CRF 2013: Business Law

Reform Updates in Singapore

Presented by: Toh Wee San (Ms)

Assistant Chief Executive

Legal and Regulatory Compliance

Accounting 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 publicaccountants in Singapore.

Our vision To make Singapore the trusted and best place to do business.

To foster a vibrant environment for the development of businessentities and supports the development of the public accountancyprofession.

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 PartnershipsAct.

To report to the Government on matters relating to the registrationand regulation of business entities and public accountants.

ACRA Administered

Business Entities

• Limited Liability Partnerships Act (Cap. 163A)

•Limited Partnerships Act 2008 (Act 37 of 2008)

• Companies Act (Cap. 50)

• Business Registration Act (Cap. 32)

Sole

Proprietorships&

Partnerships

Companies

Limited Liability

Partnerships

Limited Partnerships

Statistical Highlights of

ACRA Registered Entities

0

10,000

20,000

30,000

40,000

FY 2008/09

FY 2009/10

FY 2010/11

FY 2011/12

Business

Company

LLP

LP

Average annual growth rate of the number of registered entities 3.5%

Source: ACRA Annual Report 2011/2012

Key Business Law Reforms

in 2012

Business Registration

Act

Companies Act

Other developments

Business Registration ActBackground of Review

Business Registration Act was first enacted in 1974. Onlypiecemeal amendments were made since it came into force.

Comprehensive review to ensure a conducive, effective andefficient regulatory framework for business namesregistration in Singapore.

Public consultation of the recommendations was first issuedin October 2010 (available on ACRA’s website).

Responses to the public consultation in 2010 have beengathered 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 onbusiness in their own names need not register under newAct

Expected to reduce the regulatory burden on persons carryingon business in their own names.

Double the maximum penalties for the following offences

To streamline with the penalty regime in the other Acts thatACRA administers

Business Registration ActACRA’s Key Recommendations

To allow a registered sole-proprietorship or partnership todirectly convert to a company

Modeled after the existing regime which permits a partnershipto be converted to a limited liability partnership under theLimited Liability Partnership Act (Cap. 163A)

To streamline the reporting of deceased registrants

In law, ACRA can only act on executor’s/administrator’sinstructions.

In reality, most deceased’s next-of-kin (NOK) will not apply forprobate (most deceased are small businessmen with fewassets).

Proposal aims to streamline our processes to accept an NOK’supdates to our records with acceptable evidence adduced.

Business Registration ActMoving Forward

Public Consultation on the draft Bill anticipated tocommence in mid 2013.

The new Act is targeted to be passed in Parliament in thefirst half of 2014 and to come into force in the second halfof 2014.

Companies ActBackground of review

Steering Committee (SC) formed in October 2007 to reviewthe Companies Act.

Objective:

Update our company law to meet changing business realities

Reduce the regulatory burden and ease compliance forcompanies

Ensure a transparent corporate environment that givesordinary investors confidence

Public consultation on the SC’s Recommendations heldbetween June to October 2011 (available on ACRA’swebsite) 217 recommendations were made

Companies ActUpdates for 2012

“In evaluating views on each of the 217recommendations, MOF has adopted a principled, butpragmatic approach. We have sought to ensure that wekeep a competitive business environment, but one thatpreserves investors’ rights and interests where they reallymatter.”

Source: Deputy Prime Minister and Minister for Finance, Mr Tharman Shanmugaratnam onMOF’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’srecommendations announced in October 2012 (available onMOF’s website)

192 recommendations accepted

17 recommendations modified

8 recommendations rejected

Largest number of changes since the Act was introduced in1967.

Anticipated to bring about benefits to companies, smallmedium enterprises, retail investors and companydirectors.

Companies ActApproach to the review

Phase 1: Implement Changes

(Amendment of Companies Act)

Phase 2: Re-write of the Companies Act

Companies ActHighlights of MOF’s responses

Allowing public companies to issue shares with multiple andnon-voting rights subject to safeguards

Allows for greater flexibility to such companies in capitalmanagement.

Additional restrictions, if any, may be imposed on listedcompanies 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 generalmeetings by indirect investors and help to strengthen theculture of corporate governance.

Allowing directors to reflect alternate addresses on ACRA’sregister

New regime serves to protect the privacy of directors

Companies ActHighlights of MOF’s responses

Abolishing restriction on financial assistance for privatecompanies.

Deregulation warranted as shareholders have greater controlover decision making in such companies.

Such companies have fewer resources to obtain professionaladvice.

Creditors can rely on directors duties and wrongful tradingrecourse.

Consistent with leading jurisdictions.

ACRA’s register as the register of members for privatecompanies

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 bethe best for business efficacy.

Companies Act already contains a statutory statement ofdirectors’ duties.

Extended disclosure requirements for directors to CEOs

To promote better standards of corporate governance.

Retention of the Exempt Private Company (EPC) regime forfiling of financial information

Abolishing the EPC regime may negatively impact Singapore’scompetitiveness.

Confidentiality afforded by the EPC regime is important tocompanies.

Companies ActHighlights of MOF’s responses

Companies ActMoving Forward

Companies (Amendment) Bill slated to be tabled inParliament by end 2013.

Public Consultation on the draft Bill anticipated to be firsthalf of 2013.

Other Developments Formalities in Execution of Documents

Collaboration with the Attorney General’s Chambers tosimplify the formalities in the execution of deeds anddocuments.

This will include the removal of the requirement for a commonseal.

Amendments will be introduced to the Civil Law Act, theCompanies 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.

Thank You