This article examines the role and utility of opinions (IFA opinions) rendered by independent financial advisers (IFAs), who are required to be appointed in connection with takeovers of, and related party transactions entered into by, companies which are listed in Singapore. Three main problems are identified: (1) data from 122 IFA opinions issued between 2008 and 2010 in connection with takeover offers of Singapore-listed companies show that there are a significant number of IFAs who do not use the standard of “fair and reasonable” in assessing offers and instead use tests that are more equivocal, rendering the opinions less helpful; (2) IFAs remain subject to inherent bias and such bias is not easily detectable due to with their wide discretion in choosing appropriate assumptions and methodologies; and (3) there are a number of limitations faced by shareholders and investors in bringing common law or statutory claims against IFAs for failings in care and expertise, honesty or independence for opinions issued in takeover documentation. This article suggests solutions that improve the reliability and quality of these opinions, so as to increase the incentives of IFAs to produce meaningful and unbiased opinions, and at the same time, allow shareholders to have appropriate, but limited rights of recovery, against the IFAs.
Takeovers, independent financial advisers
Business Organizations Law | Corporate Finance
Corporate, Finance and Securities Law
Company and Securities Law Journal
Law Book Co
WAN, Wai Yee.
Independent Financial Advisers’ Opinions for Public Takeovers and Related Party Transactions in Singapore. (2012). Company and Securities Law Journal. 30, (1), 32-54. Research Collection School Of Law.
Available at: http://ink.library.smu.edu.sg/sol_research/1057
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