“ It is time for major housekeeping, ”
- Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance
DPM Tharman also pronounced that it is the ripe time “to weave anew, and rewrite the Companies Act comprehensively to produce law that is clear, comprehensible and coherent.”
This fundamental review of the Singapore Companies Act has been in the works since 2007, and the results are received with much enthusiasm. Many have lauded the key proposed changes which will benefit a range of corporate players, including investors, small private companies and public companies.
Key changes proposed by the steering committee and accepted by the Ministry of Finance include:
- Allowing different share classes for all public companies
Expected to be one of the proposed changes that will attract high level (if not heated) debate, this will provide public companies (including non-profit organisations) with flexibility in ownership and control. However, the verdict is not yet out on whether public listed companies will similarly be able to issue shares with different voting rights. A re-visit of the challenges faced by the aborted Manchester United listing?
- Allowing certain custodian of shares to nominate multiple proxies to attend shareholders’ meetings
Currently, the number of proxies for nominee accounts was restricted at two. Allowing multiple proxies is expected to boost shareholder activism and enable indirect investors such as fund managers or others holding through nominees to participate and vote at shareholders’ meetings.
- Allowing retail investors who use CPF monies to invest in companies to attend company meetings directly
Retail investors who use their CPF monies for investment will, at last, be able to attend annual general meetings and shareholders’ meetings in their own right as opposed to being treated as observers with no power to speak or vote.
- Lowering the threshold for demanding a poll vote from 10% to 5%
Incorporating an additional aspect of shareholder activism, this change enables minority investors to have a greater say at shareholders’ meetings.
- Additional audit exemption for small private companies
There will be significant cost reductions for small private companies which qualify for the broadened exemption criteria for audit requirements. Many more companies stand to benefit from this change.
- Requirement for auditors of public companies to seek approval from ACRA for their resignation
This is a significant change. The resigning auditors of a public company will also have to disclose their reasons for resigning. This is targeted to strengthen corporate governance and impose a higher standard of transparency and accountability.
These key changes are not yet cast in stone, but will subsequently be elaborated upon and clarified in the amendment bill. So far, commentators have generally given positive feedback, with some calls for greater safeguards for minority investors in light of the new provisions. The Ministry of Finance will seek public feedback on the new provisions in the earlier part of 2013, and is targeting to table the amendment bill in Parliament thereafter in the same year.