INSITE - SINGAPORE - August 2023
- Jodha Legal
- Aug 9, 2023
- 2 min read
SINGAPORE
AMENDMENTS INTRODUCED TO THE SINGAPORE COMPANIES ACT 1967
Summary: The Companies, Business Trusts, and Other Bodies (Miscellaneous Amendments) Act 2023, which took effect on 1st July 2023, introduces four key amendments to the Companies Act 1967 of Singapore. These amendments aim to create a more favourable business environment, maintain market confidence, and protect public interests.
In detail: The following are the four key amendments introduced.
(1) Improvements to Mandatory Share Acquisition Rules: Section 215 of the CA (Companies Act) allows an offeror to acquire all shares of a company, even those of dissenting shareholders in a transfer scheme. The offeror needs 90% acceptance, but some shares are excluded, like those held by related parties. However, individuals could include their shares by using special-purpose vehicles for takeovers.
To address this, the CA amendments expand the exclusions. Now, shares held by close relatives, corporate entities controlled by the offeror, the ultimate controller, and individuals or corporate entities controlled by the ultimate controller will also be excluded.
These amendments will apply to offers made on or after 1 July 2023. The goal is to protect minority shareholders while fixing the inconsistency in the CA concerning offers made by individuals and body corporates.
(2) Changes regarding the disqualification of persons as directors: The Amendment Act modifies Section 155A of the CA regarding the disqualification of directors as follows:
(a) Allows disqualified directors to seek permission from the Registrar of Companies or the General Division of the High Court to act as a director. This speeds up the application process for disqualified directors.
(b) Reduces the disqualification period for first-time disqualified directors from five years to three years. Repeat disqualified directors will still face a five-year disqualification period.
(c) Clarifies that directors will be disqualified if they have at least three companies struck off by the Registrar.
(3) Change in penalties imposed on directors of the company: The Amendment Act raises penalties for non-compliance with Accounting Standards [1] as follows:
(a) For non-fraudulent offenses, the maximum penalty increases to $250,000.
(b) For fraudulent offenses, the maximum penalty increases to $250,000 or three years imprisonment or both.
(4) Facilitating Virtual or Hybrid Meetings: To support digitalization, the Amendment Act allows companies to conduct meetings in physical, hybrid, or fully virtual formats unless they choose to prohibit it in their constitutional documents.
Technical disruptions won't invalidate meetings, but shareholders can seek recourse if substantial injustice occurs due to such issues, similar to procedural irregularities.
With the expiration of temporary COVID-19 legislation for virtual meetings by 1 July 2023, the Amendment Act provides clarity for companies in the post-pandemic landscape. It specifies permissible formats and procedures for meetings, allowing effective planning while meeting legal requirements.
Impact Assessment: The Amendments to the Companies Act regarding Accounting Standards are expected to enhance financial reporting practices, increase transparency, and streamline compliance processes for companies in Singapore. These changes will likely boost investor confidence and contribute to a more robust and trustworthy business environment. By adopting standardized Accounting Standards, companies will provide more reliable financial information, leading to better regulatory oversight and improved decision-making for investors and stakeholders.
Key Links:
[1] Accounting Standards are rules established by the Accounting Standards Committee under the Accounting Standards Act 2007.
Comments