As of 31 March 2017, the Accounting and Corporate Regulatory Authority (ACRA) announced changes to the Companies Act and Limited Liability Partnerships (LLP’s) Act. These changes were introduced to reduce compliance costs; make ownership and control of business entities more transparent; and increase efforts to position Singapore as a trusted and clean international business hub.
The most significant change introduced affects all Singapore companies and LLP’s, including foreign companies registered to do business here in Singapore. From now, all companies are required to keep a register of beneficial owners, significant controllers and nominee directors.
These new requirements apply to the following entities:
- All companies and Limited Liability Partnerships (LLP’s) incorporated / registered in Singapore. These will be obliged to maintain registers of controllers and of nominee directors.
- Foreign companies registered in Singapore. However, these will only need to maintain a register of controllers.
However, some entities are exempted and these include:
- Singapore-incorporated companies listed on an approved exchange.
- Singapore financial institutions, and their wholly owned subsidiaries.
- Companies (Singapore as well as foreign) listed on a foreign securities exchange with regulatory disclosure requirements and adequate transparency obligations regarding beneficial owners. However, the wholly owned subsidiaries of these companies are not exempt.
So what is a register of registrable controllers?
It is a record of all individuals or corporate bodies within a company that have a significant interest in, or significant control over, it:
- A person with “significant control” - has the right to appoint or remove a majority or directors or has the permission to use significant influence or control over specified matters.
- A person with “significant interest” - has an interest more than 25% of the shares held and/or 25% of voting rights in the company.
If you are unsure about the rules determining whether a particular person appears on a company’s register of registrable controllers then please do contact us or visit the ACRA website.
It is also important to know that a company’s obligation extends beyond just the register itself but how the company acquires the information:
- A company is required to take reasonable steps to find out and identify their registrable controllers. It must send out a notice to each member and each director of the company at least once annually, whether electronically or in hard copy format. Addressees have 30 days to reply to the notice and companies have two days to update their register with the information received.
- A company must keep the particulars in the register accurate and up-to-date and must send out such a notice once it is alerted to a possible change.
- If the company does not receive a response to an enquiry, the company may state in the register that the particulars of the relevant registrable controller have not been confirmed. The company is not required to ensure that a response is received.
What is a register of nominee directors?
All Singapore-incorporated companies are also required to keep a register of nominee directors from 31 March 2017. Unlike the register of registrable controllers, a company is not required to ascertain whether it has any nominee directors. It is the obligation of the nominee director to notify the company of his status and particulars of his nominator.
A nominee director is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of any other person, e.g. a contract, trusts or informal arrangement.
You must also be aware that ACRA has made it mandatory for the registers to be available at any time for inspection by themselves and law enforcement authorities. However, the registers are not for public review.
The new registers must also be located at either a company’s registered office in Singapore or at some other location in Singapore. ACRA must be informed where the register is kept. There is currently no exemption from this requirement.
As always, it is important that companies comply with these new regulations, Failure to do so constitutes a criminal offence and the offender can be liable to a fine of up to S$5,000.
Please contact us via email at firstname.lastname@example.org if you want to find out how these changes affect your company. Alternatively, additional guidelines and information is available at www.acra.gov.sg/CA_2017