Company administration

A. Requirement to retain and use a common seal would be removed

-> Companies are no longer required to use the common seal in the execution of documents as a deed or other documents such as share certificates.

Comments

Companies can choose not to purchase the common seal or keep custody over common seals – thus reducing the costs of acquiring and maintaining a seal. Companies may however choose to retain a seal if dealing with foreign jurisdictions that require execution of a document under a seal.

Documents that used to be executed by seal would be effective if signed by authorised persons (without any requirement to affix the common seal on the document). Such authorised persons would be the same as the current position - either a director and the company secretary; two directors of a company; or a director of a company in the presence of a witness who attests the signature.

Company administration

B. Requirement to maintain register of nominee directors and nominators and containing the particulars of the nominators

-> Companies would require nominee directors to disclose their nominee status and nominators to their companies. This would be a private register to be produced to regulatory authorities when requested.

Comments

This requirement would help to determine the true status of a local director if companies are being set up in Singapore by foreign entities or individuals - it should however be noted that a nominee director should be fully aware of the business and activities of the company so as to discharge one’s duties as a director effectively.

Company administration

C. Requirement to maintain a register of controllers

• All companies incorporated in Singapore and foreign companies would be required to maintain registers of registrable controllers.
• A Controller is defined as an individual or a legal entity that has a “significant interest” in or “significant control” over the company.

A controller who has significant interest in a company may include any of the following:

• For companies with share capital:
  • An individual who has interest in more than 25% of the shares or shares with more than 25% of total voting power in the company
• For companies without share capital:
  • An individual who has the right to shares in more than 25% of the capital or profits of the company

“Significant control”

A controller who has significant control on a company is a person who:

• holds the right to appoint or remove directors who hold a majority of the voting rights at directors’ meetings;
• holds more than 25% of the rights to vote on matters that are to be decided upon by a vote of the members of the company; or
• exercises or has the right to exercise significant influence or control over the company.

Existing companies would have a transitional period of 60 days from the date of commencement of the new law (31 Mar 2017) to set up the register of controllers, after which they must have and continue to maintain the required registers.

Companies newly incorporated on or after 31 Mar 2017 will have a transitional period of 30 days to set up the register.

• The registers of registrable controllers can be maintained at the company’s registered office or the registered office of the registered filing agent.
• Companies would have to declare to ACRA the location of the company’s register of controllers when filing the company’s annual returns.
• The register can be maintained in paper or electronic format.

Listed companies and Singapore financial institutions are exempted from the new requirement.

Comments

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. As it is now, banks and corporate service providers are already required to identify the ultimate controller of an entity under existing AML/KYC requirements.

This new requirement would be helpful in providing a statutory basis for gathering information in order to maintain a register of controllers of corporate entities when such entities are being incorporated.

• A corporate service provider (providing corporate secretarial or filing agent services) would be required to determine definitively the existence and particulars of controllers and to record the responses in the register of controllers.
• Information collected on the beneficial ownership of companies during the client due diligence phase can be used to be entered into the register.
• The registers should be readily available if public agencies request access to the registers, otherwise, the register of controllers would be a confidential register (not available to the public). The information in the registers would be helpful in administering or enforcing anti-money laundering-related legislation in Singapore.
• Companies can discharge their duties by sending notices to the relevant parties and recording their particulars, as well as sending further notices to any other parties that have been revealed as potential controllers. Notices can be sent and replies may be received, in electronic or hard copy format. The company would then not be liable should recipients of these notices fail to respond or provide inaccurate responses.
• Companies are required to (i) keep the information in their registers up-to-date and (ii) correct inaccuracies in said information.
• This is likely to mean that a company must minimally send a notice to every registrable controller whose particulars are contained in the register of registrable controllers at least once annually.

Company administration

D. Requirement to maintain public register of members for foreign companies

• Foreign companies will be required to keep a public register of members. This is similar to the current requirement for public companies to maintain their registers of members.

Comments

• Further information would be required to be collected when establishing branches in Singapore in order to maintain this register of members (in addition to a register of controllers). However in contrast to a register of controllers, the register of members would be available for public review if required.

Company administration

Other requirements

• Requirement for a liquidator to retain records of wound up companies for five years instead of two
• Requirement for officers/partners/managers of struck off companies to retain accounting records and registers of beneficial owners for five years