Equity Swaps and Implications in Company Law: An Examination of Singapore Law
25 Pages Posted: 12 Jan 2012
Date Written: January 11, 2012
This article explores issues from the use of equity swaps by corporate stakeholders under Singapore law. The article accepts that non-disclosure of economic interests might have an impact on market efficiency and corporate governance. To address potential problems, Singapore should consider revising the Takeover Code, while it requires further regulatory impact analysis to decide whether amendments to the Securities and Futures Act and the Companies Act are needed. As an alternative, companies can use their articles of association to impose a duty of disclosure before statutory intervention. In addition, the trading of equity swaps by directors raises issues about fiduciary duties. Although companies can probably trade equity swaps that reference their own shares, it is likely the financial assistance rule will be breached if the market reality stands.
Keywords: financial derivative, equity swap, company law, fiduciary duty, financial assistance, disclosure, interest in shares, corporate governance
JEL Classification: K10, K22
Suggested Citation: Suggested Citation