Singapore Companies Act, CAP 50 to undergo changes in 2014

With a view to reduce the regulatory and compliance burden on Singapore registered companies, the Singapore Companies Act is in for major changes. The modified version of the Act will be applicable for the year 2014. These changes were finalised after several rounds of consultation with industry players, service

providers which lasted well over 4 years.

The organization in charge of conducting all the public review and survey is the Accounting and Corporate Regulatory Authority of Singapore (ACRA) and the Ministry of Finance, Singapore. The last review of the Act was conducted in 1999 after which there were comments from various sectors on reducing the compliance burden for small and medium enterprises. Another major factor for the change is the relative difficulty faced by many company officials to understand the provisions laid out in the Act.

 

Some of the main recommendations made for the new Act are as follows,

 

  • Allow public companies to issue shares with different voting rights
  • Add more safeguards to protect the rights of minority shareholders
  • Encourage greater shareholder activism among retail investors
  • Reduce regulatory burden and compliance costs for small companies
  • Boost transparency and corporate governance standards

 

The Ministry of Finance’s responses to the Report of the Steering committee for Review of Companies Act which was issued on the 3rd of October, 2012 divides the recommendations into six major subjects – directors, shareholders’ rights and meetings, accounts and audit, general company administration and registration of charges. There is also one section dedicated to new issues raised. The changes to be made could mean a paradigm shift in the way Corporate Secretarial firms operate in Singapore.

 

 

In this context we would like to point out that due to lesser burdens that would be placed on company officials in terms of compliance; it is likely that costs associated with regulatory services will come down. This reduction can in turn act as a stimulant for many small and medium enterprises to seek professional advice for their accounting and secretarial services. In the current scenario, start-up companies tend to ignore activities like conducting an AGM on time, finalisation of accounts etc. due to higher costs that needs to be incurred in getting this done professionally. 

Ministry of Finance plans to pass the amendment Bill in parliament by the end of the year 2013. The complete text of changes to be made can be found in the website – http://www.enterpriseone.gov.sg/
About Neethu Stephen