KEY LEGISLATIVE AMENDMENTS THAT ARE EFFECTIVE FROM 31 MARCH 2017
Improving the transparency of companies and LLPs
The Companies (Amendment) Act 2017 and the Limited Liability Partnership (Amendment) Act 2017 introduces the following new requirements:
(1) To maintain register of controllers
Companies incorporated in Singapore are required to maintain registers of registrable controllers at prescribed places.
Foreign companies registered in Singapore are required to maintain registers of registrable controllers and public register of shareholders.
Existing companies will be given a transitional period of 60 days from the date of commencement of the new law (31 Mar 2017) to set up the register of controllers, after which they must have and continue to maintain the required registers. Companies registered on or after 31 Mar 2017 will have a transitional period of 30 days to set up the register.
(2) Requirement for a liquidator to retain records of wound up company and LLPs for five years instead of two
Where the company is wound up, the liquidator is required to retain the company’s or LLP’s records for at least five years.
(3) Remove the options for companies and LLPs to destroy records early if they are wound up by their members, partners or creditors
Records of companies and LLPs can be destroyed before the end of the required retention period only if directed by the court for winding up by the court.
(4) Requirement for officer/ partners/ managers of struck off companies and LLPs to retain all books and papers of the companies or LLPs for five years
Where the company has been struck off, the former partner or manager of the company must ensure that all books and papers of the company are retained for a period of at least five years.
A penalty of up to S$2,000 will be imposed for non-compliance with the record-keeping requirement.
(5) Requirement to void the issuance and transfer of bearer shares and share warrants by foreign companies registered in Singapore
(6) Requirement for nominee directors to disclose their nominee status and nominators to their companies
Remove the requirement for a common seal
A company or an LLP may have a common seal but need not have one.
A company may execute a document described or expressed as a deed without affixing a common seal onto the document by signature:
- on behalf of the company by a director of the company and a secretary of the company
- on behalf of the company by at least two directors of the company or
- on behalf of the company by a director of the company in the presence of a witness who attests the signature
An LLP may execute documents by having them signed by:
- two partners of an LLP or
- a partner of an LLP in the presence of a witness who attests the signature
The removal of requirement of common seal improves increases the ease of doing business in Singapore. The safeguard will be that only signature by the authorised persons will have the same effect as affixing a seal. Notwithstanding the change, companies can still choose to retain the use of common seals based on business needs.
KEY LEGISLATIVE AMENDMENT THAT ARE EFFECTIVE FROM 11 OCTOBER 2017
The Companies (Amendment) Act 2017 has introduced an inward re-domiciliation regime in Singapore, to allow foreign corporate entities to transfer their registration to Singapore.
Introduction of an inward re-domiciliation regime in Singapore
The Companies (Amendment) Act 2017 inserts a new Part XA applying to foreign corporate entities which intends to be registered as a company limited by shares under the Companies Act.
Requirements
The minimum requirements for transfer of registration are:
(1) Size criteria – The foreign corporate entity must meet any 2 of the below:
(a) the value of the foreign corporate entity’s total assets exceeds S$10 million
(b) the annual revenue of the foreign corporate entity exceeds S$10 million
(c) the foreign corporate entity has more than 50 employees
(2) Solvency criteria:
(a) there is no ground on which the foreign corporate entity could be found to be unable to pay its debts
(b) the foreign corporate entity is able to pay its debts as they fall due during the period of 12 months after the date of the application for transfer of registration
(c) the foreign corporate entity is able to pay its debts in full within the period of 12 months after the date of winding up (if it intends to wind up within 12 months after applying for transfer of registration)
(d) the value of the foreign corporate entity’s assets is not less than the value of its liabilities (including contingent liabilities
(3) The foreign corporate entity is authorised to transfer its incorporation under the law of its place of incorporation
(4) The foreign corporate entity has complied with the requirements of the law of its place of incorporation in relation to the transfer of its incorporation
(5) The application for transfer of registration is:
(a) not intended to defraud existing creditors of the foreign corporate entity; and
(b) made in good faith and
(6) There are other minimum requirements such as the foreign corporate entity is not under judicial management, not in liquidation or being wound up etc.
The introduction of an inward re-domiciliation regime in Singapore reduces the regulatory burden and improves the ease of doing business in Singapore. Besides the current options of setting up a subsidiary or branch in Singapore, foreign corporate entities are allowed to transfer their ownership to Singapore. Transfer of registration will thus be useful to foreign corporate entities that wish to retain their corporate history and identity. Foreign corporate entities may choose to re-domicile for various reasons, such as for a more conducive regulatory framework or to be closer to their shareholders or operational base.
A foreign corporate entity that is re-domiciled to Singapore will be required to comply with the requirements of the Companies Act like any other Singapore company. Re-domiciliation will not affect the obligations, liabilities, properties or rights of the foreign corporate entities.
KEY LEGISLATIVE AMENDMENTS THAT ARE EXPECTED TO IMPLEMENT IN Q3 2018
The timelines for holding annual general meetings (AGMs) and the filing annual returns will be aligned with the companies’ financial year end.
The rationale behind the amendments on AGMs and annual returns is to reduce the regulatory burden for companies by simplifying the timelines for the holding of AGMs and for the filing of ARs as well as introduce a new AGM exemption for qualifying private companies. The amendments on AGM and AR will come into effect in first half of 2018. The amendments will apply to financial years ending on and after the date the law comes into effect.
Listed companies are required to hold AGMs and file annual returns within four months and five months after their financial year end respectively. Non-listed companies must hold AGMs and file annual returns within six months and seven months after their financial year end respectively.
Private companies are exempted from holding AGMs, subject to safeguards. Under the Companies (Amendment) Act 2017, private companies will be exempted from holding AGMs if they send their financial statements to members within five months after the financial year end. Private companies will still need to hold an AGM if any shareholder requests for it not later than 14 days before the end of the sixth month after financial year end or a general meeting to lay financial statements if any shareholder or auditor requests for it not later than 14 days after the financial statements are sent out.
Alignment of timelines for holding annual general meetings (AGMs) and filing annual returns (ARs) to the Financial Year End
(1) Holding of AGMs
Listed companies are required to hold AGM within 4 months after financial year-end
Any other company are required to hold AGM within 6 months after financial year-end.
(2) Filing of Annual Returns
For companies having a share capital and keeping a branch register outside Singapore – file annual returns within 6 months (if listed) or 8 months (if not listed) after financial year end.
For other companies – file annual returns within five months (if listed) or seven months (if not listed) after financial year end.
Annual return can be filed only:
- after an AGM has been held
- after financial statements is sent if company need not hold AGM or
- after financial year-end for private dormant relevant company that is exempted from preparing financial statements
Source: ACRA, 12 March 2018