29 July 2021
On 29 June 2021, the Ministry of Law (“MinLaw”) announced that it has made refinements to the criteria for exemption from the Qualifying Certificate (“QC”) regime for publicly listed housing developers with a substantial connection to Singapore. These changes took immediate effect.
Overview of QC regime
The Residential Property Act (“RPA”) requires any housing developer that is not considered a Singapore company to apply for a QC when it purchases residential land for development, other than from the Government. A housing developer with a QC is subject to completion and disposal deadlines. This measure is intended to ensure the timely building and sale of residential units and to prevent hoarding and speculation in residential land.
The RPA defines a Singapore company to be one that is incorporated in Singapore, and whose directors and shareholders are all Singapore citizens or Singapore companies. As such, publicly listed housing developers are subjected to the QC regime as their shareholders would not be restricted to only Singapore citizens and/or Singapore companies.
Exemption from QC regime
To align the QC regime and objectives of the RPA, MinLaw announced on 6 February 2020 that publicly listed housing developers may apply for exemption from the QC regime on the basis that they have a substantial connection to Singapore. Applications would be assessed on the following criteria:
- Incorporation in Singapore;
- Primary listing is on the Singapore Exchange and principal place of business is Singapore;
- The chairperson and the majority of the company’s board are Singapore citizens;
- A significantly Singaporean substantial shareholding interest in the company (“shareholding interest criterion”); and
- Track record in Singapore.
Refinements to criteria for exemption from QC regime
On 29 June 2021, MinLaw announced two refinements on how the shareholding interest criterion would be assessed. The refinements take into account feedback received since the introduction of the exemption framework on 6 February 2020.
- Shares that are held through whitelisted nominee companies: Where shareholders hold their shares through nominee companies, these shares will now be counted towards fulfilling the shareholding interest criterion if the shares are held through a whitelisted nominee company and the Singaporean substantial shareholders retain control over the voting rights to the shares held through the whitelisted nominee company.
The whitelist of approved nominee companies is published on the Singapore Land Authority’s website at www.sla.gov.sg and will be reviewed and updated from time to time. As at 29 June 2021, the whitelist comprises (i) Hong Leong Finance Nominees Pte Ltd, (ii) Citibank Nominees Singapore Pte Ltd, (iii) DBS Nominees (Private) Limited, (iv) DBSN Services Pte. Ltd. and (v) Tye Hua Nominees Private Limited. A nominee company will be considered favourably for whitelisting if (i) it is incorporated in Singapore, (ii) its parent company is a licensed Monetary Authority of Singapore (MAS) financial institution; and (iii) its principal activity listed with the Accounting and Corporate Regulatory Authority (ACRA) is “trustee, fiduciary and custody services firms (including nominee companies, trustees and REIT trustees)”.
- Collective interest held by members of the same family: A housing developer will be considered to have a significantly Singaporean substantial shareholding interest if Singaporean shareholders from the same family collectively form the largest substantial shareholder and hold at least 30% interest in the total voting rights and issued shares in the housing developer. At least one of the shareholders in the family has to be a substantial shareholder and identified clearly as the primary shareholder. Further, the largest single foreign substantial shareholder must hold not more than 30% of the voting rights and issued shares in the housing developer. Only direct interest or interest held through companies that are fully owned by family members will be considered; interest held through nominee companies will not be considered.
The changes are implemented with immediate effect. Applications may be submitted to the Controller of Residential Property with this form.