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Singapore – MOF And ACRA Issue Response To Feedback On The Companies (Amendment) Bill.

11 September, 2014

 

Legal News & Analysis – Asia Pacific – Singapore  Regulatory & Compliance

 

The Ministry of Finance (“MOF”) and the Accounting and Corporate Regulatory Authority (“ACRA”) have issued their response to the feedback received on the Companies (Amendment) Bill (“draft Bill”). They have stated that they will be tabling the Companies (Amendment) Bill in Parliament this year.


They have amended some of the provisions proposed in the original draft Bill, some of which are highlighted below.


The MOF and ACRA response also contains:

 

  • a detailed response to the feedback received from the public during the public consultation exercises held in May and October 2013; and
  • a summary of new issues raised in the feedback to be considered in future reviews of the Companies Act.

Some of the changes to the draft Bill as well as conclusions reached in relation to certain new areas raised during the public consultations are summarised below:

 

  • Section 163 of the Companies Act will be amended to extend the existing prohibition on companies giving loans, guarantees or securities to cover also loans, guarantees or securities given to limited liability partnerships if the directors of the lending company own or control 20% or more of the total voting power or interest of the limited liability partnership.
  • The proposal to require a Chief Executive Officer of a non-listed company to disclose interests in securities of related corporations and participatory interests made available by the non-listed company or its related corporations, will not be proceeded with. The proposed requirement to require a Chief Executive Officer of a non-listed company to disclose his interests in shares, debentures, rights, options and contracts of the company has been retained.
  • The draft Bill will be amended to provide that a company may not opt out of the multiple proxies regime. The draft Bill had previously allowed companies to do opt out.
  • For a private company to qualify as a small company, one of the criteria specified in the draft Bill was that it should have “total gross assets” of not more than SGD 10m. The reference to “total gross assets” will be replaced with “total assets” for clarity and certainty.
  • The draft Bill had proposed a 14-day period for companies to file information on allotment or transfer of shares with ACRA, which would maintain the authoritative electronic register of members for private companies. For legal and commercial certainty and to ensure the accuracy of ACRA’s register, the draft Bill will instead require real-time registration of share ownership information and changes to it rather than allowing for a 14-day filing period. Such share ownership or change in share ownership will not take effect until ACRA updates its electronic register of members.
  • The share buyback limit in the Companies Act will be maintained at 20%.
  • Section 156(9) of the Companies Act (which states that section 156 is “in addition to and not in derogation of the operation of any rule of law or any provision in the articles restricting a director from having any interest in transactions with the company or from holding offices or possessing properties involving duties or interest in conflict with his duties or interests as a director”) will be retained as is.
  • The priority ranking between wages/salaries and retrenchment benefits under section 328 of the Companies Act will be retained without change.
  • It will change the limit on preferential payment to an employee of an insolvent company to “five months’ salary or five times the salary cap for non-workmen referred to in Part IV of the Employment Act, whichever is lower”.
  • It will implement its proposal to phase out outstanding share warrants issued before 29 December 1967 under section 66 of the Companies Act. Bearers of these warrants will be given a final two-year period from the time the amendment is effected to surrender the warrants for cancellation and have their names entered in the register of members. Companies will cancel outstanding share warrants that are not surrendered for cancellation after the two-year period.

The response can be found at the ACRA website here.

 

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For further information, please contact:

 

Annabelle Yip, Partner, WongPartnership

annabelle.yip@wongpartnership.com

 

Vivien Yui, Partner, WongPartnership

vivien.yui@wongpartnership.com

 

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