Singapore – Companies Act Amendments (2nd Phase).

28 January, 2016

 

The second phase of amendments to the Companies Act (﴾Cap. 50)﴿ (﴾“CA”)﴿, pursuant to the Companies (﴾Amendment)﴿ Bill passed in October 2014, is targeted to take effect in the first quarter of 2016. The following are some of the key amendments that will be taking place.

 

CEO Disclosures

 

The current requirements for directors of a company to disclose their shareholdings in the company and related corporations pursuant to section 165, and conflicts of interest pursuant to section 156(﴾4)﴿, will be extended to CEOs of companies:

 

1. in light of the increasingly significant role of CEOs in making company decisions; and
2. to better align the approach under the CA with that under the Securities and Futures Act, which provides for similar disclosures by directors and CEOs of companies.

 

Debarment Regime

 

A new section 155B will be introduced, under which: 

 

1. the Registrar may make a debarment order against a company’s director or secretary where the company has been in default of any filing requirement for at least 3 months after the prescribed filing deadline;
2. a person so debarred would not be able to take on new appointments (﴾but may continue with his existing appointment)﴿ as director or secretary of a company; and
3. the Registar may, on the application of the debarred person or on his own accord, cancel or suspend the debarment order after the said default has been rectified or on other prescribed grounds.

 

The introduction of section 155B aims to increase compliance with filing requirements and prevent irresponsible company officers from holding similar positions in other companies.

 

Exemption from preparation of financial statements for dormant unlisted companies

 

Currently, under section 201, a dormant company, despite being exempted from statutory audit requirements under section 205B, is nevertheless required to prepare financial statements. A new section 201A will be introduced, under which a dormant non- listed company (﴾other than a subsidiary of a listed company)﴿ would be exempt from preparing financial statements provided that:

 

1. the company has been dormant from the time of its formation or from the previous financial year;
2. the company’s total assets at any time within the financial year does not exceed $500,000 (﴾or if the company is a parent company, the consolidated total assets of the group at any time within the financial year does not exceed $500,000)﴿.

 

[Note: directors will still have to file directors’ statement under new s201A(﴾2)﴿]

 

This new section 201A is intended to reduce regulatory costs for those dormant companies that, as a result of being unlisted, have lower public impact.

 

ACRA’s maintenance of electronic register for private companies

 

Currently, sections 190 and 191 require every company to keep a physical register of members.

 

With the amendments, ACRA will be maintaining an electronic register of members for private companies, in relation to which the date on which a company files information concerning its share ownership with ACRA, would be taken as the effective date of a person being entered or removed from its register of members.

 

These amendments will do away with the need for private companies to maintain physical registers of members, and aim to improve public access to the companies’ registers of members 

 

Alternate Address

 

Under section 173, directors, managers and secretaries are required to lodge with ACRA information on their residential address, which then becomes publicly available information.

 

In order to protect the privacy of these individuals, the amendments will allow these individuals to reflect an alternate address in ACRA’s public records instead (﴾even though they will still be required to lodge their residential address with ACRA)﴿. The new section 370A prescribes certain requirements in relation to such alternate address, namely that it is:

 

1. an address at which the individual can be located;
2. not a post office box number;
3. not the residential address of the individual; and
4. located in the same jurisdiction as the individual’s residential address.

 

Merger of Memorandum and Articles of Association into Constitution

 

In order to streamline administrative processes for companies, the Memorandum and Articles of Association (﴾“M&A”)﴿ of a company will be merged into a single document called the constitution, in relation to which:

 

1. a company will be required to lodge its constitution with ACRA on incorporation;
2. for existing companies which have lodged their M&A with ACRA, such M&A will be deemed to be merged into the company’s constitution, so that no action is required on the company’s part to merge such M&A;
3. ACRA will provide in due course, model constitutions which companies may adopt, similar to how companies may currently adopt Table A available in the Fourth Schedule of the CA as their Articles of Association.
 

For further information, please contact:

 

Dominic Tan , Joyce A Tan & Partners