On 8 September 2014, proposed changes to the Singapore Companies Act (the “CA”) were tabled in Parliament for first reading. The amendments, which are set out in the Companies (Amendment) Bill 2014, will introduce wide ranging changes to the CA to reduce regulatory burden on companies, provide greater business flexibility and improve the corporate governance landscape in Singapore.
Most notably, the amendments to the CA include:
- Multiple proxies to allow indirect investors and CPF investors to vote: Companies in Singapore will be required to allow certain members to appoint more than two proxies, to enable indirect investors who hold shares through a nominee company or custodian bank or through CPF agent banks to attend and vote at shareholder meetings. A company will not be allowed to opt out of the multiple proxies regime.
- Sending notices and documents electronically: Companies will be able to make use of the simpler procedures to be prescribed in the CA to send notices of meetings and documents to members electronically as long as the specified modes of electronic transmission are set out in the constitution.
- Issuing shares with different voting rights: The current restriction on public companies having only one vote for each equity share will be removed. Subject to prescribed safeguards, a public company will be allowed to issue shares with differing voting rights (special, limited, conditional or no voting rights).
- CEOs to disclose interests in securities of company and conflict of interests: A chief executive officer of a non-listed Singapore-incorporated company (who is not also a director) will be required to disclose his and his family members’ interests in securities of the company (but not of the company’s related corporations), and conflict of interest in transactions/proposed transactions with the company or arising from any offices held or properties possessed by him.
- Financial assistance may be given if it does not materially prejudice interests of company: Subject to the satisfaction of certain prescribed conditions, a public company and a subsidiary of a public company will be allowed to provide financial assistance for the acquisition of its own shares so long as it does not materially prejudice the interests of the company or its shareholders or the company’s ability to pay its creditors. The financial assistance prohibitions will no longer apply to private companies.
- Private companies will no longer be required to keep register of members: Private companies will not be required to keep the register and index of members. The electronic register maintained by the Accounting and Corporate Regulatory Authority (“ACRA”) will be used as the main and authoritative register of members. A transfer of shares in a private company will not take effect until the ACRA electronic register of members is updated.
- Residential address of directors, CEOs or company secretaries protected from public disclosure: A director, CEO or company secretary will be allowed to enter an alternate address in the registers of directors, CEOs or secretaries instead of his residential address.
- No change to 20% share buyback limit: The share buyback limit prescribed in the CA will be maintained at 20% and will not be revised for the moment.
The Ministry of Finance (the “MOF”) and ACRA released two consultation papers in May and October 2013 respectively to consult on draft legislative amendments to implement the changes which were recommended:
- by the Steering Committee for Review of the Companies Act (the “SC”) established by the Singapore Government to conduct a fundamental review of the CA. The SC made 217 recommendations, out of which the MOF accepted 192 and modified 17;
- by the MOF and ACRA in their review of the share buyback limit prescribed under the CA, the filing and regulatory process and the ability of the Registrar of Companies to hold non-compliant companies, directors and company secretaries more accountable; and
- to enhance the regulatory framework for foreign companies.
On 4 September 2014, the MOF and ACRA announced their conclusion and response to feedback received following the two previous consultation exercises in May and October 2013.
Please click on the links below to view the materials relating to the above development:
- Companies (Amendment) Bill 2014 which is available from the Parliament website www.parliament.gov.sg
- MOF and ACRA press release and response to feedback received pursuant to the consultation papers on proposed changes to the CA which are available from the MOF website www.mof.gov.sg