Regulating squeeze-out techniques by shareholders: the divergence between Hong Kong and Singapore

Centre for Ethics & Law event

Speaker 

Wai Yee Wan (Associate Professor of Law, Singapore Management University)

Chair 

Professor Iris H-Y Chiu (Professor of Corporate Law and Financial Regulation, UCL Laws)

About the lecture

Squeeze-out transactions are controversial as the controlling shareholders may expropriate the minorities’ shareholdings at unattractive prices. Existing scholarship has focused on the optimal approach towards regulating such transactions in the US and the UK, which have widely dispersed public shareholdings, but little attention is placed on jurisdictions with concentrated shareholdings, which may necessitate a different approach given that the prospects of expropriation are very high. This article fills the gap by examining Hong Kong and Singapore, which have concentrated shareholdings. Notwithstanding the fact that they have adapted their corporate and securities laws from the UK, Hong Kong ultimately provides greater minority shareholder protection than Singapore.

We present empirical evidence that the differences in regulation have led to a smaller number of squeeze-outs but higher premium payable to minority shareholders in Hong Kong, as compared to Singapore. However, Hong Kong firms experience higher levels of related party transactions prior to the squeeze-outs, which represent another form of tunnelling. We explain that the differences in regulation and discuss the normative implications of our findings. Our study contributes to the broader literature that “law matters” and provides case studies of how interest group politics shape the evolvement of laws and regulation.

About the speaker

Wai Yee Wan is an Associate Professor in the School of Law at the Singapore Management University (“SMU”). Immediately prior to joining academia in 2005, she was a partner at Allen & Gledhill, Financial Services Department, where she practised in the areas of mergers and acquisitions as well as equity capital markets. Her main areas of research are in corporate law, mergers and acquisitions and securities regulation. She has published in international peer-reviewed legal journals, including Journal of Corporate Law Studies, Journal of Business Law, Company and Securities Law Journal and Lloyds’ Maritime and Commercial Law Quarterly. She has received research awards and fellowships for her publication record, including the Lee Kuan Yew Fellowship for Research Excellence (2015-2016), the Lee Kong Chian Fellowship (2015-2017), Hauser Global Research Fellowship by NYU (2008), and the Lee Foundation Fellowship for Research Excellence (2007).