Impending changes to the Companies Act and the Limited Liability Partnerships Act are aimed at reducing the regulatory burden on companies and limited liability partnerships (LLPs) in Singapore as well as enhancing transparency with respect to their ownership and control.

The key legislative changes and their proposed implementation dates are as follows:

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[1] Subject to a transitional period as detailed below.

[2] Subject to specific safeguards detailed below.

Further details of the main changes being introduced are set out below.

Registers of Registrable Controllers

From 31 March 2017, all companies, foreign companies and LLPs in Singapore (unless a relevant exemption applies) will need to obtain and keep beneficial ownership information in a non-public register of registrable controllers.  The purpose of the new requirement is to make ownership and control of business entities more transparent.

Controller

A ‘controller’ of a company is defined as an individual or a legal entity which has a ‘significant interest’ or ‘significant control’ over the company.

‘Significant interest’ means having an interest in more than 25% of the shares in a company or shares with more than 25% of total voting power in a company.  For companies without a share capital, this translates into having the right to share in more than 25% of the capital or profits of the company.

A person has ‘significant control’ of a company if they hold the right to appoint or remove directors who hold a majority of the voting rights at directors’ meetings, hold more than 25% of the rights to vote on matters that are to be decided upon by a vote of the members of the company or exercise or have the right to exercise significant influence or control over the company.

Similarly, controllers of LLPs include persons who satisfy any one or more of the following criteria:

• hold, directly or indirectly, a right to share in more than 25% of the capital, or more than 25% of the profits, of the LLP, or a right to share more than 25% of any surplus assets of an LLP on a winding up;
• hold the right, directly or indirectly, to appoint or remove the manager of the LLP, or if the LLP has more than one manager, a majority of the managers of the LLP;
• hold the right, directly or indirectly, to appoint or remove persons who hold a majority of the voting rights at meetings of the management body of the LLP;
• hold, directly or indirectly, more than 25% of the rights to vote on those matters that are to be decided upon by a vote of the partners of the LLP; or
• have the right to exercise, or actually exercise, significant influence or control over an LLP.

Registers

The registers of registrable controllers can be maintained in a physical or electronic format but must be kept at prescribed places, such the entity’s registered office or the office of the entity’s registered filing agent.

Although the registers themselves will not be available for viewing by the general public, certain public bodies will have the right to access the registers upon request.

Companies and LLPs will be under a duty to take reasonable steps to find out and identify registrable controllers but will not be held liable in the event that they send requests for information to controllers or purported controllers and those persons fail to respond or respond but provide inaccurate information.  Registrable controllers will be required to notify the entity they control and to keep that information updated.

A number of specific types of companies and LLPs will be exempt from the requirement to maintain a register.  These include: public companies with shares listed in Singapore, Singapore financial institutions, companies wholly-owned by the Singapore Government, a company or foreign company with shares listed on a securities exchange outside Singapore and being subject to regulatory disclosure requirements and requirements relating to adequate transparency in respect of its beneficial owners, and LLPs whose partners are companies or foreign companies exempted from the requirement to maintain a register of registrable controllers.

Information to be kept in the Register of Registrable Controllers

Details as to the particulars of controllers to be collected and maintained will be set out in codes of practice which the Accounting and Corporate Regulatory Authority will publish.

The following particulars of individual controllers are likely to be required to be maintained in the register:

• full name;
• residential address;
• nationality;
• identification number e.g. ID card or passport number;
• date of birth; and
• date on which the person becomes, and if applicable, the date on which the person ceases to be a controller.

The following particulars of corporate controllers are likely to be required to be maintained in the register:  

• name;
• if applicable, unique entity number or other similar identification number;
• address of registered office;
• legal form of the entity and the law by which it is governed;
• if applicable, the register of companies in which it is entered (including details of the state, country and the entity’s registration number in that register); and
• date on which the entity becomes, and if applicable, the date on which the entity ceases to be a controller.

Transitional Arrangements

Existing companies and LLPs will benefit from a 60 day transition period from the date of commencement of the new law (31 March 2017) to enable them to comply with the requirement to establish a register of controllers.

New companies and LLPs incorporated or registered on or after 31 March 2017 will have a transitional period of 30 days to put in place their registers.

Private Company AGM Requirement Exemption

Under current legislation, a private company need not hold annual general meetings of its members (AGMs) if those members have unanimously approved a resolution to that effect.

The 2017 amendments to the Companies Act provide that private companies are exempted from holding AGMs if they send their financial statements to members within five months after the financial year end.

This general exemption is subject to a number of safeguards, namely:

• a member who nevertheless wishes to request an AGM must notify the company to hold an AGM not later than 14 days before the last day of the sixth month after the company’s financial year end; and
• the company must hold a general meeting to lay the company’s financial statements if any member or the company’s auditor so requests within 14 days after the company’s financial statements are despatched.

No Obligation to use Common Seal

As of 31 March 2017, companies and LLPs will not be required to use their common seals when executing deeds or other documents such as share certificates

Instead, such documents may be executed by the entities’ authorised persons, being:

• for a company - a director in the presence of a witness who attests the signature or two directors or a director and the secretary of a company;
• for an LLP - two partners or a partner in the presence of a witness who attests the signature.

Companies and LLPs may, however, opt to continue using their common seal.

Bearer Shares and Share Warrants

Singapore-incorporated companies are prohibited from issuing bearer shares and share warrants.  There is currently no equivalent provision for foreign companies registered in Singapore.  The new legislation will close this gap by voiding the allotment, issue, sale, transfer, assignment or other disposition in Singapore of any bearer share or share warrant by a foreign company registered in Singapore.

Nominee Directors Disclosure Obligations

Presently nominee directors are not obliged to disclose their nominators to their companies or law enforcement authorities.  Under the amended legislation, nominee directors will be required to disclose their nominee status and the identity of their nominators.

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