Knowledge Highlights 18 January 2022
The Corporate Registers (Miscellaneous Amendments) Bill (“Bill”), which seeks to amend the Companies Act 1967 and the Limited Liability Partnerships Act 2005 to strengthen Singapore’s corporate governance regime and affirm Singapore’s commitment to combating money laundering, terrorism financing and other threats to the integrity of the international financial system, was passed in Parliament on 10 January 2022.
The amendments will also bring Singapore’s regime into closer alignment with the international standards aimed at combating global money laundering and terrorism financing set by the Financial Action Task Force (“FATF”), of which Singapore is a member.
In her speech at the second reading of the Bill, Second Minister for Finance Indranee Rajah explained the reasons for the four main sets of amendments featured in the Bill.
1. Register of nominee shareholders
Companies are required to maintain a register of members (or shareholders). A shareholder may hold shares on behalf of another person (i.e. a nominator), but a nominator is not required to be identified, as he or she is not the shareholder on record. As the nominee shareholder typically acts on the instructions of the nominator, the lack of transparency on the identity of these persons who actually control the shares is an area of concern internationally.
The first set of amendments aims to address these concerns and align Singapore’s legislation to FATF Recommendations, by requiring both local and foreign companies in Singapore to (1) keep a non-public register of nominee shareholders and their nominators, and (2) update their register within seven days of being informed by the nominee. This will ensure that nominators who are effectively controllers of a company are properly identified, in line with the international standards.
Nominee shareholders will also be required to inform the company of their nominee status and their nominators in a timely manner.
2. Identification of registrable controllers
The second set of amendments introduces a new requirement in relation to the identification of registrable controllers for local and foreign companies and LLPs.
Companies and LLPs are already required to maintain a register of registrable controllers. These are individuals or corporate entities that have a significant interest in or significant control over the company or LLP. However, there have been situations where a company or an LLP claims to have no registrable controllers with significant interest or control.
Such companies and LLPs will be required under the amendments to identify all individuals with executive control over the company or LLP as registrable controllers. Individuals with executive control are the chief executive officers, and directors or partners who exercise executive control over the daily or regular affairs of the company or LLP through a senior management position.
The amendments are aimed at enhancing the transparency of beneficial ownership and control of companies and LLPs in Singapore, by ensuring that a registrable controller is identified for all companies and LLPs, in line with international expectations.
3. Time frame for local companies to update register of nominee directors
The third set of amendments requires local companies to update their register of nominee directors within seven days of receiving information from their nominee directors.
Local companies are required to maintain a register of nominee directors, reflecting their status as a nominee director and the particulars of their nominator, but there is no time frame specified to update their register when there is a change in the particulars therein. An express seven-day time limit will provide clarity on the expected timeline and ensure a timely update of the register.
4. Time frame for foreign companies to update register of members
The final set of amendments specifies a 30-day time frame for foreign companies to update their register of members.
Foreign companies are already required to keep a register of members at their Singapore branch but no time frame is specified as to when updates must be made when there is a change in their members’ particulars. The amendment will provide clarity on the timeline for updating their register.
The longer time frame gives foreign companies sufficient time to contact their members, who may be based overseas, and to update their register.
The Ministry of Finance (“MOF”) and the Accounting and Corporate Regulatory Authority (“ACRA”) published a consultation paper seeking feedback on a draft version of the Bill on 2 July 2021. MOF/ACRA issued a summary of responses to the feedback received from the public consultation on 27 October 2021 before the Bill was introduced in Parliament on 1 November 2021.