22 March 2024

The Business Trusts (Amendment) Act 2022 (“Amendment Act”) amends the Business Trusts Act 2004 (“BTA”) to align the provisions in the BTA with the relevant provisions under the Companies Act 1967, strengthen governance safeguards for registered business trusts (“BTs”), and streamline certain regulatory requirements. When in force, these changes will improve the efficiency and robustness of the BT regulatory regime, benefiting the industry and investors.

On 12 March 2024, the Monetary Authority of Singapore (“MAS”) published a notification stating that the Amendment Act will be implemented in two phases. The Phase 1 amendments came into force on 12 March 2024, and these include provisions relating to written resolutions of BT unitholders, disclosure by chief executive officers (“CEOs”) of interests in transactions undertaken by the BT, and the court’s power to order a buy-out remedy in lieu of liquidation.

Phase 2 amendments will be brought into effect concurrently with supporting subsidiary legislation. MAS intends to conduct a public consultation on the supporting subsidiary legislation for Phase 2 amendments in Q2 2024, with implementation in Q4 2024.

Changes to BTA that have come into force

The following are some of the Phase 1 amendments that came into force on 12 March 2024:

  • CEOs to disclose interests in transactions: The requirement for directors of trustee-managers of registered BTs to disclose interests in transactions entered or to be entered into by the registered BTs, conflicts of interest, as well as interests in the registered BTs, has been extended to CEOs of trustee-managers of registered BTs, in recognition of the influence that CEOs have on the affairs of BTs.
  • Lower threshold to call for poll: Unitholders holding at least 5% (previously 10%) of the voting rights of unitholders present at a meeting have the power to call for a poll.
  • Scope of statutory derivative action expanded to include arbitration: The scope of the statutory derivative action in the BTA has been expanded to allow a unitholder to apply to the court for permission to commence arbitration on behalf of all the unitholders of the registered BT or to intervene in an arbitration to which the trustee-manager, on behalf of the registered BT, is a party.
  • Additional court option to order buy-out of BT: The BTA has been amended to empower the court, in relation to certain applications for winding up a registered BT, to order that interests in units held by one or more unitholders of the registered BT be purchased by the trustee-manager or unitholders of the registered BT, instead of winding up the registered BT. The additional remedy helps to protect the rights of minority unitholders, as there may be cases where the BT is still viable and a more efficient solution would be for the majority to buy out the minority, or vice versa.
  • Removal of trustee-manager by majority of unitholders: A trustee-manager of a registered BT may now be removed by unitholders by way of a resolution passed by more than 50% (previously at least 75%) of the voting rights of all unitholders voting at a general meeting. This change aligns the removal threshold for trustee-managers of registered BTs with that of managers of real estate investment trusts. This will help strengthen accountability to unitholders.

Various other changes have been made to the BTA, including changes to provide for the following:

  • Passing resolutions by written means;
  • Delegation of the MAS Managing Director’s powers to approve exemptions under the BTA to the relevant MAS group or department head; and
  • A trust that has received approval-in-principle to be listed on an approved exchange to be considered a BT for the purposes of the BTA, even if each of the unitholders is a related corporation of the trustee.

Amendments not yet in force

The following are some of the changes under the Amendment Act which are not yet in force:

  • Information on beneficial ownership: New requirements for unlisted BTs that are registered under the BTA to obtain and maintain information on their controllers, also commonly known as beneficial owners, and to provide such information to MAS and other public agencies on request.
  • Auditors of listed registered BTs and subsidiaries to seek MAS consent before resigning: New requirement for auditors of listed registered BTs and their subsidiaries to seek MAS’ consent if they wish to resign before the end of their term. This requirement will allow MAS to prevent a listed BT or its subsidiary from being left without an auditor.
  • Simplified deadlines for holding AGMs and filing annual returns: Currently, registered BTs are required to hold their annual general meetings (“AGMs”) once every calendar year and not more than 15 months after the preceding AGM, and are required to file annual returns within one month after the AGM. These requirements do not refer to the financial year end of the registered BT. The Amendment Act will align these timelines with the BT’s financial year end.
  • Electronic transmission of notices and documents: To facilitate electronic communications by registered BTs, amendments will be made to allow for electronic transmission of notices and documents with the implied or deemed consent of unitholders, in accordance with the trust deed of the registered BT. Currently, registered BTs wishing to publish notices and documents on a website can only do so with their unitholders’ express consent.
  • Deregistration of BT: Deregistration of a BT upon MAS’ receipt of the notification of completion of winding up from the trustee-manager without the need for a separate application for voluntary deregistration.

Reference materials

The following materials are available on Singapore Statutes Online sso.agc.gov.sg and the MAS website www.mas.gov.sg: