Since its enactment in 1967, the Companies Act of Singapore has undergone several reviews to ensure that the corporate regulatory regime is robust and supports Singapore's growth as a global hub for business and investors. The Companies (Amendment) Bill 2017, passed on 10 March 2017 was supported by the same ideology and the amendments targeted three primary areas: (i) improving transparency of ownership and control of companies in line with international norms; (ii) reducing regulatory burden and improving ease of doing business in the country; and (iii) enhancing the country's debt restructuring framework.
Your quick read on the amendments categorised by its key drivers are as below.
I. Singapore as a trusted and clean financial hub; mitigating risks of money laundering and terrorist financing
- Maintaining a register of controllers. Locally
incorporated companies and foreign companies registered in
Singapore are required to maintain registers of their
'controllers' which is defined with reference to entities
with 'significant control/interest' using a 25% threshold
to help companies determine when control/interest is significant.
This is in line with UK and EU regulatory framework. Registers are
non-public but must be available to law enforcement authorities on
- Foreign companies; public register of members.
Bringing foreign companies in alignment with locally incorporated
companies, foreign companies registered in Singapore are required
to maintain public registers of their members.
- Singapore incorporated companies; register of nominee
directors. Singapore incorporated companies are now
required to maintain a register of nominee directors, disclosing
nominee status and giving particulars of their nomination to their
- Record retention; by liquidator and company officers. On winding-up, the company liquidator is required to retain company's records for at least five years (up from the prior two year retention period) and upon strike off/dissolutions, former officers are required to retain books and papers (including accounting records and registers) for at least five years. This allows enforcement agencies to access past records for their investigations.
This category I of regulatory amendments are effective on 31 March 2017.
II. Ease of doing business in Singapore; reducing regulatory burden and compliance costs
- Inward re-domiciliation. Particularly
significant were amendments brought by the introduction of an
inward re-domiciliation regime whereby foreign corporate entities
will be allowed to transfer their registration to Singapore,
besides the current options of setting up a subsidiary or branch in
Singapore. Inward re-domiciliation is akin to changing
'corporate citizenship'. Transfer of registration will thus
be useful to foreign corporate entities that wish to retain their
corporate history and identity. Foreign corporate entities may
choose to re-domicile for various reasons, such as for a more
conducive regulatory framework or to be closer to their
shareholders or operational base. A foreign corporate entity that
is re-domiciled to Singapore will be required to comply with the
requirements of the Companies Act like any other Singapore
- Annual general meetings (AGMs) and annual
returns. Listed companies are required to hold AGMs and
file annual returns within 4 months and 5 months after their
financial year end respectively and non-listed companies within 6
months and 7 months after their financial year end respectively.
Private companies are now exempt from holding AGMs if they send
their financial statements to members within 5 months from the
financial year end however will be required to, (i) hold an AGM on
a shareholder(s) request not later than 14 days before the end of
the 6th month after financial year end, or (ii) a general meeting
to lay financial statements if any shareholder or auditor requests
for it not later than 14 days after release of the financial
- Removal of the requirement for common seal. The requirement for a common seal to execute documents such as deeds and share certificates has been removed. The requirement was seen as archaic citing jurisdictions such as Australia, Canada, Hong Kong, New Zealand and the UK which have done away with the concept.
Paragraph 3 (removal of requirement of common seal) of this category II set of amendments is effective on 31 March 2017. The effective date of the remainder is yet to be notified (expected over late 2017 and early 2018).
III. Singapore as a centre for international debt restructuring; enhancing the debt restructuring framework
The debt restructuring amendments introduced were particularly adapted from Chapter 11 of the United States Bankruptcy Code.
- Moratorium; from creditor action. The
amendments bring into effect a moratorium preventing creditors from
taking action (such as commencing legal proceedings or enforcing
security rights), giving the company the breathing room to put
forward the restructuring proposal. An automatic moratorium will
trigger for a period of 30 days from application, allowing courts
to give the moratorium worldwide effect and extending its
application to related entities relevant to the restructuring with
suitable provisions/subsidiary legislation providing carve-outs
from the moratorium (where the moratorium is likely to have
disproportionate adverse effects).
- Rescue financing; to tide through
restructuring. Provisions are introduced empowering the
courts to order priority to rescue financing over all other debts
or to be secured by a security interest that has priority over
pre-existing security interests, provided the pre-existing
interests are adequately protected.
- Cram down provisions; preventing influence of
dissenting creditors. The court will now be authorised to
approve a scheme even with dissenting creditor classes (unlike the
current framework where the court can only sanction a scheme if the
requisite majority approval has been obtained from all classes of
creditors). These provisions therefore prevent a minority
dissenting class of creditors from unreasonably frustrating a
restructuring that benefits creditors as a whole.
- Pre-packs; approval without creditor consent.
Pre-negotiated restructurings between the company and its key
creditors may now be approved without calling creditor meetings if
the other creditors will not be affected as the pre-pack is
sufficient to rescue the company.
- Judicial management; judicial manager steps in
earlier. A judicial management order may now be passed
when a company 'is likely to become unable to pay its
debts' as opposed to the current 'will be unable to pay its
debts'. This will allow the judicial management process to
commence earlier in the day, when the prospects of saving a company
are higher. Additionally, such an order may be passed despite
objections from certain secured creditors if the prejudice caused
to unsecured creditors is disproportionately greater (which is
presently not permissible if secured creditors oppose the
- Cross-border insolvency; foreign companies restructuring debt in Singapore. A list of factors has been put in place for the court to consider whether a foreign company has substantial connection to Singapore in order for it to be wound up under the Companies Act. This has a substantial impact, as a foreign company that qualifies to be wound up under the Companies Act may make an application for a scheme of arrangement or judicial management providing greater certainty to foreign debtors that wish to restructure in Singapore. The amendments also abolish the current rule that requires liquidators of foreign companies to 'ring fence' Singapore assets and pay off debts incurred in Singapore first (except for specific financial entities such as banks and insurance companies, where the rule will be retained). The amendments also envisage the adoption of the UNCITRAL Model Law on Cross-Border Insolvency.
The effective date of this category of amendments is yet to be notified (expected over late 2017 and early 2018).
The Singapore regulatory system has always displayed an arguably unparalleled level of maturity and intelligent flexibility in keeping up with a changing economic environment - the nature of company law amendments are reflective of this reputation. With these amendments Singapore aims to reinforce its positon as a key international financial centre compliant with international business standards.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.