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More changes to Companies Act proposed

Wednesday, December 28, 2016 - 05:50

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MOF and Acra said the suggested changes to the Companies Act and the Limited Liability Partnerships Act are geared towards reducing the regulatory burden on business entities, enhancing their transparency, and improving the ease of doing business.

Singapore

FURTHER changes to the Companies Act are afoot, along with proposed amendments to the Limited Liability Partnerships Act, and the Accountants Act.

Notably, the current round of proposed changes covers much-awaited updates to rules governing information on beneficial ownership.

The latest proposals were announced on Tuesday by Singapore's Ministry of Finance (MOF) and the Accounting and Corporate Regulatory Authority (Acra). They have also invited the public to submit their feedback on these proposals.

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In their announcement, MOF and Acra said the suggested changes to the Companies Act and the Limited Liability Partnerships Act are geared towards reducing the regulatory burden on business entities, enhancing their transparency, and improving the ease of doing business.

The proposed amendment to the Accountants Act, they added, is to clarify existing provisions.

To reduce the regulatory burden and improve the ease of doing business, changes have been proposed to rules governing the holding of annual general meetings (AGMs) and the filing of annual returns by companies.

It has been suggested that the timelines for holding AGMs and filing annual returns be aligned: listed companies and non-listed companies should hold their AGMs no later than the last day of the fourth month or sixth month, respectively, after their financial year-ends.

It has also been suggested that all private companies be exempt from holding AGMs, subject to specified safeguards. Currently, the Act allows private companies to dispense with holding AGMs if all members approve doing so.

Another proposed change is the removal of the legal requirement for companies and limited liability partnerships (LLPs) to use common seals (the official seal used by the entity). This will allow business entities to enter into contracts and execute deeds, for example, without the common seal, though they may still choose to retain the use of these, based on their business needs.

And, in line with international standards set by the Financial Action Task Force (FATF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes (GF), it has been proposed that companies and LLPs obtain and maintain beneficial ownership information, and make the information available to law enforcement authorities upon request.

"The objective is to make the ownership and control of business entities more transparent," MOF and Acra said. "This will boost Singapore's ongoing efforts to maintain our high corporate governance standards and strong reputation as a trusted and clean financial hub.

"It is also in line with international standards for combating money laundering, terrorism financing and other related threats to the integrity of the international financial system."

The proposed changes include:

requiring companies (except listed companies and Singapore financial institutions) and LLPs incorporated or registered in Singapore to maintain registers of beneficial owners at prescribed places;

requiring foreign companies registered in Singapore to maintain public registers containing information on their shareholders and registers of beneficial owners;

removing the option for companies and LLPs to destroy their records early if they are wound up;

requiring a liquidator to retain records of wound-up companies and LLPs for five years instead of two;

requiring the officers, partners or managers of struck-off companies and LLPs to retain accounting records and registers of beneficial owners for five years;

voiding the issuance and transfer of bearer shares and share warrants by foreign companies registered in Singapore; and

requiring nominee directors or managers to disclose their nominee status and nominators to their companies or LLPs.

Key Proposals to Companies Act

 

It has also been proposed that the Accountants Act be amended to clarify that a breach of the Ethics Pronouncement 200 (EP200) - which sets out mandatory anti-money laundering and countering the financing of terrorism requirements for professional accountants - is grounds for disciplinary action under the Act.

This latest public consultation exercise comes on the back of a round of public consultations conducted by MOF, Acra and the Ministry of Law in October, on other proposed amendments to the Companies Act.

Then, the feedback sought was on proposals to introduce an inward re-domiciliation regime in Singapore, as well as on proposed amendments to the Companies Act for debt restructuring. Those public consultations closed on Nov 16 and Dec 2, respectively.

"The amendments from the October 2016 round of public consultations, as well as Companies Act amendments in this current round of public consultations, will eventually be incorporated into a single Companies (Amendment) Bill," said MOF and Acra.

The Accountants Act amendment will be included as a related amendment in the Companies (Amendment) Bill. And amendments relating to the Limited Liability Partnerships Act will be in a separate Limited Liability Partnerships (Amendment) Bill.

The public has until Jan 13, 2017, to submit its feedback. It can access the consultation documents on MOF's website (www.mof.gov.sg), Acra's website (www.acra.gov.sg), and the Reach consultation portal (www.reach.gov.sg).

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