Document:

EXHIBIT 4.1

 

DESCRIPTION OF SECURITIES OF INMUNE BIO, INC.

REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934

 

The following information
is a summary of information concerning the common stock, par value $0.001 per share (the “Common
Stock”), of INmune Bio Inc. (“Corporation” “Company” “we,” “our,” or “us”)
and does not purport to be complete. It is subject to and qualified in its entirety by reference to our Articles of Incorporation (the
“Articles of Incorporation”), and Bylaws (the “Bylaws”), each of which are incorporated by reference as an exhibit
to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part.

 

Authorized Stock

 

We have 210,000,000 authorized
shares of capital stock, par value $0.001 per share, of which 200,000,000 shares are Common Stock and 10,000,000 shares are preferred
stock.

 

Common Stock Voting, Dividends and Liquidation
Rights

 

We are authorized to issue
200,000,000 shares of Common Stock, $0.001 par value per share. 

 

Holders of Common Stock are
entitled to one vote for each share on all matters presented to the stockholders. Holders of Common Stock do not have cumulative voting
rights. Therefore, holders of a majority of the shares of Common Stock voting for the election of directors can elect all of the directors.
Holders of Common Stock representing 33.3 percent of our capital stock issued, outstanding and entitled to vote, represented in person
or by proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of the Company’s
outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to the
Company’s certificate of incorporation.

 

Holders of Common Stock are
entitled to share in all dividends that our Board of Directors, in its discretion, declares from legally available funds. In the event
of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain
after payment of liabilities and after providing for each class of stock, if any, having preference over the Common Stock. The Common
Stock has no pre-emptive, subscription or conversion rights and there are no redemption provisions applicable to the Common Stock.

 

Preferred Stock and Anti-Takeover Provisions

 

Preferred Stock

 

We are authorized to issue
up to 10,000,000 shares of preferred stock, par value $0.001 per share, from time to time in one or more classes or series.

 

Our articles of incorporation
authorizes our Board of Directors to issue preferred stock from time to time with such designations, preferences, conversion or other
rights, voting powers, restrictions, dividends or limitations as to dividends or other distributions, qualifications or terms or conditions
of redemption as shall be determined by the Board of Directors for each class or series of stock. Preferred stock is available for possible
future financings or acquisitions and for general corporate purposes without further authorization of stockholders unless such authorization
is required by applicable law, the rules of the Nasdaq Capital Market or other securities exchange or market on which our stock is then
listed or admitted to trading.

 

     

     

    

 

Our Board of Directors may
authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights
of the holders of Common Stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions
and other corporate purposes could, under some circumstances, have the effect of delaying, deferring or preventing a change-in-control
of the Company.

 

Series A Junior Participating
Preferred Stock

 

On December 30, 2020, we filed
a Certificate of Designation of Series A Junior Participating Preferred Stock (the “Series A Preferred Stock”) with the Secretary
of State of the State of Nevada to designate 45,000 shares as Series A Preferred Junior Participating Preferred Stock.

 

The Series A Preferred Stock
shall rank, with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the
Corporation, junior to all series of any other class of the Preferred Stock issued either before or after the issuance of the Series A
Preferred Stock, unless the terms of any such series shall provide otherwise, and shall rank senior to the Common Stock.

 

Voting Rights

 

The holders of the Series
A Preferred Stock shall be entitled to vote upon any matter submitted to our stockholders for a vote. Each one (1) share of Series
A Preferred Stock shall have one thousand (1,000) votes per share.

 

Liquidation Rights

 

    Upon
any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (i) to the holders of the Common Stock or
of shares of any other stock of the Corporation ranking junior, either as to dividends or upon liquidation, dissolution or winding up,
to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $1,000 per
share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that,
the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common
Stock, or (ii) to the holders of shares of stock ranking on a parity either as to dividends or upon liquidation, dissolution or winding
up with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion
to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up

 

Redemption Rights

 

The shares of Series A Preferred Stock shall not
be redeemable from any holder.

 

    2

     

    

 

Rights Agreement

 

One December
30, 2020, the Board of Directors (the “Board”) the Company approved and adopted a Rights Agreement, dated as of December 30,
2020 (the “Rights Agreement”), by and between the Company and VStock Transfer, LLC, as rights agent. Pursuant to the Rights
Agreement, the Board declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share
of common stock, par value $0.001 per share, of the Company (each, a “Common Share” and, collectively, the “Common Shares”).
The Rights are distributable to stockholders of record as of the close of business on January 11, 2021 (the “Record Date”).
One Right also will be issued together with each Common Share issued by the Company after January 11, 2021, but before the Distribution
Date (as defined below) (or the earlier redemption or expiration of the Rights) and, in certain circumstances, after the Distribution
Date.

 

Generally, the
Rights Agreement works by causing substantial dilution to any person or group that acquires beneficial ownership of twenty percent (20%)
or more of the Common Shares without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance
of the Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving
the Company that is not approved by the Board. The Rights Agreement is not intended to interfere with any merger, tender or exchange offer
or other business combination approved by the Board. The Rights Agreement also does not prevent the Board from considering any offer that
it considers to be in the best interest of its stockholders.

 

The following
is a summary description of the Rights and material terms and conditions of the Rights Agreement. This summary is intended to provide
a general description only, does not purport to be complete and is qualified in its entirety by reference to the complete text of the
Rights Agreement, a copy of which is filed as Exhibit 4.1 to the Registration Statement on Form 8-A filed with the SEC on December 30
,2020 (the “8-A”). All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the
Rights Agreement.

 

The Rights

 

Subject to the
terms, provisions and conditions of the Rights Agreement, if the Rights become exercisable, each Right would initially represent the right
to purchase from the Company one one-thousandth of a share of a newly-designated series of preferred stock, Series A Junior Participating
Preferred Stock, par value $0.001 per share, of the Company (each, a “Series A Preferred Share” and, collectively, the “Series
A Preferred Shares”), at an exercise price of $300.00 per one one-thousandth of a Series A Preferred Share, subject to adjustment
(the “Exercise Price”). If issued, each one one-thousandth of a Series A Preferred Share would give the stockholder approximately
the same dividend, voting and liquidation rights as does one Common Share. However, prior to exercise, a Right does not give its holder
any rights as a stockholder of the Company, including, without limitation, any dividend, voting or liquidation rights. A copy of the Certificate
of Designation of Series A Junior Participating Preferred Stock (the “Series A Certificate of Designation”) that the Company
intends to file with the Secretary of State of the State of Nevada on December 30, 2020 to designate the Series A Preferred Shares is
filed as Exhibit 3.1 to 8-A.

 

    3

     

    

 

Initial Exercisability

 

Initially, the
Rights will not be exercisable, certificates will not be sent to stockholders and the Rights will automatically trade with the Common
Shares. Until the Rights separate from the Common Shares and become exercisable (or the earlier redemption or expiration of the Rights),
the Rights will be evidenced by Common Share certificates, Rights relating to any uncertificated Common Shares that are registered in
book entry form will be represented by a notation in book entry on the records of the Company, and the surrender for transfer of any Common
Shares will also constitute the transfer of the associated Rights.

 

 

Subject to certain
exceptions specified in the Rights Agreement, the Rights will separate from the Common Shares and become exercisable following the
earlier to occur of the tenth (10th) business day (or such later date as may be determined by the Board) after (i) the day on which a
public announcement or filing with the Securities and Exchange Commission (the “SEC”) is made indicating that a person has
become an Acquiring Person (as defined below) or that discloses information that reveals the existence of an Acquiring Person (the “Shares
Acquisition Date”), or (ii) the commencement by any person (other than certain exempted persons) of, or the first public announcement
of the intent of any person (other than certain exempted persons) to commence, a tender or exchange offer by or on behalf of a person,
the successful consummation of which would result in any person (other than certain exempted persons) becoming an Acquiring Person, irrespective
of whether any shares are actually purchased or exchanged pursuant to such offer (the earlier of these dates is called the “Distribution
Date”).

 

After the Distribution
Date, separate rights certificates will be issued and the Rights may be transferred other than in connection with the transfer of the
underlying Common Shares unless and until the Board has determined to effect an exchange pursuant to the Rights Agreement (as described
below).

 

Acquiring Person

 

Under the Rights
Agreement, an Acquiring Person is any person who or that, together with all Affiliates and Associates (as defined in the Rights Agreement)
of such person, from and after the first public announcement by the Company of the adoption of the Rights Agreement, is or becomes the
beneficial owner of twenty percent (20%) or more of the Common Shares outstanding, subject to various exceptions. For purposes of the
Rights Agreement, beneficial ownership is defined to include the ownership of derivative securities.

 

The Rights Agreement
provides that an Acquiring Person does not include the Company, any subsidiary of the Company, any employee benefit plan of the Company
or any subsidiary of the Company, or any person organized, appointed, or established to hold Common Shares pursuant to any employee benefit
plan of the Company or for the purpose of funding any such plan.

 

The Rights Agreement
also provides that the following persons shall not be deemed an Acquiring Person thereunder: (i) any person who becomes the beneficial
owner of twenty percent (20%) or more of the shares of Common Stock of the Company then outstanding solely as a result of the initial
grant or vesting of any options, warrants, rights or similar interests (including restricted shares and restricted stock units) by the
Company to its directors, officers and employees pursuant to any employee benefit or stock ownership plan of the Company, or the acquisition
of shares of Common Stock of the Company upon the exercise or conversion of any such securities so granted; (ii) any person who as the
result of an acquisition of shares of Common Stock by the Company (or any subsidiary of the Company, or any person organized, appointed,
established or holding shares of Common Stock of the Company for or pursuant to the terms of any such plan) that, by reducing the number
of shares of Common Stock of the Company outstanding, increases the proportionate number of shares of Common Stock of the Company beneficially
owned by such person to twenty percent (20%) or more of the Common Shares then outstanding; (iii) any person who or that became the beneficial
owner of twenty percent (20%) or more of the Common Shares then outstanding as a result of the acquisition of Common Shares directly from
the Company; or (iv) any person who or that would otherwise be an Acquiring Person who or that the Board determines had become such inadvertently
(including, without limitation, because (A) such person was unaware that it beneficially owned a percentage of the Common Shares that
would otherwise cause such person to be an “Acquiring Person,” or (B) such person was aware of the extent of its beneficial
ownership of Common Shares but had no actual knowledge of the consequences of such beneficial ownership under the Rights Agreement), and
who or that thereafter within five (5) business days of being requested by the Company, reduces such person’s beneficial ownership
to less than twenty percent (20%) of the Common Shares then outstanding.

 

    4

     

    

 

“Grandfathering”
of Existing Holders

 

The Rights Agreement
also provides that any person who beneficially owned twenty percent (20%) or more of the Common Shares immediately prior to the first
public announcement by the Company of the adoption of the Rights Agreement (each a “Grandfathered Person”), shall not be deemed
to be an “Acquiring Person” for purposes of the Rights Agreement unless and until a Grandfathered Person becomes the beneficial
owner of one or more additional Common Shares after the first public announcement by the Company of the adoption of the Rights Agreement
(other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Shares, pursuant to a split,
reclassification or subdivision of the outstanding Common Shares or pursuant to the acquisition of beneficial ownership of Common Shares
upon the vesting or exercise of any option, warrants or other rights, or upon the initial grant or vesting of restricted stock, granted
or issued by the Company to its directors, officers and employees, pursuant to a compensation or benefits plan or arrangement adopted
by the Board). However, if upon acquiring beneficial ownership of one or more additional Common Shares at any time after the first public
announcement by the Company of the adoption of the Rights Agreement, the Grandfathered Person does not, at such time, beneficially own
twenty percent (20%) or more of the Common Shares then outstanding, the Grandfathered Person will not be treated as an “Acquiring
Person” for purposes of the Rights Agreement.

 

lip-In Trigger

 

If a person
becomes an Acquiring Person, then, following the occurrence of the Distribution Date and subject to the terms, provisions and conditions
of the Rights Agreement, each Right will entitle the holder thereof to purchase from the Company, upon payment of the Exercise Price,
in lieu of a number of one one-thousandths of a Series A Preferred Share, a number of Common Shares (or, in certain circumstances, cash,
property or other securities of the Company) having a then-current market value of twice the Exercise Price. However, the Rights are not
exercisable until such time as the Rights are no longer redeemable by the Company, as further described below.

 

Following the
occurrence of an event set forth in the preceding paragraph, all Rights that are or, under certain circumstances specified in the Rights
Agreement, were beneficially owned by an Acquiring Person or certain of its transferees will become null and void and nontransferable.

 

    5

     

    

 

Flip-Over Trigger

 

If, after an
Acquiring Person obtains beneficial ownership of twenty percent (20%) or more of the Common Shares, (i) the Company merges into another
entity, (ii) an acquiring entity merges into the Company, or (iii) the Company sells or transfers more than fifty percent (50%) of its
assets, cash flow or earning power, then each Right (except for Rights that have previously been voided as set forth above) will entitle
the holder thereof to purchase, upon payment of the Exercise Price, in accordance with the terms of the Rights Agreement, a number of
shares of common stock of the person engaging in the transaction having a then-current market value of twice the Exercise Price.

 

Redemption of the Rights

 

At any time
until the close of business on the tenth (10th) business day after the Shares Acquisition Date (or, if the tenth (10th) business day after
the Shares Acquisition Date occurs before the Record Date, the close of business on the Record Date), or thereafter under certain circumstances,
the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption Price”). The
Redemption Price may be paid in cash, Common Shares or other forms of consideration, as determined by the Board, in the exercise of its
sole discretion. The redemption of the Rights may be made effective at such time, on such basis and subject to such conditions as the
Board in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption Price without any interest thereon.

 

Exchange of the Rights

 

At any time
after any person (other than certain exempted persons and Grandfathered Persons) becomes an Acquiring Person, and prior to the acquisition
by any person of beneficial ownership of fifty percent (50%) or more of the Common Shares, the Board may, at its option, cause the Company
to exchange all or part of the then outstanding and exercisable Rights (other than Rights held by the Acquiring Person or any Affiliate
or Associate thereof, which would have become null and void and nontransferable in accordance with the terms of the Rights Agreement),
in whole or in part, for Common Shares at an exchange ratio (subject to adjustment) of two Common Shares for each Right.

 

In any exchange
of the Rights pursuant to the Rights Agreement, the Company, at its option, may, and to the extent there are an insufficient number of
authorized Common Shares not reserved for any other purpose to exchange for all of the outstanding Rights, shall, substitute preferred
stock or other securities of the Company for some or all of the Common Shares exchangeable for Rights such that the aggregate value received
by a holder of Rights in exchange for each Right is substantially the same value as one Common Share. The exchange of the Rights by the
Board may be made effective at such time, on such basis, and subject to such conditions as the Board in its sole discretion may establish.
Immediately upon the action of the Board authorizing the exchange of the Rights, the right to exercise the Rights will terminate, and
the only right of the holders of Rights will be to receive the Common Shares or other consideration issuable in connection with the exchange.

 

Expiration of the Rights

 

On December
20, 2021 the Company and V Stock Transfer, LLC entered into Amendment No. 1 to the Rights Agreement pursuant to which the expiration date
of the Rights Agreement was extended from December 30, 2021 to December 30, 2022. The Rights and the Rights Agreement (as amended) will
expire upon the earliest to occur of (i) the date on which all of the Rights are redeemed, (ii) the date on which the Rights are exchanged,
and (iii) the close of business on December 30, 2022.

 

    6

     

    

 

Amendment of Rights Agreement

 

Except as otherwise
provided in the Rights Agreement, the Company, by action of the Board, may from time to time, in its sole and absolute discretion, supplement
or amend any provision of the Rights Agreement in any respect without the approval of any holders of Rights, including, without limitation,
in order to (i) cure any ambiguity in the Rights Agreement, (ii) correct or supplement any provision contained in the Rights
Agreement that may be defective or inconsistent with any other provisions contained therein, (iii) shorten or lengthen any time period
in the Rights Agreement, or (iv) otherwise change, amend, or supplement any provisions in the Rights Agreement in any manner that
the Company may deem necessary or desirable; provided, however, that from and after such time as any person becomes an
Acquiring Person, the Rights Agreement may not be supplemented or amended in any manner that would adversely affect the interests of the
holders of Rights (other than Rights that have become null and void pursuant to the Rights Agreement) as such or cause the Rights Agreement
to become amendable other than in accordance with the terms of the Rights Agreement. Without limiting the foregoing, the Company, by action
of the Board, may at any time before any person becomes an Acquiring Person amend the Rights Agreement to make the provisions of the Rights
Agreement inapplicable to a particular transaction by which a person might otherwise become an Acquiring Person or to otherwise alter
the terms and conditions of the Rights Agreement as they may apply with respect to any such transaction.

 

Rights of Holders

 

Until a Right
is exercised, a Right does not give its holder any rights as a stockholder of the Company, including, without limitation, any dividend,
voting or liquidation rights.

 

Anti-Dilution Provisions

 

The Board may
adjust the Exercise Price, the number of Series A Preferred Shares issuable and the number of outstanding Rights to prevent dilution that
may occur from a stock dividend, a stock split or a reclassification of the Series A Preferred Shares or Common Shares.

 

With certain
exceptions, no adjustments to the Exercise Price will be made until the cumulative adjustments amount to at least one percent (1%) of
the Exercise Price. No fractional Series A Preferred Shares will be issued other than fractions that are integral multiples of one one-thousandth
of a share and, in lieu thereof, an adjustment in cash will be made based on the current market price of the Series A Preferred Shares.

 

Tax Consequences

 

The adoption
of the Rights Agreement and the subsequent distribution of the Rights to stockholders should not be a taxable event for the Company or
its stockholders under presently existing U.S. federal income tax laws. However, if the Rights become exercisable or if the Rights are
redeemed, stockholders may recognize taxable income, depending on the circumstances then existing.

 

    7

     

    

 

Authority of the Board

 

When evaluating
decisions relating to the redemption of the Rights or any amendment to the Rights Agreement to delay or prevent the Rights from detaching
and becoming exercisable as a result of a particular transaction, pursuant to the Rights Agreement, the Board, or any future board of
directors, would not be subject to restrictions such as those commonly known as “dead-hand,” “slow-hand,” “no-hand,”
or similar provisions.

 

Certain Anti-Takeover Effects

 

The Rights are
not intended to prevent a takeover of the Company and should not interfere with any merger or other business combination approved by the
Board. However, the Rights may cause substantial dilution to a person or group that acquires beneficial ownership of twenty percent (20%)
or more of the issued and outstanding Common Shares (which includes for this purpose stock referenced in derivative transactions and securities)
without the approval of the Board.

 

SEC Registration

 

Since the Rights
are not exercisable immediately, registration with the SEC of the Series A Preferred Shares issuable upon exercise of the Rights is not
required until the Rights become exercisable.

 

Nevada Law

 

The provisions of Nevada law
and our bylaws may have the effect of delaying, deferring or preventing another party from acquiring control of the company. These provisions
may discourage and prevent coercive takeover practices and inadequate takeover bids.

 

Nevada
law contains a provision governing the acquisition of a controlling interest. This law provides generally that any person or entity that
acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market
may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested shareholders of the corporation
elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires
“control shares” whenever it acquires shares that, but for the operation of the control share acquisition act, would bring
its voting power within any of the following three ranges: 20 to 33-1/3%; 33-1/3 to 50%; or more than 50%.

 

A “control share acquisition”
is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding
control shares. The shareholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions
of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the
corporation. Our Articles of Incorporation and Bylaws do not exempt our Common Stock from the control share acquisition act.

 

The control share acquisition
act is applicable only to shares of “Issuing Corporations” as defined by the Nevada law. An Issuing Corporation is a Nevada
corporation which (i) has 200 or more shareholders, with at least 100 of such shareholders being
both shareholders of record and residents of Nevada, and (ii) does business in Nevada directly or through an affiliated corporation.

 

    8

     

    

 

The Nevada “Combination
with Interested Stockholders Statute” may also have an effect of delaying or making it more difficult to effect a change in control
of our company. This statute prevents an “interested stockholder” and a resident domestic Nevada corporation from entering
into a “combination,” unless certain conditions are met. The statute defines “combination” to include any merger
or consolidation with an “interested stockholder,” or any sale, lease, exchange, mortgage, pledge, transfer or other disposition,
in one transaction or a series of transactions with an “interested stockholder” having (i) an aggregate market value equal
to 5% or more of the aggregate market value of the assets of the corporation, (ii) an aggregate market value equal to 5% or more of the
aggregate market value of all outstanding shares of the corporation, or (iii) representing 10% or more of the earning power or net income
of the corporation.

 

An “interested stockholder”
means the beneficial owner of 10% or more of the voting shares of a resident domestic corporation, or an affiliate or associate thereof.
A corporation affected by the statute may not engage in a “combination” within three years after the interested stockholder
acquires its shares unless the combination or purchase is approved by the board of directors before the interested stockholder acquired
such shares. If approval is not obtained, then after the expiration of the three-year period, the business combination may be consummated
with the approval of the board of directors or a majority of the voting power held by disinterested stockholders, or if the consideration
to be paid by the interested stockholder is at least equal to the highest of (i) the highest price per share paid by the interested stockholder
within the three years immediately preceding the date of the announcement of the combination or in the transaction in which he became
an interested stockholder, whichever is higher, (ii) the market value per common share on the date of announcement of the combination
or the date the interested stockholder acquired the shares, whichever is higher, or (iii) if higher for the holders of preferred stock,
the highest liquidation value of the preferred stock.

 

Articles of Incorporation
and Bylaws

 

Our Articles of Incorporation
are silent as to cumulative voting rights in the election of our directors. Nevada law requires the existence of cumulative voting rights
to be provided for by a corporation’s Articles of Incorporation. As such, the combination of the present ownership by
a few stockholders of a significant portion of our issued and outstanding Common Stock and lack of cumulative voting makes it more difficult
for other stockholders to replace our board of directors or for a third party to obtain control of us by replacing our board of directors.
Our Articles of Incorporation and Bylaws do not contain any explicit provisions that would have an effect of delaying, deferring or preventing
a change in control of our company.

 

Market Listing

 

Our common stock is traded
on The Nasdaq Capital Market under the symbol “INMB.”

 

Transfer Agent and Registrar

 

The transfer agent and registrar
for our Common Stock is VStock Transfer, LLC. The transfer agent’s address is 18 Lafayette Place, Woodmere, New York 11598.

 

 

9wve-ex42_639.htm

Exhibit 4.2

 

DESCRIPTION OF SECURITIES REGISTERED PURSUANT

TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

Wave Life Sciences Ltd. (the “Company,” “we,” “us” or “our”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): our ordinary shares, no par value. 

 

DESCRIPTION OF SHARE CAPITAL

General 

The following description of our share capital and provisions of our constitution (formerly known as our memorandum and articles of association) are summaries and are qualified by reference to the Companies Act 1967 of Singapore ("Singapore Companies Act") and our constitution. A copy of our constitution has been filed with the Securities and Exchange Commission as an exhibit to our Annual Report on Form 10-K of which this Exhibit is a part. 

Ordinary Shares 

As of December 31, 2021, our issued and paid-up ordinary share capital consists of 59,841,116 ordinary shares. We currently have only one class of issued ordinary shares, which have identical rights in all respects and rank equally with one another. Our ordinary shares have no par value and there is no authorized share capital under Singapore law. There is a provision in our constitution which provides that we may issue shares with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as our board of directors may determine. 

All of our shares presently issued are fully paid-up, and existing shareholders are not subject to any calls on these shares. Although Singapore law does not recognize the concept of “non-assessability” with respect to newly-issued shares, we note that any purchaser of our shares who has fully paid up all amounts due with respect to such shares will not be subject under Singapore law to any personal liability to contribute to the assets or liabilities of our company in such purchaser’s capacity solely as a holder of such shares. We believe that this interpretation is substantively consistent with the concept of “non-assessability” under most, if not all, U.S. state corporations laws. All of our shares are in registered form. We cannot, except in the circumstances permitted by the Singapore Companies Act, grant any financial assistance for the acquisition or proposed acquisition of our own shares. Except as described below under “—Takeovers,” there are no limitations imposed by the Singapore Companies Act or by our constitution on the right of shareholders not resident in Singapore to hold or vote ordinary shares. 

Transfer Agent and Registrar 

The transfer agent and registrar for our ordinary shares is Computershare Trust Company, N.A. 

Nasdaq Global Market 

Our ordinary shares are listed for quotation on The Nasdaq Global Market under the symbol “WVE.” 

New Shares 

Under the Singapore Companies Act, new shares may be issued only with the prior approval of our shareholders in a general meeting. General approval may be sought from our shareholders in a general meeting for the issue of shares. Approval, if granted, will lapse at the earlier of: 

	
 
	
•
	
the conclusion of the next annual general meeting; or 

	
 
	
•
	
the expiration of the period within which the next annual general meeting is required by law to be held (i.e., within six months after the end of each financial year), 

but any approval may be revoked or varied by the company in a general meeting. 

Our shareholders have provided such general authority to issue new ordinary shares until the conclusion of our 2022 annual general meeting. Such approval will lapse in accordance with the preceding paragraph if our shareholders do not grant a new approval at our 2022 annual general meeting. Subject to this and the provisions of the Singapore Companies Act and our constitution, our board 

			
	
 
	
 
	
 

 

			
	
 
	
 
	
 

 

of directors may allot and issue or grant options over or otherwise dispose of new ordinary shares to such persons on such terms and conditions and with the rights and restrictions as they may think fit to impose. 

Preferred Shares 

Series A Preferred Shares 

As of December 31, 2021, we have 3,901,348 Series A preferred shares outstanding. These shares are currently held by one of our largest shareholders, Shin Nippon Biomedical Laboratories, Ltd. The terms of the Series A preferred shares as set out in our constitution include (1) no voting rights at any general meeting other than in limited circumstances, (2) a liquidation preference equal to $0.002 per Series A preferred share, (3) no entitlement to dividends and (4) the right to convert the Series A preferred shares at any time on a one-for-one basis into ordinary shares at the discretion of the holder in accordance with the constitution. 

The holders of the Series A preferred shares are not entitled to vote at any general meeting. The only instances in which the holders of the Series A preferred shares are able to vote at a general meeting would be if (but only if) the matters to be discussed at the meeting relate to or there is intent to pass resolutions on (i) abrogating or changing the rights attached to the Series A preferred shares; and (ii) for the winding up of the Company. Such resolutions would require the unanimous approval of the holders of the Series A preferred shares. 

Other Preferred Shares 

Under the Singapore Companies Act, different classes of shares in a public company may be issued only if (a) the issue of the class or classes of shares is provided for in the constitution of the public company and (b) the constitution of the public company sets out in respect of each class of shares the rights attached to that class of shares. Our constitution provides that we may issue shares of a different class with preferred, deferred or other special rights, or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as our board of directors may determine. Under Singapore law, our preferred shareholders will have the right to attend any general meeting and in a poll at such general meeting, to have at least one vote for every preferred share held: 

	
 
	
•
	
upon any resolution concerning the voluntary winding-up of our company under Section 160 of the Insolvency, Restructuring and Dissolution Act 2018; 

	
 
	
•
	
upon any resolution which varies the rights attached to such preferred shares; or 

	
 
	
•
	
in the case of preferred shares issued after August 15, 1984, but before the commencement of Section 96 of the Companies (Amendment) Act 2014, when the dividends to be paid on our preferred shares or any part thereof are more than twelve months in arrears and unpaid, for the period they remain in arrears and unpaid. 

We may, subject to the Singapore Companies Act and the prior approval in a general meeting of our shareholders, issue preferred shares which are, or at our option or are to be, subject to redemption provided that such preferred shares may not be redeemed out of capital unless: 

	
 
	
•
	
all the directors have made a solvency statement in relation to such redemption; and 

	
 
	
•
	
we have lodged a copy of the statement with the Accounting and Corporate Regulatory Authority of Singapore. 

Further, such shares must be fully paid-up before they are redeemed. 

As of December 31, 2021, we have no preferred shares outstanding other than the Series A preferred shares described above. At present, we have no plans to issue additional preferred shares. 

Registration Rights under our Share Purchase Agreement with Pfizer 

Under the terms of our Share Purchase Agreement dated as of May 5, 2016 with an affiliate of Pfizer Inc., or the Pfizer Affiliate, under which the Pfizer Affiliate purchased 1,875,000 ordinary shares from, or the Pfizer Shares, subject to certain conditions and limitations, we agreed to provide certain demand registration rights to the Pfizer Affiliate in order to register all or a portion of the Pfizer Shares purchased by the Pfizer Affiliate. We also provided the Pfizer Affiliate with certain “piggyback” registration rights for a certain period of time, subject to certain conditions and limitations, such that when we propose to register our ordinary shares for our account, the Pfizer Affiliate will have the right to include some or all of the Pfizer Shares in such registration. The Share Purchase Agreement also contains other customary terms and conditions of the parties with respect to the registration of the Pfizer Shares. 

2

			
	
 
	
 
	
 

 

Registration Rights under our Share Purchase Agreement with Takeda 

On February 19, 2018, we entered into a Share Purchase Agreement with Takeda Pharmaceutical Company Limited (“Takeda”), pursuant to which Takeda purchased 1,096,892 of our ordinary shares (the “Takeda Shares”). In connection with the Share Purchase Agreement, Takeda and we agreed upon certain rights and restrictions as set forth in the Investor Agreement, dated as of April 2, 2018 (the “Investor Agreement”). The Takeda Shares are subject to a lock-up restriction, such that Takeda will not, and will also cause its affiliates not to, without our prior approval, sell, transfer or otherwise dispose of the Takeda Shares until certain specified periods of time after the effective date of the Investor Agreement. For a certain period following the expiration of the lock-up period, subject to certain conditions and limitations, we agreed to provide certain demand registration rights to Takeda in order to register all or a portion of the Takeda Shares purchased by Takeda. We also provided Takeda with certain “piggyback” registration rights for a certain period following the expiration of the lock-up period, subject to certain conditions and limitations, such that when we propose to register our ordinary shares for our account, Takeda will have the right to include some or all of the Takeda Shares in such registration. The Investor Agreement also contains other customary terms and conditions of the parties with respect to the registration of Takeda Shares. 

Transfer of Ordinary Shares 

Subject to applicable securities laws in relevant jurisdictions and our constitution, our ordinary shares are freely transferable. Our constitution provides that shares may be transferred by a duly signed instrument of transfer in any usual or common form or in a form approved by the directors and The Nasdaq Stock Market. The directors may decline to register any transfer unless, among other things, evidence of payment of any stamp duty payable with respect to the transfer is provided together with other evidence of ownership and title as the directors may reasonably require to show the right of the transferor to make the transfer. We will replace lost or destroyed certificates for shares upon notice to us and upon, among other things, the applicant furnishing evidence and indemnity as the directors may require and the payment of all applicable fees. 

Election and Re-election of Directors 

We may, by ordinary resolution, remove any director before the expiration of his or her period of office, notwithstanding anything in our constitution or in any agreement between us and such director. We may also, by an ordinary resolution, appoint another person in place of a director removed from office pursuant to the foregoing. 

Under our constitution, subject to the Singapore Companies Act, any director shall retire at the next annual general meeting and shall then be eligible for re-election at that meeting. 

Our board of directors shall have the power, at any time and from time to time, to appoint any person to be a director either to fill a casual vacancy or as an additional director so long as the total number of directors shall not at any time exceed the maximum number (if any) fixed by or in accordance with our constitution. 

Shareholders’ Meetings 

We are required to hold an annual general meeting each calendar year and within six months after the end of each financial year. The directors may convene an extraordinary general meeting whenever they think fit and they must do so upon the written request of shareholders holding not less than 10% of the total number of paid-up shares as of the date of deposit of the requisition carrying the right to vote at a general meeting. In addition, two or more shareholders holding not less than 10% of our total number of issued shares (excluding our treasury shares) may call a meeting of our shareholders. 

The Singapore Companies Act provides that a shareholder is entitled to attend any general meeting and speak on any resolution put before the general meeting. Unless otherwise required by law or by our constitution, resolutions put forth at general meetings may be decided by ordinary resolution, requiring the affirmative vote of a majority of the shareholders present in person or represented by proxy at the meeting and entitled to vote on the resolution. An ordinary resolution suffices, for example, for appointments of directors. A special resolution, requiring an affirmative vote of not less than three-fourths of the shareholders present in person or represented by proxy at the meeting and entitled to vote on the resolution, is necessary for certain matters under Singapore law, such as an alteration of our constitution. A shareholder entitled to attend and vote at a meeting of the company, or at a meeting of any class of shareholders of the company, is entitled to appoint another person or persons, whether a shareholder of the company or not, as the shareholder's proxy to attend and vote instead of the shareholder at the meeting. Under the Singapore Companies Act, a proxy appointed to attend and vote instead of the shareholder also has the same right as the shareholder to speak at the meeting, but unless the constitution of the company otherwise provides, (i) a proxy is not entitled to vote except on a poll, (ii) a shareholder is not entitled to appoint more than two proxies to attend and vote at the same meeting and (iii) where a shareholder appoints two proxies the appointments are invalid unless the shareholder specifies the proportions of the shareholder's holdings to be represented by each proxy. 

3

			
	
 
	
 
	
 

 

Notwithstanding the foregoing, a registered shareholder entitled to attend and vote at a meeting of the company held pursuant to an order of court under Section 210(1) of the Singapore Companies Act, or at any adjourned meeting under Section 210(3) of the Singapore Companies Act, is, unless the court orders otherwise, entitled to appoint only one proxy to attend and vote at the same meeting, and except where the aforementioned applies, a registered shareholder having a share capital who is a relevant intermediary (as defined under the Singapore Companies Act) may appoint more than two proxies in relation to a meeting to exercise all or any of the shareholder's rights to attend and to speak and vote at the meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares held by the shareholder (which number and class of shares shall be specified), and at such meeting, the proxy has the right to vote on a show of hands. 

Only registered shareholders of our company, and their proxies, will be entitled to attend, speak and vote at any meeting of shareholders. Under the Singapore Companies Act, public companies may issue non-voting shares and shares that confer special, limited or conditional voting rights, such that the holder of a share may vote on a resolution before a general meeting of the company if, in accordance with the provisions of Section 64A of the Singapore Companies Act, the share confers on the holder a right to vote on that resolution. 

Voting Rights 

As provided under our constitution and the Singapore Companies Act, voting at any meeting of shareholders is by show of hands unless a poll has been demanded prior to the declaration of the result of the show of hands by, among others, (i) the chairman or (ii) at least one shareholder present in person or by proxy or by attorney or, in the case of a corporation, by a representative entitled to vote thereat, in each case representing in the aggregate not less than 5% of the total voting rights of all shareholders having the right to vote at the general meeting, provided that no poll shall be demanded in respect of an election of a chairman or relating to any adjournment of such meeting. On a poll every shareholder who is present in person or by proxy or by attorney, or in the case of a corporation, by a representative, has one vote for every share held by such shareholder. Proxies need not be shareholders. 

Only those shareholders who are registered in our register of members as holders of ordinary shares will be entitled to vote at any meeting of shareholders. Therefore, DTC, or its nominee, will grant an omnibus proxy to DTC participants holding our shares in book-entry form through a broker, bank, nominee, or other institution that is a direct or indirect participant in the DTC. Such shareholders will have the right to instruct their broker, bank, nominee or other institution holding these shares on how to vote such shares by completing the voting instruction form provided by the applicable broker, bank, nominee, or other institution. Whether voting is by a show of hands or by a poll, DTC’s vote will be voted by the chairman of the meeting according to the results of the DTC’s participants’ votes (which results will reflect the instructions received from shareholders that own our shares electronically in book-entry form). 

Minority Rights 

The rights of minority shareholders of Singapore companies are protected, among other things, under Section 216 of the Singapore Companies Act, which gives the Singapore courts a general power to make any order, upon application by any shareholder of a company, as they think fit to remedy any of the following situations: 

	
 
	
•
	
the affairs of a company are being conducted or the powers of the board of directors are being exercised in a manner oppressive to, or in disregard of the interests of, one or more of the shareholders, including the applicant; or 

	
 
	
•
	
a company takes an action, or threatens to take an action, or the shareholders pass a resolution, or propose to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of the shareholders, including the applicant. 

Singapore courts have wide discretion as to the remedy they may grant, and the remedies listed in the Singapore Companies Act itself are not exclusive. In general, Singapore courts may, with a view to bringing to an end or remedying the matters complained of: 

	
 
	
•
	
direct or prohibit any act or cancel or modify any transaction or resolution; 

	
 
	
•
	
regulate the conduct of the affairs of the company in the future; 

	
 
	
•
	
authorize civil proceedings to be brought in the name of, or on behalf of, the company by a person or persons and on such terms as the court may direct; 

	
 
	
•
	
provide for the purchase of a minority shareholder’s shares by the other shareholders or by the company itself; 

	
 
	
•
	
in the case of a purchase of shares by the company provide for a reduction accordingly of the company’s capital; or 

	
 
	
•
	
provide that the company be wound up. 

4

			
	
 
	
 
	
 

 

	
 
		

Dividends 

Subject to any preferential rights of holders of any outstanding preferred shares, holders of our ordinary shares will be entitled to receive dividends and other distributions in cash, shares or property as may be declared by our company from time to time. We may, by ordinary resolution, declare dividends at a general meeting of shareholders, but we are restricted from paying dividends in excess of the amount recommended by our board of directors. Pursuant to Singapore law and our constitution, no dividend may be paid except out of our profits. To date, we have not declared any cash dividends on our ordinary shares and have no current plans to pay cash dividends in the foreseeable future. 

Bonus and Rights Issues 

In a general meeting, our shareholders may, upon the recommendation of the directors, capitalize any reserves or profits and distribute them as bonus shares, credited as paid-up, to the shareholders in proportion to their shareholdings. 

 

Subject to the provisions of the Singapore Companies Act and our constitution, our directors may also issue rights to take up additional ordinary shares to our shareholders in proportion to their respective ownership. Such rights are subject to any condition attached to such issue and the regulations of any stock exchange on which our shares are listed, as well as U.S. federal and blue sky securities laws applicable to such issue. 

Takeovers 

The Singapore Code on Take-overs and Mergers applies to, among other things, the acquisition of voting shares of Singapore-incorporated listed public companies or unlisted public companies with more than 50 shareholders and net tangible assets of S$5 million or more. Any person acquiring, whether by a series of transactions over a period of time or not, either on his or her own or together with parties acting in concert with such person, 30% or more of our voting shares, or, if such person holds, either on his or her own or together with parties acting in concert with such person, between 30% and 50% (both amounts inclusive) of our voting shares, and if such person (or parties acting in concert with such person) acquires additional voting shares representing more than 1% of our voting shares in any six-month period, must, except with the consent of the Securities Industry Council in Singapore, extend a mandatory takeover offer for the remaining voting shares in accordance with the provisions of the Singapore Code on Take-overs and Mergers. Responsibility for ensuring compliance with the Singapore Code on Take-overs and Mergers rests with parties (including company directors) to a take-over or merger and their advisors. 

“Parties acting in concert” comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal), cooperate, through the acquisition by any of them of shares in a company, to obtain or consolidate effective control of that company. Certain persons are presumed (unless the presumption is rebutted) to be acting in concert with each other. They are as follows: 

	
 
	
•
	
a company, its parent company, subsidiaries and fellow subsidiaries, the associated companies of any of the company and its related companies, subsidiaries and fellow subsidiaries, companies whose associated companies include any of these companies and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights; 

	
 
	
•
	
a company with any of its directors (together with their close relatives, related trusts and companies controlled by any of the directors, their close relatives and related trusts); 

	
 
	
•
	
a company with any of its pension funds and employee share schemes; 

	
 
	
•
	
a person with any investment company, unit trust or other fund whose investment such person manages on a discretionary basis, but only in respect of the investment account which such person manages; 

	
 
	
•
	
a financial or other professional advisor, including a stockbroker, with its client in respect of the shareholdings of the advisor and persons controlling, controlled by or under the same control as the advisor; 

	
 
	
•
	
directors of a company (together with their close relatives, related trusts and companies controlled by any of such directors, their close relatives and related trusts) which is subject to an offer or where the directors have reason to believe a bona fide offer for their company may be imminent; 

	
 
	
•
	
partners; and 

	
 
	
•
	
an individual and (i) such person’s close relatives, (ii) such person’s related trusts, (iii) any person who is accustomed to act in accordance with such person’s instructions, (iv) companies controlled by the individual, such person’s close relatives, related trusts or any person who is accustomed to act in accordance with such person’s instructions and (v) any 

5

			
	
 
	
 
	
 

 

	
 
		
person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights. 

Subject to certain exceptions, a mandatory offer must be in cash or be accompanied by a cash alternative at not less than the highest price paid by the offeror or parties acting in concert with the offeror during the offer period and within the six months prior to its commencement. 

Under the Singapore Code on Take-overs and Mergers, where effective control of a company is acquired or consolidated by a person, or persons acting in concert, a general offer to all other shareholders is normally required. An offeror must treat all shareholders of the same class in an offeree company equally. A fundamental requirement is that shareholders in the company subject to the takeover offer must be given sufficient information, advice and time to consider and decide on the offer. These legal requirements may impede or delay a takeover of our company by a third-party. 

We may submit an application to the Securities Industry Council of Singapore for a waiver from the Singapore Code on Take-overs and Mergers so that the Singapore Code on Take-overs and Mergers will not apply to our company for so long as we are not listed on a securities exchange in Singapore. We will make an appropriate announcement if we submit the application and when the result of the application is known. 

Liquidation or Other Return of Capital 

On a winding-up or other return of capital, subject to any special rights attaching to the Series A preferred shares or to any other class of shares, holders of ordinary shares will be entitled to participate in any surplus assets in proportion to their shareholdings. 

6

			
	
 
	
 
	
 

 

COMPARISON OF SHAREHOLDER RIGHTS

We are incorporated under the laws of Singapore. The following discussion summarizes material differences between the rights of holders of our ordinary shares and the rights of holders of the common stock of a typical corporation incorporated under the laws of the state of Delaware which result from differences in governing documents and the laws of Singapore and Delaware.

This discussion does not purport to be a complete statement of the rights of holders of our ordinary shares under applicable law in Singapore and our constitution or the rights of holders of the common stock of a typical corporation under applicable Delaware law and a typical certificate of incorporation and bylaws.

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
 

	
Board of Directors
	
 
	
 

	
 
	
 
	
 

	
A typical certificate of incorporation and bylaws provides that the number of directors on the board of directors will be fixed from time to time by a vote of the majority of the authorized directors. Under Delaware law, a board of directors can be divided into classes and cumulative voting in the election of directors is only permitted if expressly authorized in a corporation’s certificate of incorporation.
	
  
	
The constitution of companies will typically state the minimum and maximum number of directors as well as provide that the number of directors may be increased or reduced by shareholders via ordinary resolution passed at a general meeting, provided that the number of directors following such increase or reduction is within the maximum (if any) and minimum number of directors provided in our constitution and the Singapore Companies Act, respectively.

	
 
	
 
	
 

	
Limitation on Personal Liability of Directors
	
 
	
 

	
 
	
 
	
 

	
A typical certificate of incorporation provides for the elimination of personal monetary liability of directors for breach of fiduciary duties as directors to the fullest extent permissible under the laws of Delaware, except for liability (i) for any breach of a director’s loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (relating to the liability of directors for unlawful payment of a dividend or an unlawful stock purchase or redemption) or (iv) for any transaction from which the director derived an improper personal benefit. A typical certificate of incorporation also provides that if the Delaware General Corporation Law is amended so as to allow further elimination of, or limitations on, director liability, then the liability of directors will be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law as so amended.
	
  
	
Pursuant to the Singapore Companies Act, any provision (whether in the constitution, a contract with the company or otherwise) exempting or indemnifying a director against any liability which by law would otherwise attach to him or her in respect of any negligence, default, breach of duty or breach of trust of which such director may be guilty in relation to the company is void. However, a company is not prohibited from (a) purchasing and maintaining for any such director insurance against any such liability, or (b) indemnifying such director against any liability incurred by him or her to a person other than the company except when the indemnity is against any liability (i) of the director to pay a fine in criminal proceedings, (ii) of the director to pay a penalty in respect of non-compliance with any regulatory requirements, (iii) incurred by the director in defending criminal proceedings in which he or she is convicted, (iv) incurred by the director in defending civil proceedings brought by the company or a related company in which judgment is given against him or her, or (v) incurred by the director in connection with an application for relief under Section 76A(13) or Section 391 of the Singapore Companies Act in which the court refuses to grant him or her relief. Nevertheless, a director can be released by the shareholders of a company for breaches of duty to a company except in the case of fraud, illegality, insolvency of the company and oppression or disregard of minority interests.

	
  

7

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
Subject to the Singapore Companies Act and every other Singapore statute for the time being in force and affecting the Company, we may indemnify our directors against costs, charges, fees, and other expenses that may be incurred by any of them in defending any proceedings (whether civil or criminal) relating to anything done or omitted or alleged to be done or omitted by such person acting in his or her capacity as a director of our company, in which judgment is given in his or her favor, or in which he or she is acquitted or in which the courts have granted relief pursuant to the provisions of the Singapore Companies Act, provided that such indemnity shall not extend to any liability which by law would otherwise attach to him or her in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to our company, or which would otherwise result in such indemnity being voided under applicable Singapore laws.

	
 
	
 
	
 

	
Interested Shareholders
	
 
	
 

	
 
	
 
	
 

	
Section 203 of the Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in specified corporate transactions (such as mergers, stock and asset sales, and loans) with an “interested stockholder” for three years following the time that the stockholder becomes an interested stockholder. Subject to specified exceptions, an “interested stockholder” is a person or group that owns 15% or more of the corporation’s outstanding voting stock (including any rights to acquire stock pursuant to an option, warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect to which the person has voting rights only), or is an affiliate or associate of the corporation and was the owner of 15% or more of the voting stock at any time within the previous three years.

A Delaware corporation may elect to “opt out” of, and not be governed by, Section 203 through a provision in either its original certificate of incorporation, or an amendment to its original certificate or bylaws that was approved by majority stockholder vote. With a limited exception, this amendment would not become effective until 12 months following its adoption.
	
  
	
There are no comparable provisions under the Singapore Companies Act with respect to public companies which are not listed on the Singapore Exchange Securities Trading Limited.

	
 
	
 
	
 

	
Removal of Directors
	
 
	
 

	
 
	
 
	
 

	
A typical certificate of incorporation and bylaws provide that, subject to the rights of holders of any preferred stock, directors may be removed at any time by the affirmative vote of the holders of at least a majority, or in some instances a supermajority, of the voting power of all of the then outstanding shares entitled to vote generally in the election of directors, voting together as a single class. A certificate of incorporation could also provide that such a right is only exercisable when a director is being removed for cause (removal of a director only for cause is the default rule in the case of a classified board).
	
 
	
Under the Singapore Companies Act, directors of a public company may be removed before expiration of their term of office, despite anything in its constitution or in any agreement between the public company and such directors, by ordinary resolution (i.e., a resolution which is passed by a simple majority of those shareholders present and voting in person or by proxy). Notice of the intention to move such a resolution has to be given to the company not less than 28 days before the meeting at which it is moved. The company must then give notice of such resolution to its shareholders not less than 14 days before the meeting. Where any director removed in this manner was appointed to represent the interests of any particular class of shareholders or debenture holders, the resolution to remove the director does not take effect until the director’s successor has been appointed.

8

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
 

	
Filling Vacancies on the Board of Directors
	
 
	
 

	
 
	
 
	
 

	
A typical certificate of incorporation and bylaws provide that, subject to the rights of the holders of any preferred stock, any vacancy, whether arising through death, resignation, retirement, disqualification, removal, an increase in the number of directors or any other reason, may be filled by a majority vote of the remaining directors, even if such directors remaining in office constitute less than a quorum, or by the sole remaining director. Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders at which the term of the class of directors to which the newly elected director has been elected expires.
	
 
	
The constitution of a Singapore company typically provides that the directors have the power to appoint any person to be a director, either to fill a vacancy or as an addition to the existing directors, but so that the total number of directors shall not at any time exceed the maximum number (if any) fixed by or in accordance with the constitution. Any director so appointed shall hold office until the next following annual general meeting, where such director will then be eligible for re-election. Our constitution provides that the directors may appoint any person to be a director either to fill a casual vacancy or as an additional director but so that the total number of Directors shall not at any time exceed the maximum number fixed by or in accordance with the constitution.

	
 
	
 
	
 

	
Amendment of Governing Documents
	
 
	
 

	
 
	
 
	
 

	
Under the Delaware General Corporation Law, amendments to a corporation’s certificate of incorporation require the approval of stockholders holding a majority of the outstanding shares entitled to vote on the amendment. If a class vote on the amendment is required by the Delaware General Corporation Law, a majority of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate of incorporation or by other provisions of the Delaware General Corporation Law.

Under the Delaware General Corporation Law, the board of directors may amend bylaws if so authorized in the charter. The stockholders of a Delaware corporation also have the power to amend bylaws.
	
 
	
Our constitution may be altered by special resolution (i.e., a resolution passed by at least a three-fourths majority of the shareholders entitled to vote, present in person or by proxy at a meeting for which not less than 21 days’ written notice is given). The board of directors has no right to amend the constitution.

Under the Singapore Companies Act, an entrenching provision may be included in the constitution with which a company is formed and may at any time be inserted into the constitution of a company only if all the shareholders of the company agree. An entrenching provision is a provision of the constitution of a company to the effect that other specified provisions of the constitution may not be altered in the manner provided by the Singapore Companies Act or may not be so altered except (i) by a resolution passed by a specified majority greater than 75% (the minimum majority required by the Singapore Companies Act for a special resolution) or (ii) where other specified conditions are met. The Singapore Companies Act provides that such entrenching provision may be removed or altered only if all the members of the company agree.

	
 
	
 
	
 

	
Meetings of Shareholders
	
 
	
 

	
 
	
 
	
 

	
Annual and Special Meetings
	
 
	
Annual General Meetings

	
 
	
 
	
 

	
Typical bylaws provide that annual meetings of stockholders are to be held on a date and at a time fixed by the board of directors. Under the Delaware General Corporation Law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the certificate of incorporation or the bylaws.
	
 
	
All companies are required to hold an annual general meeting after the end of each financial year within either 4 months (in the case of a public company that is listed on an exchange in Singapore approved by the Monetary Authority of Singapore) or 6 months (in the case of any other company).

	
 
	
 
	
 

9

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
Extraordinary General Meetings

	
 
	
 
	
 

	
 
	
 
	
Any general meeting other than the annual general meeting is called an “extraordinary general meeting.” Despite anything in the constitution, directors of a company must convene an extraordinary general meeting if required to do so by requisition (i.e. written notice, requiring that a meeting be called, given to the directors) by shareholder(s) holding not less than 10% of the total number of paid-up shares as at the date of the deposit of the requisition carrying the right of voting at general meetings of the company. In addition, the constitution usually also provides that general meetings may be convened in accordance with the Singapore Companies Act by the directors.

	
 
	
 
	
 

	
Quorum Requirements
	
 
	
Quorum Requirements

	
 
	
 
	
 

	
Under the Delaware General Corporation Law, a corporation’s certificate of incorporation or bylaws can specify the number of shares which constitute the quorum required to conduct business at a meeting, provided that in no event shall a quorum consist of less than one-third of the shares entitled to vote at a meeting.
	
 
	
Our constitution provides that any two shareholders present in person or by proxy or by attorney or, in the case of a corporation, by a representative and entitled to vote thereat; in each case representing in aggregate not less than a majority of the total voting rights of all shareholders having the right to vote at a general meeting, shall constitute a quorum. In the event a quorum is not present, the meeting if not convened on the requisition of shareholders may be adjourned for one week. When reconvened, the quorum for the meeting will be the same and if at such adjourned meeting a quorum is not present, the meeting will be dissolved.

	
 
	
 
	
 

	
 
	
 
	
Shareholders’ Rights at Meetings

	
 
	
 
	
 

	
 
	
 
	
The Singapore Companies Act provides that every member has, despite any provision in the constitution, a right to attend any general meeting of the company and to speak on any resolution before the meeting. The company’s constitution may provide that a member shall not be entitled to vote unless all calls or other sums personally payable by the member in respect of shares in the company have been paid.

Public companies may issue non-voting shares and shares that confer special, limited and conditional voting rights, such that the holder of a share may vote on a resolution before a general meeting if, in accordance with the provisions of Section 64A of the Singapore Companies Act, the share confers on the holder a right to vote on the resolution.

	
 
	
 
	
 

	
 
	
 
	
Circulation of Shareholders’ Resolutions

	
 
	
 
	
 

	
 
	
 
	
Under the Singapore Companies Act, (a) any number of shareholders representing not less than 5% of the total voting rights of all the shareholders having at the date of requisition a right to vote at a meeting to which the requisition relates or (b) not less than 100 shareholders holding shares on which there has been paid up an average sum, per shareholder, of not less than S$500, may requisition the company to give to shareholders notice of any resolution which may properly be moved and is intended to be moved at the next annual general meeting, and circulate to shareholders any statement of not more than 1,000 words with respect to the matter referred to in any proposed resolution or the business to be dealt with at that meeting.

10

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
 

	
Indemnification of Officers, Directors and Employees
	
 
	
 

	
 
	
 
	
 

	
Under the Delaware General Corporation Law, subject to specified limitations in the case of derivative suits brought by a corporation’s stockholders in its name, a corporation may indemnify any person who is made a party to any third-party action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other enterprise) against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding through, among other things, a majority vote of a quorum consisting of directors who were not parties to the suit or proceeding, if the person:

•      acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation or, in some circumstances, at least not opposed to its best interests; and

•      in a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.

Delaware corporate law permits indemnification by a corporation under similar circumstances for expenses (including attorneys’ fees) actually and reasonably incurred by such persons in connection with the defense or settlement of a derivative action or suit, except that no indemnification may be made in respect of any claim, issue or matter as to which the person is adjudged to be liable to the corporation unless the Delaware Court of Chancery or the court in which the action or suit was brought determines upon application that the person is fairly and reasonably entitled to indemnity for the expenses which the court deems to be proper.

To the extent a director, officer, employee or agent is successful in the defense of such an action, suit or proceeding, the corporation is required by Delaware corporate law to indemnify such person for reasonable expenses incurred thereby. Expenses (including attorneys’ fees) incurred by such persons in defending any action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of that person to repay the amount if it is ultimately determined that that person is not entitled to be so indemnified.
	
 
	
Under Section 172 of the Singapore Companies Act, any provision exempting or indemnifying the officers of a company (including directors) against liability, which by law would otherwise attach to them in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void.

However, the Singapore Companies Act allows a company to:

•      purchase and maintain for any officer insurance against any liability which by law would otherwise attach to such officer in connection with any negligence, default, breach of duty or breach of trust in relation to the company;

•      indemnify such officer against any liability incurred by him or her to a person other than the company except when the indemnity is against any liability (i) of the officer to pay a fine in criminal proceedings, (ii) of the officer to pay a penalty in respect of non-compliance with any regulatory requirements, (iii) incurred by the officer in defending criminal proceedings in which he or she is convicted, (iv) incurred by the officer in defending civil proceedings brought by the company or a related company in which judgment is given against him or her, or (v) incurred by the officer in connection with an application for relief under Section 76A(13) or Section 391 of the Singapore Companies Act in which the court refuses to grant him or her relief.

In cases where a director is sued by the company, the Singapore Companies Act gives the court the power to relieve directors either wholly or partially from their liability for their negligence, default, breach of duty or breach of trust. In order for relief to be obtained, it must be shown that (i) the director acted reasonably and honestly; and (ii) it is fair, having regard to all the circumstances of the case including those connected with such director’s appointment, to excuse the director. However, Singapore case law has indicated that such relief will not be granted to a director who has benefited as a result of his or her breach of trust.

 

11

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
Our constitution provides that subject to the provisions of the Singapore Companies Act and every other applicable statute for the time being in force concerning companies and affecting the company, the directors and officers are entitled to be indemnified against costs, charges, fees and other expenses that may be incurred by such person in defending any proceedings, whether civil or criminal, which relates to anything done or omitted or alleged to be done or omitted by such person as a director, officer or employee of the company and in which judgment is given in his or her favor or in which such person is acquitted or in which the courts have granted relief pursuant to the provisions of the Singapore Companies Act, provided that such indemnity shall not extend to any liability which by law would otherwise attach to him or her in respect of any negligence, default, breach of duty or breach of trust of which he or she may be guilty in relation to the company, or which would otherwise result in such indemnity being voided under applicable Singapore laws.

	
 
	
 
	
 

	
Shareholder Approval of Issuances of Shares
	
 
	
 

	
 
	
 
	
 

	
Under Delaware law, the board of directors has the authority to issue, from time to time, capital stock in its sole discretion, as long the number the shares to be issued, together with those shares that are already issued and outstanding and those shares reserved to be issued, do not exceed the authorized capital for the corporation as previously approved by the stockholders and set forth in the corporation’s certificate of incorporation. Under the foregoing circumstances, no additional stockholder approval is required for the issuance of capital stock. Under Delaware law, stockholder approval is required (i) for any amendment to the corporation’s certificate of incorporation to increase the authorized capital and (ii) for the issuance of stock in a direct merger transaction where the number of shares exceeds 20% of the corporation’s shares outstanding prior to the transaction, regardless of whether there is sufficient authorized capital.
	
 
	
Section 161 of the Singapore Companies Act provides that despite anything in the company’s constitution, the directors must not exercise any power to issue shares without prior approval of Company’s shareholders in a general meeting. The affirmative vote of shareholders holding at least a majority of the ordinary shares held by the shareholders present in person or represented by proxy at the annual general meeting and entitled to vote is required for this authorization. Once this shareholders’ approval is obtained, unless previously revoked or varied by the company in general meeting, it continues in force until the conclusion of the next annual general meeting or the expiration of the period within which the next annual general meeting after that date is required by law to be held, whichever is earlier; but any approval may be revoked or varied by the company in general meeting. Notwithstanding this general authorization to allot and issue our ordinary shares, Wave will be required to seek shareholder approval with respect to future issuances of ordinary shares, where required under The Nasdaq Stock Market rules, such as if we were to propose an issuance of ordinary shares that would result in a change in control of Wave or in connection with a transaction involving the issuance of ordinary shares representing 20% or more of our outstanding ordinary shares.

	
 
	
 
	
 

	
Shareholder Approval of Business Combinations
	
 
	
 

	
 
	
 
	
 

	
Generally, under the Delaware General Corporation Law, completion of a merger, consolidation, or the sale, lease or exchange of substantially all of a corporation’s assets or dissolution requires approval by the board of directors and by a majority (unless the certificate of incorporation requires a higher percentage) of outstanding stock of the corporation entitled to vote.

 
	
 
	
The Singapore Companies Act and the Insolvency, Restructuring and Dissolution Act 2018 mandates that specified corporate actions require approval by the shareholders in a general meeting, notably:

•      despite anything in the company’s constitution, directors must not carry into effect any proposals for disposing of the whole or substantially the whole of the company’s undertaking or property unless those proposals have been approved by shareholders in a general meeting;

12

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
The Delaware General Corporation Law also requires a special vote of stockholders in connection with a business combination with an “interested stockholder” as defined in section 203 of the Delaware General Corporation Law. See “—Interested Shareholders” above.
	
 
	
•      the company may by special resolution resolve that it be wound up voluntarily;

•      subject to the constitution of each amalgamating company, an amalgamation proposal must be approved by the shareholders of each amalgamating company via special resolution at a general meeting;

•      a compromise or arrangement proposed between a company and its shareholders, or any class of them, must, among other things, be approved by a majority in number representing three-fourths in value of the shareholders or class of shareholders present and voting either in person or by proxy at the meeting ordered by the court; and

•      despite anything in the company’s constitution, the directors must not, without the prior approval of shareholders, issue shares, including shares being issued in connection with corporate actions.

	
 
	
 
	
 

	
Shareholder Action Without A Meeting
	
 
	
 

	
 
	
 
	
 

	
Under the Delaware General Corporation Law, unless otherwise provided in a corporation’s certificate of incorporation, any action that may be taken at a meeting of stockholders may be taken without a meeting, without prior notice and without a vote if the holders of outstanding stock, having not less than the minimum number of votes that would be necessary to authorize such action, consent in writing. It is not uncommon for a corporation’s certificate of incorporation to prohibit such action.
	
 
	
There are no equivalent provisions under the Singapore Companies Act in respect of public companies which are listed on a securities exchange, like our company.

	
 
	
 
	
 

	
Shareholder Suits
	
 
	
 

	
 
	
 
	
 

	
Under the Delaware General Corporation Law, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation. An individual also may commence a class action suit on behalf of himself or herself and other similarly situated stockholders where the requirements for maintaining a class action under the Delaware General Corporation Law have been met. A person may institute and maintain such a suit only if such person was a stockholder at the time of the transaction which is the subject of the suit or his or her shares thereafter devolved upon him or her by operation of law. Additionally, under Delaware case law, the plaintiff generally must be a stockholder not only at the time of the transaction which is the subject of the suit, but also through the duration of the derivative suit. The Delaware General Corporation Law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff, unless such demand would be futile.
	
 
	
Standing

Only registered shareholders of our company reflected in our register of members are recognized under Singapore law as shareholders of our company. As a result, only registered shareholders have legal standing to institute shareholder actions against us or otherwise seek to enforce their rights as shareholders. Holders of book-entry interests in our shares will be required to exchange their book-entry interests for certificated shares and to be registered as shareholders in our shareholder register in order to institute or enforce any legal proceedings or claims against us, our directors or our executive officers relating to shareholder rights. A holder of book-entry interests may become a registered shareholder of our company by exchanging its interest in our shares for certificated shares and being registered in our shareholder register.

 

13

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
Personal remedies in cases of oppression or injustice

A shareholder may apply to the court for an order under Section 216 of the Singapore Companies Act to remedy situations where (i) the company’s affairs are being conducted or the powers of the company’s directors are being exercised in a manner oppressive to, or in disregard of the interests of one or more of the shareholders or holders of debentures of the company, including the applicant; or (ii) the company has done an act, or threatens to do an act, or the shareholders or holders of debentures have passed some resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of the company’s shareholders or holders of debentures, including the applicant.

Singapore courts have wide discretion as to the relief they may grant under such application, including, inter alia, directing or prohibiting any act or cancelling or varying any transaction or resolution, providing that the company be wound up, or authorizing civil proceedings to be brought in the name of or on behalf of the company by such person or persons and on such terms as the court directs.

	
 
	
 
	
Derivative actions and arbitrations

The Singapore Companies Act has a provision which provides a mechanism enabling shareholders to apply to the court for leave to bring a derivative action or commence an arbitration on behalf of the company. Derivative actions are also allowed as a common law action.

Applications are generally made by shareholders of the company, but courts are given the discretion to allow such persons as they deem proper to apply (e.g., beneficial owner of shares).

It should be noted that this provision of the Singapore Companies Act is primarily used by minority shareholders to bring an action or arbitration in the name and on behalf of the company or intervene in an action or arbitration to which the company is a party for the purpose of prosecuting, defending or discontinuing the action or arbitration on behalf of the company. Prior to commencing a derivative action or arbitration, the court must be satisfied that (i) 14 days’ notice has been given to the directors of the company of the party’s intention to commence such action or arbitration if the directors of the company do not bring, diligently prosecute or defend or discontinue the action, (ii) the party is acting in good faith and (iii) it appears to be prima facie in the interests of the company that the action be brought, prosecuted, defended or discontinued.

Class actions

The concept of class action suits in the United States, which allows individual shareholders to bring an action seeking to represent the class or classes of shareholders, does not exist in the same manner in Singapore. In Singapore, it is possible as a matter of procedure for a number of shareholders to begin proceedings on behalf of themselves and other shareholders who have the same interest in the proceedings whom they represent. These shareholders are known as “representative plaintiffs.”

14

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
 

	
Distributions and Dividends; Repurchases and Redemptions
	
 
	
 

	
 
	
 
	
 

	
The Delaware General Corporation Law permits a corporation to declare and pay dividends out of statutory surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or for the preceding fiscal year as long as the amount of capital of the corporation following the declaration and payment of the dividend is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets.

Under the Delaware General Corporation Law, any corporation may purchase or redeem its own shares, except that generally it may not purchase or redeem these shares if the capital of the corporation is impaired at the time or would become impaired as a result of the redemption. A corporation may, however, purchase or redeem out of capital shares that are entitled upon any distribution of its assets to a preference over another class or series of its shares if the shares are to be retired and the capital reduced.
	
 
	
The Singapore Companies Act provides that no dividend is payable to the shareholders of any company except out of profits.

The Singapore Companies Act does not provide a definition on when profits are deemed to be available for the purpose of paying dividends and this is accordingly governed by case law.

Our constitution provides that no dividend can be paid otherwise than out of profits.

Acquisition of a company’s own shares

The Singapore Companies Act generally prohibits a company from acquiring its own shares or purporting to acquire the shares of its holding company or ultimate holding company, whether directly or indirectly, in any way, subject to certain exceptions. Any contract or transaction made or entered into in contravention of the aforementioned prohibition by which a company acquires or purports to acquire its own shares or shares in its holding company or ultimate holding company is void. However, provided that it is expressly permitted to do so by its constitution and subject to the special conditions of each permitted acquisition contained in the Singapore Companies Act, a company may:

•      redeem redeemable preferred shares on such terms and in such manner as is provided by its constitution. Preferred shares may be redeemed out of capital only if all the directors make a solvency statement in relation to such redemption in accordance with the Singapore Companies Act, and the company lodges a copy of the statement with the Registrar of Companies;

•     whether listed on an exchange in Singapore approved by the Monetary Authority of Singapore or any securities exchange outside Singapore, or not, make an off-market purchase of its own shares in accordance with an equal access scheme authorized in advance at a general meeting;

•      make a selective off-market purchase of its own shares in accordance with an agreement authorized in advance at a general meeting by a special resolution where persons whose shares are to be acquired and their associated persons have abstained from voting; and

•     whether listed on an exchange in Singapore approved by the Monetary Authority of Singapore or any securities exchange outside Singapore, or not, make an acquisition of its own shares under a contingent purchase contract which has been authorized in advance at a general meeting by a special resolution.

15

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
A company may also purchase its own shares by an order of a Singapore court.

•     The total number of ordinary shares, stocks in any class and non-redeemable preferred shares that may be acquired by a company in a relevant period must not exceed 20% (or such other prescribed percentage) of the total number of ordinary shares, stocks in any class or non-redeemable preferred shares (as the case may be) as of the date of the resolution to acquire the shares. Where, however, a company has reduced its share capital by a special resolution or a Singapore court made an order to such effect, the total number of ordinary shares, stocks in any class or non-redeemable preferred shares shall be taken to be the total number of ordinary shares, stocks in any class or non-redeemable preferred shares (as the case may be) as altered by the special resolution or the order of the court. Payment, including any expenses (including brokerage or commission) incurred directly in the acquisition by the company of its own shares, may be made out of the company’s profits or capital, provided that the company is solvent.

Financial assistance for the acquisition of shares

A public company or a company whose holding company or ultimate holding company is a public company must not give financial assistance to any person whether directly or indirectly for the purpose of or in connection with:

•      the acquisition or proposed acquisition of shares in the company or units of such shares; or

•      the acquisition or proposed acquisition of shares in its holding company or ultimate holding company, or units of such shares.

Financial assistance may take the form of a loan, the giving of a guarantee, the provision of security, the release of an obligation, the release of a debt or otherwise.

However, it should be noted that a company may provide financial assistance for the acquisition of its shares or shares in its holding company or ultimate holding company if it complies with the requirements (including approval by special resolution) set out in the Singapore Companies Act.

Our constitution provides that subject to the provisions of the Singapore Companies Act, we may purchase or otherwise acquire our own shares upon such terms and subject to such conditions as we may deem fit. We may deal with any such shares which is so purchased or acquired by us in such manner as may be permitted under the Singapore Companies Act (including, without limitation, hold such shares as treasury shares).

16

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
 

	
Transactions with Officers or Directors
	
 
	
 

	
 
	
 
	
 

	
Under the Delaware General Corporation Law, some contracts or transactions in which one or more of a corporation’s directors has an interest are not void or voidable because of such interest provided that some conditions, such as obtaining the required approval and fulfilling the requirements of good faith and full disclosure, are met. Under the Delaware General Corporation Law, either (a) the stockholders or the board of directors of a corporation must approve in good faith any such contract or transaction after full disclosure of the material facts or (b) the contract or transaction must have been “fair” as to the corporation at the time it was approved. If board approval is sought, the contract or transaction must be approved in good faith by a majority of disinterested directors after full disclosure of material facts, even though less than a majority of a quorum.
	
 
	
Under the Singapore Companies Act, directors and the chief executive officer of the company are not prohibited from dealing with the company, but where they have an interest, whether directly or indirectly, in a transaction with the company, that interest must be disclosed to the board of directors. In particular, every director or chief executive officer who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with the company must, as soon as is practicable after the relevant facts have come to such director’s or, as the case may be, the chief executive officer’s knowledge, declare the nature of such interest at a meeting of the directors or send a written notice to the company detailing the nature, character and extent of the interest.

In addition, a director or chief executive officer who holds any office or possesses any property which directly or indirectly might create interests in conflict with such director’s or, as the case may be, the chief executive officer’s duties as director or chief executive officer is required to declare the fact and the nature, character and extent of the conflict at a meeting of directors or send a written notice to the company detailing the nature, character and extent of the conflict.

The Singapore Companies Act extends the scope of this statutory duty of a director and chief executive officer to disclose any interests by pronouncing that an interest of a member of a director’s or, as the case may be, the chief executive officer’s family (including spouse, son, adopted son, step-son, daughter, adopted daughter and step-daughter) will be treated as an interest of the director or chief executive officer (as the case may be).

A director or chief executive officer is not deemed to be interested or to have been at any time interested in any transaction or proposed transaction where the interest of the director or chief executive officer (as the case may be) consists only of being a member or creditor of a corporation which is interested in the transaction or proposed transaction with the company if the interest may properly be regarded as immaterial. Where the transaction or the proposed transaction relates to any loan to the company, no disclosure need be made where the director or chief executive officer (as the case may be) has only guaranteed the repayment of such loan, unless the constitution provides otherwise.

Further, where any transaction or proposed transaction has been or will be made with or for the benefit of a related corporation (i.e., the holding company, subsidiary or subsidiary of a common holding company), the director or chief executive officer is not deemed to be interested or to have been at any time interested in such transaction or proposed transaction by virtue of only being a director or chief executive officer (as the case may be) of the related corporation, unless the constitution provides otherwise.

17

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
Subject to specified exceptions, the Singapore Companies Act prohibits a company (other than an exempt private company) from, among others, (i) making a loan or a quasi-loan to its directors or to directors of a related corporation, or giving a guarantee or security in connection with such a loan or quasi-loan, (ii) entering into a credit transaction as creditor for the benefit of its directors or the directors of a related corporation, or giving a guarantee or any security in connection with such a credit transaction, (iii) arranging an assignment to or assumption by us of any rights, obligations or liabilities under a transaction which, if it had been entered into by us, would have been a restricted transaction, and (iv) taking part in an arrangement under which another person enters into a transaction which, if entered into by us, would have been a restricted transaction and such person obtains a benefit from us or our related corporation pursuant thereto. Companies are also prohibited from entering into any of these transactions with the spouse or children (whether adopted or natural or step-children) of its directors.

Subject to specified exceptions, the Singapore Companies Act prohibits a company (other than an exempt private company) from making a loan or a quasi-loan to another company or a limited liability partnership or entering into any guarantee or providing any security in connection with a loan or a quasi-loan made to another company or a limited liability partnership by a person other than the first-mentioned company, entering into a credit transaction as a creditor for the benefit of another company or a limited liability partnership, or entering into any guarantee or provide any security in connection with a credit transaction entered into by any person for the benefit of another company or a limited liability partnership if a director or directors of the first-mentioned company is or together are interested in 20% or more of the total voting power in the other company or the limited liability partnership (as the case may be).

Such prohibition also applies to a loan, quasi-loan, credit transaction made by a company (other than an exempt private company), a credit transaction made by a company (other than an exempt private company) for the benefit of another company or limited liability partnership and a guarantee or security provided by a company (other than an exempt private company) in connection with a loan or quasi-loan made by a person other than the first-mentioned company to another company or a limited liability partnership where such other company or limited liability partnership is incorporated or formed (as the case may be) outside Singapore, if a director or directors of the first-mentioned company (a) is or together are interested in 20% or more of the total voting power in the other company or limited liability partnership or (b) in a case where the other company does not have a share capital, exercises or together exercise control over the other company whether by reason of having the power to appoint directors or otherwise.

The Singapore Companies Act also provides that an interest of a member of a director’s family (including spouse, son, adopted son, step-son, daughter, adopted daughter and step-daughter) will be treated as an interest of the director.

18

			
	
 
	
 
	
 

 

	
Delaware
	
  
	
Singapore

	
 
	
 
	
 

	
Dissenters’ Rights
	
 
	
 

	
 
	
 
	
 

	
Under the Delaware General Corporation Law, a stockholder of a corporation participating in some types of major corporate transactions may, under varying circumstances, be entitled to appraisal rights pursuant to which the stockholder may receive cash in the amount of the fair market value of his or her shares in lieu of the consideration he or she would otherwise receive in the transaction.
	
 
	
There are no equivalent provisions in Singapore under the Singapore Companies Act.

	
 
	
 
	
 

	
Cumulative Voting
	
 
	
 

	
 
	
 
	
 

	
Under the Delaware General Corporation Law, a corporation may adopt in its bylaws that its directors shall be elected by cumulative voting. When directors are elected by cumulative voting, a stockholder has the number of votes equal to the number of shares held by such stockholder times the number of directors nominated for election. The stockholder may cast all of such votes for one director or among the directors in any proportion.
	
 
	
There are no equivalent provisions in Singapore under the Singapore Companies Act.

 

19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00341-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00341-of-00352.parquet"}]]