The Accounting and Corporate Regulatory Authority (“ACRA”) has announced that the provisions of the Companies (Amendment) Act will come into force in two phases. One set of provisions will come into force on 1 July 2015, while another set will come into force in the first quarter of 2016.
We set out below some of the key amendments that ACRA has stated will come into force on 1 July 2015.
Changes affecting companies generally:
- New exceptions to the giving of financial assistance will be introduced. This includes an exception allowing a company to give financial assistance for the purchase of its shares where the giving of such assistance will not prejudice the interests of the company or its shareholders, or prejudice its ability to pay its creditors.
- A company may issue shares for no consideration.
- A company may use its share capital to pay for brokerage and commissions incurred in an issue or buyback of shares.
Changes affecting specifically listed companies:
- Listed companies will be allowed to make a selected off-market acquisition of shares in itself in accordance with an agreement authorised by the company.
- Section 216A will be extended such that the statutory derivative action is applicable to Singapore-incorporated companies that are listed for quotation or quoted on a securities market, whether in Singapore or overseas.
Changes affecting specifically private companies:
- The prohibition against financial assistance will be removed for private companies.
Changes affecting directors:
- Shareholders’ approval will not be required for payment of compensation up to a year’s emoluments to an executive director for termination of his employment.
- The conditions for nominee directors to disclose information to nominating shareholders will be relaxed.
Changes related to audit and auditors:
- Auditors of a non-public interest company may resign upon giving notice to the company.
- The requirement to prepare consolidated financial statements will be determined by financial reporting standards and not the Companies Act.
- The requirement relating to alignment of financial year between a parent and its subsidiary will be repealed.
- A small company audit exemption will be introduced. To qualify as a small company, the company must be a private company that meets the specified criteria as to the number of employees, revenue, and/or assets.
Many of the provisions that are slated to come into force in the first quarter of 2016 are those linked to the registration and filing processes in ACRA’s online business filing and information portal, BizFile. ACRA has stated that it will announce the effective date of these provisions two months in advance.
A complete list of the key amendments coming into force on 1 July 2015 and those coming into force in the first quarter of 2016 is set out in ACRA’s media release, which is available on ACRA’s website here.