Le­gal Brief­ing

The re­cently passed Com­pa­nies Act amend­ments are aimed at mak­ing busi­ness own­er­ship trans­par­ent.

Singapore Business Review - - CONTENTS -

In March, Par­lia­ment passed the Com­pa­nies (Amend­ment) Bill and Lim­ited Li­a­bil­ity Part­ner­ships (Amend­ment) Bill in re­sponse to ris­ing in­ci­dence of money laun­der­ing, ter­ror­ist fi­nanc­ing, and tax eva­sion, and in sup­port of the coun­try’s bid to be­come an in­ter­na­tional cen­tre for debt re­struc­tur­ing. The Com­pa­nies Act amend­ments are aimed at mak­ing own­er­ship and con­trol of busi­ness en­ti­ties more trans­par­ent, in­tro­duc­ing an in­ward re­domi­cil­i­a­tion regime for for­eign cor­po­rate en­ti­ties, re­duc­ing reg­u­la­tory bur­den to make do­ing busi­ness eas­ier, and en­hanc­ing Sin­ga­pore’s debt re­struc­tur­ing and cor­po­rate res­cue frame­work, ac­cord­ing to se­nior min­is­ter of state for law and finance In­dra­nee Ra­jah S.C.

What are the new reg­is­ters, and which com­pa­nies need to com­ply?

Sin­ga­pore now re­quires busi­ness en­ti­ties to keep reg­is­ters of con­trollers, reg­is­ters of mem­bers of for­eign com­pa­nies, and reg­is­ters of nom­i­nee di­rec­tors. “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 and to keep reg­is­ters of sig­nif­i­cant con­trollers and nom­i­nee di­rec­tors,” says Allen & Overy. “The ap­pli­ca­tion of th­ese rules to de­ter­mine whether a par­tic­u­lar per­son ap­pears on a com­pany’s reg­is­ter of reg­is­tra­ble con­trollers can be com­plex.”

Some key is­sues that firms should take note of to com­ply with the new re­quire­ments in­clude con­sid­er­ing ex­emp­tions, send­ing no­tices in the pre­scribed form, and doc­u­ment­ing the send­ing of pre­scribed no­tices and re­ceipt of the sub­se­quent replies, says Chris­tine Chan, co-head of the cor­po­rate and reg­u­la­tory com­pli­ance prac­tice group at Allen & Gled­hill.

Firms must also main­tain and keep a reg­is­ter of reg­is­tra­ble con­trollers, up­date, and cor­rect the in­for­ma­tion con­tained in the reg­is­ters, ob­serve time­lines for keep­ing the reg­is­ter, and dis­close the reg­is­ters to Regis­trar and public agen­cies upon re­quest.

“The trans­parency-re­lated amend­ments are fur­ther ex­am­ples of the Sin­ga­pore gov­ern­ment’s ob­jec­tive of mak­ing own­er­ship and con­trol of busi­ness en­ti­ties more trans­par­ent, and con­tinue to strengthen Sin­ga­pore as a lead­ing fi­nan­cial cen­tre that fol­lows in­ter­na­tional best prac­tices,” says Andrew Martin, head of cor­po­rate and se­cu­ri­ties prac­tice group at Baker Mcken­zie in Sin­ga­pore.

What will be the im­pact of the new in­ward re­domi­cil­i­a­tion regime?

Sin­ga­pore has in­tro­duced a frame­work to en­able for­eign cor­po­rate en­ti­ties to trans­fer their reg­is­tra­tion to Sin­ga­pore, a process called re­domi­cil­i­a­tion, of­ten to ben­e­fit from the coun­try’s more con­ducive reg­u­la­tory en­vi­ron­ment or to move closer to their main op­er­a­tional base or mar­kets.

Martin says the new in­ward re­domi­cil­i­a­tion regime will en­hance Sin­ga­pore’s rep­u­ta­tion for flex­i­bil­ity and at­tract multi­na­tional com­pa­nies look­ing for a hub to spring­board their growth in the Asian mar­kets. Firms that want to re­domi­cile in Sin­ga­pore must meet cer­tain re­quire­ments, as well as com­ply with the Com­pa­nies Act like any other Sin­ga­pore-in­cor­po­rated com­pany. ACRA has in­di­cated that the in­ward re­domi­cil­i­a­tion regime in­tro­duced by the amend­ments will be im­ple­mented within the first half of 2017.

What will the amend­ments on debt re­struc­tur­ing mean for Sin­ga­pore?

In 2013, the In­sol­vency Law Re­view Com­mit­tee made rec­om­men­da­tions to up­date Sin­ga­pore’s in­sol­vency laws so that the coun­try could take ad­van­tage of the ris­ing de­mand for debt re­struc­tur­ing ser­vices in Asia. The new amend­ments look to fur­ther en­hance Sin­ga­pore as an in­ter­na­tional debt re­struc­tur­ing cen­tre and fa­cil­i­tate cor­po­rate res­cues, and in­clude the in­tro­duc­tion of “su­per pri­or­ity” for res­cue fi­nanc­ing and the re­lax­ation of cri­te­ria for mak­ing of a ju­di­cial man­age­ment or­der from the cur­rent “will be un­able to pay its debts” to “is likely to be­come un­able to pay its debts.”

The coun­try has also abol­ished the rule re­quir­ing liq­ui­da­tion of for­eign com­pa­nies to “ring fence” Sin­ga­pore as­sets and pay off debts in­curred in Sin­ga­pore first, ex­cept for cer­tain spe­cific fi­nan­cial en­ti­ties like banks and in­sur­ance com­pa­nies.

The coun­try has also abol­ished the rule re­quir­ing liq­ui­da­tion of for­eign com­pa­nies to “ring fence” Sin­ga­pore as­sets and pay off debts in­curred in Sin­ga­pore first.

Keep­ing reg­is­ters of sig­nif­i­cant con­trollers is now re­quired

Andrew Martin

Chris­tine Chan

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