In brief: the formalities of corporate reorganisations in Singapore

Formalities

Can a corporate reorganisation be backdated or deemed to have already taken place, for example, from the start of the financial year?

We do not recommend backdating of documents (ie, dating a document with an earlier date than that on which it is actually executed). Depending on the type of corporate reorganisation, it may be possible to state in a specific agreement for a step to have an earlier effective date notwithstanding that the agreement is dated as of the current date. However, this may not apply to all types of corporate reorganisations and legal, tax and financial advisers should be consulted prior to implementing the same.

In a share transfer scenario, an earlier effective date is not possible as a transfer of shares in a Singapore company does not take effect until the electronic register of members of such company is updated with the ACRA upon lodgement (see section 126 of the Companies Act). In practical terms, this would mean that lawyers advising on the share transfer would need to stamp the share transfer form and lodge the share transfer with the ACRA on the effective date that the company has in mind.

What documentation is required in a corporate reorganisation?

Please see the response to question 7. It is important to plan a corporate reorganisation prior to its commencement. A reorganisation plan should be drafted and reviewed by all stakeholders involved to identify whether the steps proposed are feasible.

Generally, corporate authorisations such as board resolutions and shareholder resolutions (if required) would need to be executed. Depending on the type of corporate reorganisation to be undertaken, common documents prepared include sale and purchase agreements, asset purchase agreements, contribution or assignment agreements, novation agreements, transfer instruments (such as share transfer forms), share application forms, third-party consents and waivers.

Specifically in relation to employees, employee consents and new employment agreements may also need to be drafted. Applications for new licences or permits, if applicable, would also need to be prepared. If the consideration is not in payable in cash, intercompany loan agreements or promissory notes are used to satisfy consideration.

Internally within the group, agreements such as internal service agreements and intellectual property licence agreements may also need to be drafted.

Should representations, warranties or indemnities be given by the parties in corporate reorganisation?

Representations, warranties or indemnities are typically included in agreements entered into with third parties. For intra-group transaction, we typically do not see extensive representations, warranties or indemnities, although the basic capacity and authority warranties are usually included.

Does it make any difference whether assets or a business as a going concern are transferred?

Yes, this would make a difference in relation to the transfer of employees and whether GST is payable for such transfer of business.

Explain any differences between public, private, government or non-profit entities to consider when undertaking a corporate reorganisation.

Singapore entities may be subject to different legislation depending on their corporate structure and regulatory status.

While the Companies Act generally governs public and private companies, public listed companies are also subject to the listing rules of the stock exchange on which they are listed. Further, public listed companies and unlisted public companies with more than 50 shareholders and net tangible assets of S$5 million or more are required to comply with the provisions of the Code. A particular difference between public and private companies is the ease with which shareholders’ approval for corporate reorganisations can be obtained and this should be factored in during the planning stages.

Considerations relating to non-profit entities would depend on the entity’s structure and the corresponding legislation. The manner in which non-profit entities are typically set up in Singapore is set out as follows:

• as a public company limited by guarantee, governed by the Companies Act;
• a society, governed by the Societies Act (Cap 311) of Singapore; or
• a trust.

In addition, non-profit entities that are registered charities will also need to comply with the Charities Act (Cap 37) of Singapore.

Do any filings or other post-reorganisation steps need to be taken after the corporate reorganisation?

Depending on the type of reorganisation transaction undertaken, we would generally anticipate the following steps:

• stamping of share transfer forms;
• filing of corporate actions with the ACRA, such as filing of share allotments, share transfers and amalgamations;
• updating of corporate registers (to the extent not updated by the ACRA);
• cancellation of old share certificates and issuance of new share certificates; and
• post-completion notifications to third parties or government authorities as required.

Law stated date

Please state the date on which the law stated here is accurate.