one-proxy rule should not have been applied.
For more information, click here to read the full Legal Update.
