Proposed Legislative Amendments by ACRA to ensure Corporate Regulatory Environment remains competitive and robust

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Proposed Legislative Amendments by ACRA to ensure Corporate Regulatory Environment remains competitive and robust

Proposed Legislative Amendments by ACRA to ensure Corporate Regulatory Environment remains competitive and robust

June 7, 2022

Introduction

The Accounting and Corporate Regulatory Authority (ACRA), being the statutory board that regulates business registration, financial reporting, public accountants, and corporate service providers, is in the process of obtaining feedback from the public on proposed amendments to the Companies Act 1967 (Companies Act), Accounting and Corporate Regulatory Authority Act 2004 (ACRA Act) and a new Corporate Service Providers Bill (CSP Bill).

The proposed legislative amendments are part of ACRA’s continuing aim to ensure that the Singapore corporate regulatory environment remains competitive and robust. We have set out the salient proposed amendments and provisions in this article.

Proposed Amendments to the ACRA Act

To ensure that the financial penalties are effective, commensurate and dissuasive, taking into consideration sanctions imposed on other service providers in Singapore and on Corporate Service Providers (CSPs) in other foreign jurisdictions, ACRA proposes the following amendments:

S/N	Current Provision	Proposed Amendment
(1)	The financial penalty for a Registered Filing Agent (RFA) who is found to have breached the terms and conditions of the RFA’s registration is up to a maximum of S$25,000 per breach.	To increase the maximum financial penalty to at least S$50,000 per breach for RFAs.
(2)	The financial penalty for a Registered Qualified Individual (RQI) who is found to have breached the terms and conditions of the RQI’s registration is up to a maximum of S$10,000 per breach.	To increase the maximum financial penalty to S$20,000 per breach for RQIs.

Proposed Amendment to the Companies Act

The Financial Action Task Force (FATF) recommendations now require nominee directors and shareholders to disclose their nominee status and the identity of their nominator to ACRA, and for ACRA to maintain such information. They also require that the nominee status of the director/shareholder be made publicly available. In light of this, ACRA proposes the following amendments:

S/N	Current Requirement	Proposed Amendment
(1)	Individuals who are nominee directors/ shareholders are only required to disclose their particulars to their companies, and such information has to be maintained in the Register of Nominee Directors. This information is not publicly available nor submitted to ACRA.	To require nominee directors and shareholders to disclose their nominee status and the identity of their nominators to ACRA and for ACRA to maintain such information. Upon disclosure to ACRA, the nominee status of the director/shareholder will be made publicly available.

Proposed Enacting of the CSP Bill

ACRA is proposing to enact the CSP Bill, which will, amongst other things, require all entities or people providing corporate secretarial services (which includes forming corporations, acting or arranging for another person to act as director, and providing a registered office) in and from Singapore to register with ACRA as CSPs, regardless of whether they need to transact with ACRA. In addition, we have set out below, the effect that some of the salient new provisions of the CSP Bill will have:

S/N	Current Requirement (if any)	Effect of New Provision of CSP Bill
(1)	Currently, under the ACRA Act, where an RFA has breached any term or condition, the Chief Executive of ACRA may cancel or suspend the registration of the RFA, restrict the RFA’s use of the electronic transaction system, require the RFA to pay a financial penalty or censure the RFA. There are currently no direct sanctions on directors/owners/partners of an RFA for breaches of Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) obligations.	To introduce a fine not exceeding S$100,000 on directors, owners, or partners of CSPs for breaches of AML/CFT obligations, if the breach was committed with the consent or connivance of, or is attributable to any neglect by, such individuals.
(2)	There are no specific requirements for CSPs to ensure that the individuals they appoint as nominee directors are fit and proper. There are also no additional obligations imposed on individuals acting as nominee directors by way of business.	To require CSPs to ensure that the individuals they appoint to act as nominee directors: (i) are fit and proper; and (ii) satisfy prescribed training requirements, if they hold more than a legally prescribed number of nominee directorships by way of business (unless they are qualified persons, such as, for example, an advocate and solicitor of the Supreme Court of Singapore or a public accountant registered under the Accountants Act 2004).
(3)	Currently, RFAs are required to perform customer due diligence on a risk-sensitive basis, but the specific requirements are not spelt out.	To introduce amendments to the current regime that will require CSPs to conduct screening of their customers against prescribed sources of information (i.e., the relevant United Nations lists and Ministry of Home Affairs lists), and to perform risk assessment on their customers.
(4)	There is currently no requirement for RFAs to implement a group-wide AML/CFT policy to require their branches or subsidiaries in Singapore or elsewhere to adhere to a group policy to mitigate their money-laundering/ terrorism financing (ML/TF) risks.	To require CSPs to implement a group-wide AML/CFT policy to require their branches and subsidiaries in Singapore or elsewhere to have a group policy to mitigate their ML/TF risks.

Closing Thoughts

The proposals aim to enhance the corporate sector's regulatory regime for the purposes of, amongst other things, improving Singapore’s compliance with the FATF recommendations and maintaining Singapore’s reputation as a trusted financial hub. In addition, ACRA’s proposed legislative amendments seek to address the risks presented by the misuse of nominee arrangements in the creation of shell companies to facilitate money laundering and require individuals who act as nominee directors, by way of the provision of services in exchange for a fee or an award, to be qualified persons.

Dentons Rodyk thanks and acknowledges Legal Executive Sean Gallagher for his contributions to this article.

Key contact

Marian Ho Senior Partner, SingaporeSingapore
D +65 6885 3610
Email me

marian.ho@dentons.com

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Proposed Legislative Amendments by ACRA to ensure Corporate Regulatory Environment remains competitive and robust

Proposed Legislative Amendments by ACRA to ensure Corporate Regulatory Environment remains competitive and robust

Introduction

Proposed Amendments to the ACRA Act

Proposed Amendment to the Companies Act

Proposed Enacting of the CSP Bill

Closing Thoughts

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Proposed Legislative Amendments by ACRA to ensure Corporate Regulatory Environment remains competitive and robust

Proposed Legislative Amendments by ACRA to ensure Corporate Regulatory Environment remains competitive and robust

Introduction

Proposed Amendments to the ACRA Act

Proposed Amendment to the Companies Act

Proposed Enacting of the CSP Bill

Closing Thoughts

Share

How can the world's largest global law firm help you today ?

Contact us or find an office in your location.

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