27 January 2022
On 19 November 2021, the Monetary Authority of Singapore (“MAS”) issued a consultation paper seeking feedback on proposed amendments to the Business Trusts Act (“BTA”).
Broadly, the proposed amendments to the BTA are aimed at:
- aligning the provisions under the BTA with the relevant provisions under the Companies Act (“CA”) where appropriate, taking into account the Companies (Amendment) Act 2014 and Companies (Amendment) Act 2017 (collectively, “CAA”);
- strengthening governance safeguards for business trusts (“BTs”) by having regard to the governance requirements imposed on managers of real estate investment trusts (“REITs”);
- streamlining certain regulatory requirements; and
- making clarificatory amendments and other miscellaneous amendments.The consultation closed on 27 December 2021.
Aligning BTA provisions with CA provisions
Given the similarities between BTs and companies, many of the BTA provisions are based on provisions under the CA. With the CA having been amended pursuant to the CAA, MAS proposes to make similar amendments to the BTA. These include the following:
- Disclosures and trust administration:
- requiring disclosure of interests by the CEO of the trustee-manager of a BT (“TM”);
- requiring TMs of unlisted registered BTs to obtain and maintain information on beneficial ownership of units in the unlisted registered BTs;
- allowing for electronic transmission of notices and documents to unitholders with their express, implied or deemed consent in accordance with the trust deed of the BT; and
- introducing provisions to enable BTs that have been deregistered under section 52 of the BTA to be restored by MAS administratively and not be limited to restoration via an application to court.
- Unitholders’ rights and general meetings:
- extending the scope of statutory derivative actions to include arbitration;
- providing the court hearing a winding-up application the option to order a buy-out where it is just and equitable to do so;
- lowering the threshold for eligibility to demand a poll; and
- simplifying the deadlines for TMs to hold annual general meetings and file annual returns.
- Auditors and financial statements:
- replacing the requirement for a separate directors’ report with a directors’ statement which accompanies the financial statements of a registered BT;
- codifying the requirement to prepare financial statements in accordance with the accounting standards of the Accounting Standards Council; and
- requiring auditors of listed registered BTs and subsidiaries of listed registered BTs to seek MAS’ consent before resigning.
- Governance and the right of compulsory acquisitions:
- extending the prohibition of the improper use of information by an officer or agent of the TM to include the prohibition of the improper use of his position as an officer or agent, and extending the prohibition of the improper use of information by the TM to include the improper use of its position as a TM as well; and
- extending the scope of the right of compulsory acquisition to include individual offerors and to include derivatives of units in a BT, and providing for joint offers for compulsory acquisitions of BTs.
Strengthening governance safeguards for BTs
MAS proposes to strengthen the governance requirements for BTs by taking reference from the governance requirements imposed on REITs in view of the structural similarities between BTs and REITs. Currently, a TM of a BT can only be removed if unitholders holding not less than three-fourths of the voting rights approve a resolution to remove the TM. In line with the lower removal thresholds for REIT managers, MAS proposes to lower the removal threshold in the BTA to a simple majority.
Streamlining regulatory requirements
MAS proposes to introduce provisions in the BTA to provide for the passing of resolutions by written means, in line with sections 184A to 184F of the CA.
MAS also proposes to introduce a provision providing that MAS may proceed to deregister a BT upon receipt of the notice of completion of its winding up from the TM under section 47(3) or the liquidator under section 48(5) of the BTA. With this amendment, the TM will not need to apply separately for voluntary deregistration.
MAS also proposes to make (a) clarificatory amendments to the BTA, (b) amendments to the BTA to align with provisions under the Securities and Futures Act of an administrative nature that are relevant to the BTA, and (c) miscellaneous amendments to the BTA that are consequential to the CAA.