Corporate Secretarial Updates
On 31 March 2017, several revisions were made to Singapore’s Companies Act (Cap.50). The purpose of these amendments is to keep Singapore’s corporate regulatory regime robust and to reflect ongoing efforts by the government to support Singapore’s growth as a global hub for business and investors.
Update 1: Changes to requirements for locally incorporated companies and foreign companies registered in Singapore – when it comes to maintaining registers of controllers at prescribed places
Companies are required to take reasonable steps to identify and obtain information on its controllers. This includes sending notices to potential controllers or persons who have information about the controllers for confirmation. The amendments require that beneficial owners or controllers provide and update their particulars to the company.
Section 386AB of the Companies Act (Cap.50) sets out the definition of “controller” as an individual or a legal entity that has a “significant interest” in or “significant control” over the company. The two thresholds are further explained in the Sixteenth Schedule as follows:
- The right to appoint or remove a majority of directors
- The right to exercise or the actual exercise of significant influence or control over the company
- Holding more than 25% of the voting rights (whether directly or indirectly) on matters to be decided at a member’s meeting
- Having an interest in more than 25% of the shares or shares with more than 25% of the total voting power in the company
- Where the entity has no share capital, holding the right to share in more than 25% of the capital or profits if the company
These changes follow the Financial Action Task Force’s (FATF) recommendation that Singapore enhances the accessibility of information on beneficial ownership of legal persons to law enforcement agencies. In addition, the 25% threshold is consistent with the recommendations in FATF guidance documents.
The objective behind the new register of controllers is to make the ownership and control of corporate entities more transparent and reduce opportunities for the misuse of corporate entities for illicit purposes.
Despite the requirements of maintaining a register of controllers under S386AF(11) of the Companies Act (Cap. 50), the register of controllers must not be disclosed or made available for inspection except upon request by the Accounting and Corporate Regulatory Authority (ACRA) or other public agencies.
Update 2: Changes to requirements for locally incorporated companies to maintain register of nominee directors
The purpose of this amendment is to mitigate the risks of money laundering and terrorist financing being done through nominees.
A nominee director as defined by the Companies Act (Cap. 50) Section 386AL(8) as a director accustomed or under an obligation whether formal or informal to act in accordance with the direction, instructions or wishes of any other persons.
Despite a local director being a nominee director, the nominee director should be fully aware of the business and activities of the company, so as to discharge his duties as a director effectively.
Under Section 386AL of the Companies Act (Cap. 50), a nominee director of a Singapore incorporated company is required to:
- Inform the company of that fact
- Provide prescribed particulars of the person for whom the director is a nominee
- Inform the company of changes in the director’s particulars or status as nominee
Similar to the register of controllers, the register of nominee directors is a private register and must not be disclosed or made available for inspection, except upon request by ACRA or other public agencies.
Overall, these amendments make the amenity & control of business entities more transparent and thus reduce opportunities for the misuse of corporate entities for illicit purpose. This in turn boosts Singapore’s efforts to maintain a strong reputation as a trusted and clean financial hub.
To consult our corporate secretarial consultants on how to integrate these changes into your business, send us a message .