Singapore Companies Act and Limited Liability Partnerships (LLP) Act: Significant Recent Developments
By Dezan Shira & Associates
Singapore’s parliament on March 10, 2017 passed significant amendments to its Companies Act and Limited Liability Partnerships (LLP) Act. Among the key changes are measures aimed at making ownership and control of business entities more transparent in the city-state and reduce opportunities for the misuse of corporate entities for illicit purposes. The measures are also aimed at bringing Singapore in line with international good practices, and uphold the city-state’s sound reputation as a globally trusted financial hub. Among other significant changes introduced by the amended acts are (a) increased record keeping requirements and (b) introduction of an inward re-domiciliation regime allowing foreign corporate entities to transfer their corporate registration to Singapore.
In its bid to improve transparency of corporate entities, Singapore now requires companies to maintain three registers – register of registrable controllers; register of nominee directors; and a register of members:
Register of Registrable Controllers
According to Singapore’s Accounting and Corporate Regulatory Authority (ACRA), as of March 31, 2017, all companies incorporated in Singapore, foreign companies and all LLPs registered in Singapore (unless exempted) are now required to maintain beneficial ownership information in the form of a register of registrable controllers, and to make the information available to regulators upon request. The registers of registrable controllers is to be maintained either in paper or electronic form at prescribed places, e.g. the company’s/LLP’s registered office or the registered office of the registered filing agent. The registers should be kept only by the corporate entities and must not be made available to the public.
Regulators can use the information contained in the registers only for the purpose of administering or enforcing the laws under their purview (e.g. investigation of money laundering offences). Companies and LLPs should declare with ACRA the location of the company’s register of registrable controllers when filing the company’s annual returns or annual declaration. Existing companies and LLPs have until May 30, 2017 to set up the register of controllers, after which they must have and continue to maintain the required registers. Companies incorporated on or after 31 Mar 2017 and LLPs registered on or after 31 Mar 2017 will have a transitional period of 30 days to set up the register.
Register of Nominee Directors
According to ACRA, companies in Singapore will now be also required to each maintain a register of its nominee directors containing the particulars of the nominators of the company’s nominee directors. Companies will have to make the register of nominee directors and any related documents available to regulators upon request. Companies should enter into their registers the information received from nominee directors within the prescribed timeline after receiving the information. The prescribed timeline is expected to be within 2 business days of receiving the information as per latest information released by ACRA. Companies may maintain the register in electronic or hardcopy formats, and should not disclose or make available for public inspection the register or any particulars contained in the register, according to ACRA.
According to ACRA, directors of companies should consider whether they are nominees, and if they are nominees, they should, within the applicable timelines, (a) inform their respective companies of that fact and (b) provide the particulars of their nominators. In addition, nominee directors must inform their companies when they cease to be a nominee and of any change to the nominator’s particulars provided to the company.
Besides the aforementioned two registers, foreign companies in Singapore will also be now required to maintain a register of members bringing them in line with the requirement for Singapore-incorporated companies.
Introduction of Inward Re-domiciliation Regime
A foreign corporate entity will now be allowed the option of transferring its registration to Singapore instead of setting up a subsidiary. A foreign corporate entity who transfers its registration to Singapore in effect becomes a Singapore-domiciled company, and will be subjected to and must comply with all laws applicable to Singapore-incorporated companies including the Singapore Companies Act. In order to complete its re-domiciliation process in Singapore, a foreign company must register with the Singapore Company’s Registrar all pre-existing charges. It will also be required to deregister in the jurisdiction where it was incorporated.
Increased Record Keeping Requirements
The period for which records must be maintained has now been extended from two to at least five years for all companies and LLPs that are struck off and dissolved by their members, partners and creditors as well as for liquidators of dissolved companies and LLPs.
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