Equity Swaps and Implications in Company Law: An Examination of Singapore Law

25 Pages Posted: 12 Jan 2012

See all articles by Christopher C. Chen

Christopher C. Chen

Singapore Management University School of Law

Date Written: January 11, 2012

Abstract

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

Chen, Christopher C., Equity Swaps and Implications in Company Law: An Examination of Singapore Law (January 11, 2012). Available at SSRN: https://ssrn.com/abstract=1983657 or http://dx.doi.org/10.2139/ssrn.1983657

Christopher C. Chen (Contact Author)

Singapore Management University School of Law ( email )

55 Armenian Street
Singapore, 179943
Singapore

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