The Companies (Amendment) Act 2017 was passed on 10 March 2017 and will be implemented in phases. The first phase which was effected on 31 March 2017, introduces amendments such as the requirement to maintain varies registers at the prescribed places and the remove the requirement of common seals.
Maintenance of new registers
The Register of Registrable Controllers is required to be maintained by non-exempted Singapore incorporated companies, foreign companies registered in Singapore (i.e. branches) and non-exempted Singapore limited liability partnerships (LLPs) and to make the information available to public agencies upon request.
The objective behind the new register of controllers seeks to make the beneficial ownership information and control of business entities more transparent and reduce the opportunities for the misuse of corporate entities for illicit purposes. The Register Registrable Controllers will contain the particulars of the controller of the company
For a Singapore company, a controller is defined in section 386AB of the Act as an individual or a legal entity that has a ‘significant interest’ in or ‘significant control’ over the company.
For companies with share capital, a controller who has ‘significant interest’ in a company will include an individual who has:
- interest in more than 25% of the shares or
- shares with more than 25% of total voting power in the company
A controller who has ‘significant control’ over a company is a person who:
- holds the right to appoint or remove directors who hold a majority of the voting rights at directors’ meetings
- holds 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
- exercises or has the right to exercise significant influence or control over the company
Companies are 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 controller.
The Companies (Filing of Documents) (Amendment) Regulations 2017 requires the annual return by companies lodged with the Registrar to contain information regarding the register of controllers. Existing companies and LLPs are given a transitional period of 60 days from the date of commencement of the new law to set up the register of controllers. This means that from 1 June 2017 onward, they must have and continue to maintain the required registers. Companies incorporated on or after 31 Mar 2017 and LLPs registered on or after 31 Mar 2017 will have a transitional period of 30 days to set up the register instead.
Register of nominee directors
Singapore incorporated companies will also be required to maintain a Register of Nominee Directors from 31 March 2017 at prescribed places (e.g. its registered office or the registered office of its registered filing agent).
The Register of Nominee Directors will contain the particulars of the nominee directors and his/ her nominators.
A director is a nominee if the director is accustomed or under an obligation whether formal or informal to act in accordance with the directions, instructions or wishes of any other person. For example, a director is a nominee of a person with a shareholding in a company if he or she is appointed by that person to the board of directors of the company and he or she acts in accordance with the directions, instructions or wishes of that person.
Other key important requirements would include the following:
- the registers of registrable controllers is to be maintained at prescribed places e.g. the non-exempted company’s / LLP’s registered office or the registered office of its registered filing agent
- the register can be maintained in paper or electronic format
- companies and LLPs will have to declare with ACRA the location of the company’s register of registrable controllers when filing the company’s annual returns or annual declaration and
- companies and LLPs can discharge their duties by sending notices to the relevant parties and recording their particulars, as well as sending further notices to any other parties that have been revealed as potential controllers. Notices can be sent and replies may be received, in electronic or hard copy format. The company or LLP is not liable should recipients of these notices fail to respond or provide inaccurate responses.
Failure to comply with this requirement would
result in the company (or foreign company as the case may be) and every
officer of the company/foreign company who is in default, guilty of an
offence and upon conviction, liable to a fine not exceeding S$5,000.
Nevertheless, it is important to note that companies, foreign companies and LLPs must not disclose or make available for inspection a register or any information in said register to any member of the public, save for the relevant personnel of public agencies as provided for in the Companies Act.
Dispensation of having the company seal or common seal
At present, companies are required to use the common seal when documents need to be executed as a deed, and for certain documents such as share certificates in accordance with its constitution. Typically, the companies are required for the Common Seal to be affixed in the presence of a director, and a second director or the company secretary. Companies often encounter practical difficulties in executing deeds, for instance, where the directors are out of Singapore (as the Common Seal must be retained in the Registered Office in Singapore).
With effect from 31 March 2017, the amendment removes the requirement for Singapore companies to use the Common Seal as a means of executing a document as a deed, or other documents such as share certificates. Instead, companies will have the option to execute deeds by having them signed by authorised persons
‘Authorised persons’ with respect to a company are:
- a director and the company secretary of a company
- two directors of a company or
- a director of a company, in the presence of a witness who attests the signature
For an LLP, such authorised persons would be:
- two partners of the LLP or
- a partner of the LLP in the presence of a witness who attests the signature
If a document is to be signed by a person on behalf of more
than one company, the person should be signing the document separately
in each capacity, in order for the document to have been signed by
“authorised persons” as described above.
Nevertheless, companies can continue to retain the use of a common seal based on their business needs. This additional option provides much added flexibility in the execution of documents as deeds, with companies no longer required to overcome any practical jurisdictional restrictions but still can choose to use of common seals as a means to execute deeds. A company may,
- have a common seal but need not have one;
- 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
Source: ACRA, 24 January 2019