The Significant Investments Review Bill (SIRB) was introduced in Parliament on 6 November 2023, seeking to impose notification and/or approval requirements for designated businesses in regulated sectors, such as telecommunications, banking and utilities (Designated Entities). The SIRB is designed to strengthen Singapore's national security and position as a trusted business hub by safeguarding the continuity of businesses deemed critical to Singapore.
Because most critical entities are already covered by existing sectoral legislation, only a few entities are likely to be classified as Designated Entities once the SIRB is passed.
The Minister of Trade and Industry (Minister) may classify any entity established, carrying out any activity or providing any goods or services in Singapore as a Designated Entity if such designation is necessary in Singapore's national security interests.
Any person intending to make an equity investment, or gain indirect control, in a Designated Entity is subject to the following requirements:
In addition, current investors with equity interests satisfying the prescribed thresholds (currently set at 50% and 75%) must secure the Minister’s prior approval if they intend to decrease their investments below these thresholds (i.e., the investment will fall below 50% or 75% of the Designated Entity's equity interests).
Any transaction completed without the required approval is generally void, but can be validated by application to the Minister upon compliance with prescribed conditions.
A Designated Entity must secure the Minister's approval before it can appoint its chief executive officer, director, chairperson of the board of directors, manager or partner. However, the same person can be immediately re-appointed without a new approval from the Minister.
The Minister can remove these officers if (a) they have been appointed without an approval, (b) a condition for approval has been breached, or (c) the removal is necessary in the interest of Singapore's national security.
The Minister’s prior consent must be obtained before Designated Entities can voluntarily wind-up or dissolve, or be placed under judicial management.
The Minister may, within 2 years and 30 days after the transaction, review any transaction by a person (e.g., investment or divestment) with any entity established, carrying out any activity or providing any goods or services in Singapore (whether or not a Designated Entity) that has acted against the national security interests of Singapore within 2 years after the transaction. Thereafter, the Minister may, among others, direct the transfer or disposal (whether generally or to a specified person) of all or any of the equity interests in the entity held by that person or their associates within the prescribed period and subject to the conditions that the Minister considers appropriate.
While some SIRB requirements already apply to certain regulated entities under applicable sectoral legislation, the SIRB grants the Minister broader authority to deal with all businesses in Singapore – regulated or not – to protect Singapore’s national security interests. Companies should therefore be mindful of the proposed obligations under the SIRB, especially the National Security Interests Directions, which applies to all businesses.
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Disclaimer: This article is for general information only and does not constitute legal advice.