CRF 2013: Business LawReform Updates in Singapore Presented by: Toh Wee San (Ms) Assistant Chief Executive Legal and Regulatory ComplianceAccounting and Corporate Regulatory Authority, Singapore (ACRA) To provide a responsive and trusted regulatory environment for businesses and public accountants.
Contents Background of ACRA - Over-view, legislation administered and relevant statistics Key Business Reforms in 2012 – Business Registration Act, Companies Act and Others Details of Reforms - Background, key recommendations and coming up
Overview of ACRA National regulator and facilitator of businesses and public accountants in Singapore. Our vision To make Singapore the trusted and best place to do business. To foster a vibrant environment for the development of business entities and supports the development of the public accountancy profession. Our functions include – Administering the Accounting and Corporate Regulatory Act, the Accountants Act, the Business Registration Act, the Companies Act, the Limited Liability Partnerships Act and the Limited Partnerships Act. To report to the Government on matters relating to the registration and regulation of business entities and public accountants.
Statistical Highlights ofACRA Registered Entities 40,000 30,000 Business 20,000 Company 10,000 LLP 0 LP FY FY FY FY 2008/09 2009/10 2010/11 2011/12 3.5% Average annual growth rate of the number of registered entities Source: ACRA Annual Report 2011/2012
Key Business Law Reformsin 2012 Business Companies Registration Act Act Other developments
Business Registration ActBackground of Review Business Registration Act was first enacted in 1974. Only piecemeal amendments were made since it came into force. Comprehensive review to ensure a conducive, effective and efficient regulatory framework for business names registration in Singapore. Public consultation of the recommendations was first issued in October 2010 (available on ACRA’s website). Responses to the public consultation in 2010 have been gathered and various dialogue sessions were held in 2011. Formulation of policies completed in 2012.
Business Registration ActACRA’s Key Recommendations Individuals (sole proprietors or partners) carrying on business in their own names need not register under new Act Expected to reduce the regulatory burden on persons carrying on business in their own names. Double the maximum penalties for the following offences To streamline with the penalty regime in the other Acts that ACRA administers
Business Registration ActACRA’s Key Recommendations To allow a registered sole-proprietorship or partnership to directly convert to a company Modeled after the existing regime which permits a partnership to be converted to a limited liability partnership under the Limited Liability Partnership Act (Cap. 163A) To streamline the reporting of deceased registrants In law, ACRA can only act on executor’s/administrator’s instructions. In reality, most deceased’s next-of-kin (NOK) will not apply for probate (most deceased are small businessmen with few assets). Proposal aims to streamline our processes to accept an NOK’s updates to our records with acceptable evidence adduced.
Business Registration ActMoving Forward Public Consultation on the draft Bill anticipated to commence in mid 2013. The new Act is targeted to be passed in Parliament in the first half of 2014 and to come into force in the second half of 2014.
Companies ActBackground of review Steering Committee (SC) formed in October 2007 to review the Companies Act. Objective: Update our company law to meet changing business realities Reduce the regulatory burden and ease compliance for companies Ensure a transparent corporate environment that gives ordinary investors confidence Public consultation on the SC’s Recommendations held between June to October 2011 (available on ACRA’s website) 217 recommendations were made
Companies ActUpdates for 2012 “In evaluating views on each of the 217 recommendations, MOF has adopted a principled, but pragmatic approach. We have sought to ensure that we keep a competitive business environment, but one that preserves investors’ rights and interests where they really matter.” Source: Deputy Prime Minister and Minister for Finance, Mr Tharman Shanmugaratnam on MOF’s responses to the SC’s recommendations at the Securities Investors Association (Singapore) Investors’ Choice Awards Dinner held on 3 October 2012
Companies ActUpdates for 2012 Ministry of Finance’s (MOF) responses to the SC’s recommendations announced in October 2012 (available on MOF’s website) 192 recommendations accepted 17 recommendations modified 8 recommendations rejected Largest number of changes since the Act was introduced in 1967. Anticipated to bring about benefits to companies, small medium enterprises, retail investors and company directors.
Companies ActApproach to the review Phase 1: Implement Changes Phase 2: Re-write of (Amendment of the Companies Act Companies Act)
Companies ActHighlights of MOF’s responses Allowing public companies to issue shares with multiple and non-voting rights subject to safeguards Allows for greater flexibility to such companies in capital management. Additional restrictions, if any, may be imposed on listed companies by the Singapore Stock Exchange. New small company criteria for audit exemption To enable small companies to keep compliance costs low. Expected to benefit about an additional 10% of all companies (or approximately 25,000 more companies).
Companies ActHighlights of MOF’s responses Multiple proxy regime to enfranchise indirect investors Aims to provide for more active participation at general meetings by indirect investors and help to strengthen the culture of corporate governance. Allowing directors to reflect alternate addresses on ACRA’s register New regime serves to protect the privacy of directors
Companies ActHighlights of MOF’s responses Abolishing restriction on financial assistance for private companies. Deregulation warranted as shareholders have greater control over decision making in such companies. Such companies have fewer resources to obtain professional advice. Creditors can rely on directors duties and wrongful trading recourse. Consistent with leading jurisdictions. ACRA’s register as the register of members for private companies Removal of dual reporting, to company and regulator.
Companies ActHighlights of MOF’s responses Not to codify directors’ duties Codification may result in a loss of flexibility and may not be the best for business efficacy. Companies Act already contains a statutory statement of directors’ duties. Extended disclosure requirements for directors to CEOs To promote better standards of corporate governance.
Companies ActHighlights of MOF’s responses Retention of the Exempt Private Company (EPC) regime for filing of financial information Abolishing the EPC regime may negatively impact Singapore’s competitiveness. Confidentiality afforded by the EPC regime is important to companies.
Companies ActMoving Forward Companies (Amendment) Bill slated to be tabled in Parliament by end 2013. Public Consultation on the draft Bill anticipated to be first half of 2013.
Other DevelopmentsFormalities in Execution of Documents Collaboration with the Attorney General’s Chambers to simplify the formalities in the execution of deeds and documents. This will include the removal of the requirement for a common seal. Amendments will be introduced to the Civil Law Act, the Companies Act and the Limited Liability Partnerships Act. Public consultation is planned for 2013.
Conclusion Hectic year ahead for law reform to draft and consult on draft legislations. Changes in law, where applicable also to tie in with the design and implementation of new filing system targeted for 2014.