The Companies (Amendment) Act 2017 was passed on 10 March 2017 and came partially into effect on 31 March 2017. A key change is the introduction of a requirement for Singapore companies and limited liability partnerships, as well as foreign companies registered to do business in Singapore, to keep registers of significant controllers and nominee directors. Other amendments include changes to the requirement for Singapore companies to execute deeds by affixing their common seal and are covered in a separate update.
Persons required to keep the registers
The requirement to keep registers of significant controllers and nominee directors applies to the following entities:
- All companies and limited liability partnerships (LLP) incorporated / registered in Singapore will be required to maintain registers of controllers and registers of nominee directors at prescribed places (e.g. company’s registered office).
- Foreign companies registered in Singapore will also be required to maintain registers of controllers but not registers of nominee directors.
- Entities exempted from the requirements include Singapore-incorporated companies listed on an approved exchange, Singapore financial institutions, and their wholly-owned subsidiaries. Also included in the exemption are companies (Singapore as well as foreign) listed on a foreign securities exchange with regulatory disclosure requirements and requirements relating to adequate transparency in respect of beneficial owners. For such companies, however, their wholly-owned subsidiaries are not exempted.
The registers will not be open to inspection by the public but must be available for inspection by the Accounting and Corporate Regulatory Authority (ACRA) and law enforcement authorities.
Register of registrable controllers
For a company, a controller is an individual or corporate body that has a significant interest in, or significant control over, it:
- A person has “significant control” if he has the right to appoint or remove a majority or directors or has the right to exercise (or actually exercises) significant influence or control over matters that may be prescribed.
- A person has “significant interest” if he has an interest more than 25% of the shares held and/or 25% of voting rights. In determining whether a person has an interest in shares, the tests set out in section 7 of the Companies Act apply.
A company only has to include registrable controllers in the register. A controller is registrable unless:
- Its significant interest in or significant control over the company is only through one or more other controllers (B) of that company;
- It is a controller of B (or each B if there is more than one); and
- B (or each B if there is more than one) is any of the following:
- a company or foreign company that is required to keep a register of controllers or that is exempted from the requirement;
- a corporation whose shares are listed for quotation on an approved exchange;
- a limited liability partnership that is required to keep a register of controllers or that is exempted from the requirement; or
- a trustee of an express trust to which Part VII of the Trustees Act applies.
The application of these rules to determine whether a particular person appears on a company’s register of registrable controllers can be complex. To illustrate how the rules might be applied, we have set out an example of a joint venture company in Figure 1 below where all the companies are incorporated in Singapore.
The rules set out above would be applied as follows:
The application of the rules may be complicated if other factors and rules apply:
- For example, if I2 has an independent right to exercise significant influence over the JVCo (for example, he is a shadow director of the board of the JVCo), he would be a significant controller of the JVCo in his own right and should therefore appear on the JVCo’s register of registrable controllers.
- As another example, if C1 is a foreign company and not a Singapore incorporated company, I1 would be a registrable controller of the JVCo as C1 would not be a corporation that is required to keep a register of registrable controllers and I1 would then not fall under the exception to be registrable. In the same way, if A2 were also a foreign company, then A3 would be a registrable controller of the JVCo for the same reasons.
In addition to the rules discussed above, companies should take into account the Companies (Register of Controllers and Nominee Directors) Regulations 2017 as well as the various guidance (Guidance) issued by the ACRA. Companies have 60 days from 31 March 2017 to prepare and keep their registers. Their other obligations with respect to this register are as follows:
- A company must take reasonable steps to find out and identify its registrable controllers. The Guidance states that at a minimum a company should send notices to its directors and shareholders annually. The form of the notices is set out in the Companies (Register of Controllers and Nominee Directors) Regulations 2017. Addressees have 30 days to reply to the notice and companies have two days to update the register with the information received. Accordingly, companies should send their notices out at the very latest by 28 April 2017.
- A company must keep the particulars in the register accurate and up-to-date. The Guidance states that companies should at a minimum therefore send a notice annually to every registrable controller whose particulars are contained in the register of registrable controllers. As the obligation is on the company to send the notice if it knows or has reasonable grounds to believe that the particulars in the register have changed, a company must send out such a notice once it is alerted to a possible change, for example, as a result of reading an article in the newspapers.
- If the company does not receive a response to its enquiry, the company may state in the register that the particulars of the relevant registrable controller have not been confirmed. The company is not required to ensure that a response is received.
Register of nominee directors
As noted above, Singapore-incorporated companies were required to keep a register of nominee directors from 31 March 2017. Unlike the register of registrable controllers, a company is not required to ascertain whether it has any nominee directors. Instead, the obligation is on the nominee director to notify the company of his status and of the particulars of his nominator.
A director is a nominee director if he is accustomed or under an obligation whether formal or informal to act in accordance with the directions, instructions or wishes of any other person. The test is one of fact, and directors will therefore need to examine their own specific circumstances to see if the test is satisfied.