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Singapore – New Rules In Relation To Stamp Duty Relief In The Context Of Companies’ Internal Restructuring Exercise.

1 September, 2014

 

Legal News & Analysis – Asia Pacific – Singapore – Insolvency & Restructuring

 

The Stamp Duties (Relief from Stamp Duty upon Transfer of Assets Between Associated Permitted Entities) Rules 2014 (Associated Entities Rules) and the Stamp Duties (Relief from Stamp Duty upon Reconstruction or Amalgamation of Companies) (Amendment) Rules 2014 (Reconstruction Rules) (collectively, the New Rules) came into effect on 16 January 2014 and 22 May 2014 respectively. Most of the conditions for relief to be granted in the context of an internal restructuring exercise under the New Rules mirror that of the rules that were in existence prior to the introduction of the New Rules (Old Rules). However, we set out below the following noteworthy changes that are now in force. 


Additional Conditions In Relation To Fixed Time Frames For Applying For Relief 


In addition to the existing conditions for applying for relief under the Old Rules, the following conditions have been imposed: 


(a) The claim for relief from stamp duty must be made within 14 days of execution when the instrument for the purposes of or in connection with an acquisition (Instrument) is executed in Singapore and within 30 days of execution where the Instrument is executed outside Singapore; and 


(b) When the Commissioner of Stamp Duties has indicated that the duty will not be chargeable on the Instrument on the basis of the likelihood of the other conditions being satisfied, the Instrument has to be executed within 4 months of this indication where the claim for relief from stamp duty has been made before the execution of the Instrument. 


Possible Extension Of Time Period For Execution Of Instrument 


The Reconstruction Rules also allow for the Commissioner of Stamp Duties to, in his discretion and subject to any such terms and conditions as he may impose, extend the time periods set out for the claim for relief or execution of the Instruments if the time frames stipulated cannot be met in unavoidable circumstances. 


In addition, it used to be that if the Instrument in connection with the reconstruction or amalgamation of companies was not executed within a period of 12 months from the date of the registration of the transferee company, the date of the authority to increase the share capital of the transferee company, or from the date specified in the notice of amalgamation (as the case may be), the claim for relief was to be disallowed and an amount equal to the duty remitted would become payable by the transferee entity to the Commissioner immediately. The Reconstruction Rules now allow for the Commissioner of Stamp Duties to, in his discretion and subject to such terms and conditions as he may impose, extend the 12-month period referred to in the above situations in unavoidable circumstances. 


Reconstruction Rules 


“Valuable Consideration” 


Pursuant to the Reconstruction Rules, where the transferee company is wholly associated with the existing company, the reference to valuable consideration at the open market value may be read as a reference to valuable consideration at the existing company’s book value. In addition, any part or the whole of the consideration for the acquisition in question may be paid in cash. 


“Wholly-Associated” 


The transferee company shall be taken to be wholly associated with the existing company if:

 

(a) either one of the companies is the direct beneficial owner of 100% of the share capital of the other company; or 


(b) either one of the companies is an indirect beneficial owner of 100% of the reckonable share capital of the other company and owns 100% of the voting power in respect of the other company; or 


(c) a third company is the direct beneficial owner of 100% of the reckonable share capital of each of the transferee company and the existing company; or 


(d) a third company is an indirect beneficial owner of 100% of the reckonable share capital of the transferee company or the existing company and owns 100% of the voting power in respect of that company. 


Associated Entities Rules 


Introduction Of New Terms 


New terms such as “group”, “holding entity” and “permitted entity” have been introduced under the Associated Entities Rules. If in doubt of whether their companies come within the definition of these terms, companies should refer to the Rules for more information.

 

ATMD Bird & Bird

 

For further information, please contact:

 

Jolie Giouw, ATMD Bird & Bird

jolie.giouw@twobirds.com 

 

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