Overhaul of Singapore Companies ActOct 13, 2014
The Singaporean Parliament passed an overhaul of the Companies Act, which governs how businesses are conducted in the country. It was the largest overhaul of the Act since it was enacted in 1967. The amendments were made to liberalise the regulatory system and implement more flexibility to the business environment.
More than 200 amendments were passed by the Parliament and among them is an exemption for small businesses from having an audit done on their accounts. That change alone will affect at least 25,000 small businesses. They will still be required to keep proper records of their accounts. The law has provisions to prevent it from being abused by larger firms. The Accounting and Corporate Regulatory Authority can also require a company to submit its records even if the said company is exempted from audit.
Multinational companies that are non-listed are given more flexibility in finding more capital, as well as giving investors more investment opportunities with the lifting of the “one share one vote” restriction. At present, there are around 800 non-listed public corporations.
The changes allow Singapore to remain as a competitive financial centre, but there are some risks involved, especially if the rule on the “one share one vote” is applied to listed corporations. Josephine Teo, Senior Minister of State for Finance, said that the revamped Companies Act is designed to give more flexibility to public companies in raising capital. She added that there are checks and balances for all companies, whether they are listed or not. She cited the requirement for businesses to specify the rights attached to each class of share.
Multinational companies that are public will be affected by the changes in the Singapore Companies Act. The bill will now require public companies to specify the right for each class of shares they offer and to clearly state the various classes of shares so that investors and shareholders know the rights connected with the particular share. Investors are now informed about the shares and can make a smart decision on whether or not to invest in companies. Companies are also required by law to make sure that the information about the voting rights for each class of shares are attached to the notice of meetings whenever a resolution has to be voted upon by the shareholders.
It is important for multinationals to know about the various changes made to the Singapore Companies Act. That way they can ensure that they are operating legally in the country. If you need advice or know more about the amendments of the Companies Act, contact us. We will be happy to discuss with you about your concerns regarding the latest developments in the business environment of Singapore.