The latest amendment to the Singapore Companies Act, the Companies Amendment Act of 2017, was introduced on March 10, 2017 and became effective on March 31, 2017. The latest legislative amendment seeks to attain the following purposes:
- Improve ease of doing of business in Singapore
- Lessen regulatory burdens
Enhance transparency of ownership and control over corporate entities in Singapore to prevent misuse of business entities for illicit gains
- Reduce administrative and compliance costs for company formation
- Improve debt restructuring for financially distressed companies in Singapore
- Enable Singapore to monitor compliance with the international standards on tax transparency
- Maintain Singapore’s reputation as a highly inclusive global business hub
The implementation of the amended provisions is scheduled in different phases: as to the first and second phase, these are intended for implementation during the first two quarters of 2017 but with respect to the final phase, it is set for early implementation in 2018.
The Companies Amendment Act of 2017 Contain the Following Modifications and Amended Provisions:
Use of Common Seal
Before: It was mandated that the execution of contracts and Deeds (such as share certificates) must be under the company’s common seal.
Now: The CAA abolished the mandatory requirement to seal deeds and other corporate documents. Usage of common seal is now merely optional. In fact, the execution of a deed may be permitted so long as it is accompanied by the signatures of these authorised signatories:
- Signed by both the corporate secretary and company director
- Signed by at least two company directors
- Signed by director of a company and later attested to by a witness
The amendment is intended to give companies flexibility and ease their burden of having to procure a common seal prior to the execution of corporate documents.
Registration of Controllers
Before: The Companies Act had no previous clause concerning the Register of controllers.
Now: Companies are required to maintain a register of controllers, which means that they should strive to find out the identity of controller or those persons who have:
- significant control over the company
This includes the power to appoint or remove members of the Board holding majority of the voting rights, holds more than 25% of the voting rights, or exercises control or influence over the company.
- significant interest over the company.
This pertains to a person with shareholdings representing more than 25% of the total voting power or a person who has more than 25% interest in company shares.
This new requirement is designed to prevent use of corporate vehicles for illegal activities.
- significant control over the company
Extended Retention Period of Liquidated Companies’ Records
Before: The retention period for records of liquidated companies only lasted for 2 years.
Now: To augment measures against money laundering and terrorism financing, records of voluntarily wound-up/liquidated companies, including their books and accounting records, shall be retained for a period of five years.
Inward Redomiciliation Regime
Before: The Companies Act did not have any clause for redomiciliation.
Now: The inward redomiciliation scheme increases the entry option of foreign companies intending to set up local presence in Singapore, in addition to establishing subsidiaries, branch offices or representative offices. This regime enables foreign companies to transfer their registration from their home country/original place of incorporation to Singapore and be regarded as a tax resident.
Debt Restructuring Framework
Before: Normally, a debt restructuring scheme between creditors and the debtor company does not have an automatic moratorium in favor of the former.
Now: The debt restructuring framework gives greater aid to distressed companies. Among the significant changes introduced are the court-sanctioned moratorium which restrains debt enforcement during on-going court proceedings, the super priority financing, which is a court sanctioned order to prioritise and grant preference to loans that are deemed extremely critical to the continued life of the distressed corporate entity and the cram down effect, which allows the Court to implement a viable scheme despite objection for some creditors, if it appears to the former that the scheme will resuscitate the life of the distressed company.
Annual General Meeting
Before: As a rule, all companies are required to conduct the annual general meeting once a year, and within 15 months from the last held meeting.
Now: The rule is now distinct for public and private companies. The annual general meeting of publicly listed companies is held within 4 months from the end of each financial year whereas for private companies, the meeting must be made within 6 months from financial year end. However, a private company may dispense with the annual general meeting under the following conditions:
- It is a dormant company exempt from the requirement of sending financial statements to members
- Passing of a resolution at a general meeting that intends to dispense the holding of the annual general meeting
- The company, within 5 months from financial year end, sent financial statements to all its members
Filing of Annual Returns
Before: Companies are mandated to file annual returns within 30 days from its conduct of an annual general meeting.
Now: The schedule for lodging annual returns have changed, both for public and private companies. Filing of annual returns by public companies with the Registrar must be done after its annual general meeting and within 5 months from financial year end. For private companies, the filing must be done within 7 months after financial year end.
If you want to understand in detail the Companies Amendment Act of 2017 and be guided on various processes relating to setting up a business or forming a company in Singapore, please feel free to contact Corporate Services Singapore. We have a team of licensed accountants and incorporation specialists who are willing to help you comply with Singapore’s strict statutory compliance requirements.