Between 23 October 2013 and 19 November 2013, the Ministry of Finance (the “MOF”) and the Accounting and Corporate Regulatory Authority (the “ACRA”) conducted a public consultation seeking feedback on more legislative changes to the Companies Act (the “CA”). The proposals are set out in consultation documents released by the MOF and ACRA (the “Second Consultation Paper”), including the draft text of the Companies (Amendment) Bill (Part 2).
The proposals in the Second Consultation Paper are independent from an earlier set of proposed changes to the CA which was the subject matter of the consultation exercise conducted jointly by the MOF and ACRA in May/June 2013. That consultation exercise sought comments on draft legislative changes to the CA that aim to implement recommendations by the Steering Committee for the Review of the Companies Act (the “First Consultation Paper”). The MOF states that they are still evaluating the feedback received in response to the consultation in May/June 2013.
The key proposals set out in the Second Consultation Paper include:
- Share buyback limit: Currently, a Singapore incorporated company which is not listed on the Singapore Exchange Securities Trading Limited (the “SGX-ST”) is allowed to purchase or acquire up to 20% of the total number of its ordinary or preference shares over the period between consecutive annual general meetings. The MOF/ACRA is seeking comments on whether the limit on the number of shares that a company is allowed to buy back should be liberalised or removed.
- New alternative form for disclosing directors’ interests in transactions or property/other office held by directors: Section 156 of the CA requires a director to declare his interests in transactions or proposed transactions with the company or other offices held or property possessed by the director which may conflict with his duties or interests. The director is now required to declare his interests at a directors’ meeting. It is proposed that a director should also be allowed to declare his interests by sending a written notice to the company.
- Narrowing scope of directors’ disclosure obligations of interests in securities of company and related corporations: There is a proposal to revise section 164 of the CA so that directors are only required to disclose their interests in securities of the company and its holding company and subsidiaries (and not its fellow subsidiaries).
- New debarment regime for directors and company secretaries: A new debarment regime is proposed to debar from any new appointment as a director or company secretary, any director or company secretary of a company which has failed to lodge any documents at least three months after the prescribed deadlines under the CA.
- Disqualifying directors of struck-off companies: The MOF/ACRA propose to disqualify a person from acting as a director if three or more companies in which he was a director were struck off within a period of five years, as a result of ACRA-initiated review.
- New requirement to retain financial statements or documents laid at AGMs for five years: There will be a new requirement for a company to keep a copy of each of the documents that was laid before the company at its annual general meeting (“AGM”) under section 201 of the CA (e.g. profit and loss account, balance-sheet, etc.) for a period of not less than five years after the date of the AGM.
- Refinements to regulatory regime for foreign companies: The provisions relating to foreign companies will be retained in the CA with some refinements. Among other things, the MOF/ACRA propose to replace the term “agent” with “authorised representative” to better reflect the accountability and responsibility expected of that office and a foreign company will only be required to appoint a minimum of one “authorised representative”, instead of two.
The following materials are available from the MOF website www.mof.gov.sg:
- Press release
- Annex A: Summary of the feedback received from the public consultation on foreign companies and ACRA response
- Annex B: Highlights of key proposed changes relating to foreign companies and other aspects of the Companies Act
- Annex C: Table of proposed changes in part two of the draft Companies (Amendment) Bill
- Annex D: Part two of the draft Companies (Amendment) Bill
- Annex E: New areas under review