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