INSITE - Singapore - March 2024

ACRA CONSULTS ON DRAFT BILL TO ENHANCE DATA PRIVACY, FACILITATE DIGITAL COMMUNICATIONS WITH ACRA, STREAMLINE FOREIGN COMPANIES' FINANCIAL REPORTING REQUIREMENTS

Summary: On March 5, 2024, the Ministry of Finance and the Accounting and Corporate Regulatory Authority (ACRA) released a Consultation Paper on proposed legislative changes regarding Digital Communications and Regulatory Enhancements. This aims to gather feedback on the draft ACRA (Registry and Regulatory Enhancements) Bill (the Bill). The Bill intends to improve data privacy, digitalisation, and simplify corporate regulations. The consultation period will end on March 18, 2024. This update outlines the main amendments introduced by the Bill.

In Detail: 

Key Proposed Changes

The Bill will update the Companies Act 1967 (CA 1967) and the Accounting and Corporate Regulatory Authority Act 2004 (ACRA Act) to introduce important modifications.

Digitalization of Communications

The Bill will empower the ACRA to send correspondences and notices (excluding summonses) to a secure digital mailbox in BizFile+. Access to this digital mailbox will be restricted to authorized individuals using relevant Singpass or Corppass accounts. ACRA may also inform recipients about how and when they can access any document or information sent by ACRA, either by sending notifications to their email addresses or through other electronic means.

Data Collection

To streamline Government-to-Business digital communication, position holders, shareholders, and business entities must provide and keep their email addresses and mobile numbers up to date. Additionally, when conducting transactions through BizFile+, ACRA may request any necessary information, including email addresses and mobile numbers, as required by the ACRA Act, the CA 1967, or other legislation ACRA administers. The Bill will authorize ACRA to access data from specific government agencies for transaction filings and to verify information on ACRA's register using data from both government and non-government entities. This aims to simplify processes for individuals and businesses by minimizing the need for repetitive data submissions to various government agencies.

Improving Data Privacy

A tiered disclosure system will be implemented to regulate how data filed with or collected by ACRA is shared. This framework will establish rules regarding (i) the types of data ACRA can share, (ii) who ACRA can share the data with, and (iii) the requirements recipients must meet. While developing this system, ACRA will consider the necessity of tailoring approaches for different purposes, such as meeting Anti-Money Laundering (AML) requirements.

Simplifying Financial Reporting Requirements for Foreign Companies

The Bill will simplify financial reporting for foreign companies in the following ways:

• Foreign companies listed in Singapore or overseas must submit financial statements complying with the listing rules of their respective stock exchange to ACRA.

• Unlisted foreign companies preparing financial statements similar to those set by the Accounting Standards Committee can lodge them with ACRA.

• Unlisted foreign companies using different accounting standards but preparing statements in accordance with their jurisdiction's standards can also lodge them with ACRA.

• Foreign companies not preparing financial statements can submit unaudited summary financial statements provided by ACRA.

Furthermore, ACRA plans to exempt non-listed companies from disclosing directors' interests in securities by issuing a class exemption order under section 202(2) of the CA. This exemption will apply to all public non-listed companies and private companies. They won't need to disclose directors' interests in shares or debentures of the company or other corporations if the company states in its annual return filing that all shareholders have agreed to the non-disclosures.

Conclusion: In summary, the proposed legislative changes outlined in the Consultation Paper released by the ACRA aim to enhance data privacy, facilitate digital communications with ACRA, and streamline financial reporting requirements for foreign companies. These changes, embodied in the draft ACRA (Registry and Regulatory Enhancements) Bill, seek to modernise corporate regulations by promoting digitalization, improving data collection processes, and simplifying financial reporting obligations. The consultation period, ending on March 18, 2024, invites stakeholders to provide feedback on these key amendments, which are poised to have significant implications for regulatory compliance and business operations in Singapore.

Key Links: https://www.acra.gov.sg/legislation/legislative-reform/listing-of-consultation-papers/public-consultation-on-proposed-legislative-amendments-relating-to-digital-communications-and-regulatory-enhancements/