The Ministry of Finance (MOF) and the Accounting and Corporate Regulatory Authority
(ACRA) have proposed to amend several ACRA-administered legislations, namely the Accountants Act 2004 (AA), ACRA Act 2004, Companies Act 1967 (CA), Limited Liability Partnerships Act 2005 (LLPA) and Limited Partnerships Act 2008 (LPA). The proposed Corporate and Accounting Laws (Amendment) Bill (Bill) has been released for public comments.
The amendments aim to:
We highlight some key proposed amendments below.
Under the Bill, the restoration of an entity under the CA may now be refused if the entity is likely to be used for purposes that are unlawful or prejudicial to the public peace in Singapore, or restoration would be contrary to the national security or interest. These grounds are aligned with the grounds for refusing registration of a company’s constitution. The timeline for the striking off process will also be shortened to reduce the likelihood of inactive companies being used for illicit purposes.
The Bill will disqualify persons who have been convicted of certain money laundering offences from acting as directors under the CA.
The Bill will allow sole directors to act as company secretaries, in line with other jurisdictions such as the United Kingdom, which should reduce compliance costs for smaller companies.
Public companies that have not previously issued a prospectus and private companies that become public companies will no longer need to lodge a statement in lieu of a prospectus with ACRA, easing duplicative reporting and reducing regulatory burden.
Public companies limited by shares will no longer be required to convene a statutory meeting (which currently must be done within 1-3 months after they commence business) and prepare a statutory report (which currently must be sent to members at least 7 days before the statutory meeting). MOF notes that members’ rights are adequately protected by existing requirements for annual general meetings and extraordinary general meetings.
The Bill will tighten approval requirements for selective off-market purchases, i.e., purchases outside an exchange and not in accordance with an equal access scheme. Currently, only a special resolution is required (excluding holders of target shares). If passed, an additional tier of approval will be required, where at least 75% of the members in the class of shares being purchased (excluding holders of target shares) must approve the transaction.
The Bill clarifies that any variation or abrogation of class rights will require 75% approval of the class rights holders, unless the constitution specifies otherwise. The CA was previously silent on this issue, and MOF states this amendment is in line with the current practice of companies.
The 90% threshold for an offeror to compel acquisition of dissenting shareholders’ shares will be amended to include shares from options or convertible securities holders, provided they exercise their conversion rights before the notice date. This change enhances protection for option and convertible securities holders but requires them to convert before the notice date.
Proposed amendments include:
The incremental improvements by MOF and ACRA demonstrate Singapore’s continuous effort to keep its corporate and accounting frameworks up-to-date and efficient. Shareholders should be cognisant of the modified rights under the Bill, and public accountants should be conscious of the expanded regulatory regime applicable to them.
OrionW regularly advises clients on corporate matters. For more information about Singapore company law, or if you have questions about this article, please contact us at info@orionw.com.
Disclaimer: This article is for general information only and does not constitute legal advice.
