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Singapore – ACRA Announces Phased Implementation of Companies (Amendment) Act 2014.

21 April, 2015

 

 

Introduction

The Accounting and Corporate Regulatory Authority of Singapore (“ACRA”) has announced that the legislative amendments to the Companies Act (“CA”) will be implemented in two phases. ACRA had previously indicated that all the amendments would come into effect in the second quarter of 2015. The two-phase implementation approach is being adopted as ACRA’s online business filing and information portal, Bizfile, is currently undergoing a major revamp. Technical issues related to the revamp are taking longer to resolve than originally anticipated.


The first phase of implementation on 1 July 2015 will see about 40% of the over 200 amendments take effect. The rest of the amendments are expected to come into effect in the second phase, in the first quarter of 2016.

 

The First Phase – 1 July 2015


CA amendments that have no or limited links to Bizfile will be effected under the first phase. These include the new provisions which broaden the criteria for exemption for statutory audit for small companies, which will benefit SMEs, as well as the removal of the prohibition against financial assistance by private companies and introducing new exceptions to financial assistance.


A list of the key amendments that will come into effect on 1 July 2015 can be found in Annex A. ACRA has indicated that the commencement notification for the legislative amendments to be effected in the first phase will be published by end-May 2015, with supporting legislation to be issued in June 2015.


The Second Phase – Q1 2016


ACRA will announce the effective date for and provide more details on the second phase of implementation about two months before the changes are due to take effect. A list of the key amendments that will come into effect in the second phase can be found at Annex B.


In addition, the simplified regulatory fee structure for businesses and the New Business Names Registration Act (which will replace the current Business Registration Act) will also take effect in tandem with the completion of the revamped Bizfile, which is expected to be in the first quarter of 2016.

 

Annex A – List Of Key Amendments To Be Implemented In First Phase – 1 July 2015

 

S/N Key Amendments Section number in Companies (Amendment) Act 2014
(a)  Shareholders’ approval not required for payment of compensation up to a year’s emoluments to executive director for termination of his employment. Section 86
(b)  Relaxing conditions for nominee directors to disclose information to nominating shareholders. Section 80
(c)  Empowering the Court hearing a winding-up application to order a buy-out instead of ordering winding-up Section 150
(d)  Expanding the scope of the statutory derivative action in section 216A to allow a complainant to apply to the court for leave to commence/intervene in arbitration. Section 146
(e)  Extending application of section 216A such that the statutory derivative action is applicable to Singapore-incorporated companies that are listed for quotation or quoted on a securities market, whether in Singapore or overseas. Section 146
(f)  Allowing listed companies to make selected off-market acquisition of shares in itself in accordance with an agreement authorised by the company. Section 45
(g)  Removal of prohibition against financial assistance by private companies and introducing new exceptions to financial assistance. Section 41
(h)  Permitting use of capital for share issues and buybacks for brokerage, commissions. Section 35
(i) Allowing companies to issue shares for no consideration. Section 35
(j)  Consolidating provisions relating to auditor independence under the Accountants Act. Section 9
(k) Introduction of small company audit exemption. Sections 128 & 184
(l)  Auditors of non-public interest company may resign upon giving notice to the company. Auditors of public interest companies and their subsidiaries to obtain ACRA’s consent for premature resignation. Section 126
(m)  Determination of requirement to prepare consolidated financial statements to be determined by financial reporting standards and not the Companies Act. Section 112, 113, 116 (and other related amendments)
(n)  Repeal of Companies Act requirement relating to alignment of financial year between parent and subsidiary. Section 115
(o)  Company secretaries of private companies need not be physically present at the company’s registered office. Section 88
(p)  Prescribing the requirements of a company secretary of a public company in regulations. Section 88
(q) Abolition of transitional arrangements for share warrants. Section 34
(r)  Update limit on preferential payments to employees of insolvent companies. Section 151

 

Annex B – List Of Key Amendments To Be Implemented In The Second Phase – Q1 2016

 

S/N Key Amendments
(a) Removing the requirement for shareholders’ approval to re-appoint directors aged 70 and above.
(b) Extension of the types of loans permitted to directors to include quasi-loans, credit transactions and related arrangements.
(c) Extension of directors’ disclosures requirements to Chief Executive Officers.
(d) Allowing a company to provide indemnity against liability incurred by directors to third parties.
(e) Power of Registrar to debar directors and secretaries.
(f) Lowering the threshold of 10% of total voting rights for the eligibility of shareholders to demand a poll to 5%.
(g) Introduction of multiple proxies regime to enfranchise indirect investors.
(h) Liberalising rules on electronic transaction of documents by companies.
(i) Extension of procedures for passing written resolutions by written means to unlisted public companies.
(j) Removal of one-share-one-vote for public companies.
(k) Introduction of statutory mechanism for redenomination of shares.
(l) Refinements to the amalgamation process.
(m) Clarification that shares redeemed out of proceeds of a fresh issue of shares are not treated as having been redeemed out of capital.
(n) Transfer of the provisions relating to the Central Depository System to the Securities and Futures Act.
(o) New exemption from preparation of financial statements for dormant non-listed companies.
(p) Provisions relating to the revision of defective accounts.
(q) Extension of summary financial statements to all companies.
(r) Electronic registers of members of private companies to be kept by ACRA.
(s) Electronic registers of directors and other officers of all companies to be kept by ACRA.
(t) Memorandum and articles will be merged into a single constitution.
(u) Removal of requirement for charities registered under the Charities Act to apply to omit the word “limited” from their names.
(v) Allowing directors and other persons to report an alternate address.
(w)  Updating of striking-off provisions for local companies (except the prescription of circumstances under which the Registrar may consider a company to not be carrying on business or not it operation).
(x) Amendments relating to reservation/ protection of company names.
(y) All amendments relating to foreign companies.

 

Rajah & Tann

 

For further information, please contact:


Abdul Jabbar, Partner, Rajah & Tann
abdul.jabbar@rajahtann.com


Evelyn Wee, Partner, Rajah & Tann
evelyn.wee@rajahtann.com

Rajah & Tann Corporate/M&A Practice Profile in Singapore

 

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