SIGNIFICANT changes to the law governing companies will come into effect in just a matter of weeks.
Singapore will be implementing changes to its Companies Act – which will include making the beneficial ownership of business entities more transparent – come March 31.
Senior Minister of State for Finance and Law Indranee Rajah announced this in her speech on the second reading of the Companies (Amendment) Bill to Parliament last Friday. The Bill was passed on the same day.
Among the key changes are a set of amendments “to make the ownership and control of business entities more transparent and thus reduce opportunities for the misuse of corporate entities for illicit purposes,” she said.
SEE ALSO: More changes to Companies Act proposed
Locally incorporated companies and foreign companies registered in Singapore will be required to maintain registers of controllers at prescribed places. A controller, or beneficial owner, is the individual or legal entity that has more than 25 per cent interest in or control over a company.
“Companies will be required to take reasonable steps to identify and obtain information on their controllers, including sending notices to potential controllers or persons who have information about the controllers,” said Ms Indranee.
The amendments will also compel beneficial owners or controllers to provide and update their particulars to the company.
Foreign companies registered in Singapore will also have to maintain public registers of their members.
And lastly, locally incorporated companies will be required to maintain a register of their nominee directors. “This mitigates the risks of money laundering and terrorist financing being done through nominees,” said Ms Indranee.
The changes follow from the Financial Action Task Force’s recommendation that Singapore enhance the accessibility of information on beneficial ownership of legal persons to law enforcement agencies.
Singapore is also hoping that, as a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, these changes will enable it to better implement international standards on tax transparency.
Another key change to the Companies Act pertains to record-keeping. The liquidator of a wound-up company will have to retain the company’s records for at least five years, instead of the current two. A company wound up by its members or creditors will have to retain its records for at least five years.
The former officers of a company that has been struck off and dissolved will have to similarly retain all books and papers of the company for at least five years, including its accounting records and registers.
“These amendments will boost Singapore’s ongoing efforts to maintain its strong reputation as a trusted and clean financial hub,” said Ms Indranee.
While the amendments are intended to come into effect at month’s end, existing companies will have a transitional period of 60 days from March 31 to maintain the registers of controllers. This is to help them prepare to comply with these new requirements.
“Acra (Accounting and Corporate Regulatory Authority) will also issue further guidance to companies. This includes samples of the notice that companies can use to send to their shareholders, directors and any other relevant persons to assist them in obtaining the information required for their register of controllers.”
Other amendments that will come into effect later seek to reduce the regulatory burden on companies and improve the ease of doing business here.
The timelines for holding annual general meetings (AGMs) and filing annual returns will be aligned with the companies’ financial year-end.
The amendments will require listed companies to hold AGMs within four months and file annual returns within five months after their financial year-end. Non-listed companies must hold AGMs within six months and file annual returns within seven months after their financial year-end.
All private companies will be exempted from AGMs, subject to safeguards. This is in addition to the current regime where private companies can dispense with the holding of AGMs if all shareholders approve.
The Bill will also introduce an inward re-domiciliation regime in Singapore. Foreign corporate entities will be allowed to transfer their registration to Singapore, besides the current options of setting up a subsidiary or branch in Singapore.
Ms Indranee also detailed changes in the Companies Act that aim to enhance Singapore’s corporate rescue and restructuring processes. “The proposed changes will further enhance our legal framework and status as a centre for international debt restructuring,” she said.
These amendments will strengthen the scheme of arrangement and judicial management regimes, which are the procedures used for corporate rescue and restructuring in Singapore.
Additionally, amendments will also be made to enhance Singapore’s capability in dealing with cross-border insolvencies.
(THE BUSINESS TIMES)