Public Consultation On Proposed Amendments To The Companies Act

Accounting and Corporate Regulatory Authority - ACRA

Accounting and Corporate Regulatory Authority

Consultation Period: 20 Jul 2020 - 17 Aug 2020
Status: Open

Background

2. ACRA had set up a Companies Act Working Group (“CAWG”) in January 2018 to review several areas of the CA. The review was part of ACRA’s efforts to ensure Singapore’s corporate laws and regulatory framework stay competitive. The CAWG, chaired by then-ACRA Board member Professor Tan Cheng Han, S.C. and comprising members from local and international law firms, industry regulators and associations, had deliberated on the proposed amendments with inputs and feedback from stakeholders. Please refer to Annex A for the list of CAWG members.

3. ACRA also reviewed other requirements in the CA, with a view to streamlining filing process and updating regulatory requirements.

Report and recommendations by the CAWG

4. The CAWG reviewed 56 issues and recommended 36 legislative reforms, covering the following areas:

(a) Facilitating digitalisation,
(b) Types of companies and financial reporting,
(c) Matters relating to directors and company secretaries,
(d) Safeguarding shareholders’ interests,
(e) Share capital and financial assistance, and
(f) Updating outdated provisions.

5. The recommendations by the CAWG took into consideration the evolving business environment including developments in the use of technology by companies, and striking a balance between an effective and efficient regulatory framework and the compliance burden on companies. Some of the key recommendations by the CAWG are highlighted below:

(i) Dematerialisation of shares and facilitating digitalisation

6. The CAWG considered the use of digital media and technology within the context of the CA, and made recommendations in respect of dematerialisation of physical share certificates, facilitating digital meetings, and clarifying the application of existing digitalisation provisions to documents under the CA.

(ii) Review of company types and refinements to financial reporting criteria

7. The CAWG undertook a review of the existing company types and financial reporting requirements in the CA, and recommended to:

(a) introduce a concept of “publicly accountable company” for the purposes of financial reporting to better tailor the financial reporting obligations in the CA to a broader group of stakeholders (e.g. shareholders; creditors), based on the public interest/accountability of companies; and

(b) introduce the concept of a “micro” company, defined as a company which fulfils the requirements of total annual revenue and total assets each being not more than $500,000, and allow such micro companies that are non-publicly accountable to prepare reduced/simplified financial statements.

8. The CAWG also reviewed the requirements to file financial statements and proposed to retain the current requirements that:

(a) all companies should be required to file financial statements except (i) dormant relevant companies and (ii) prescribed companies that meet the criteria in regulations made under the CA. The existing solvent exempt private company criteria should be prescribed in the regulations; and

(b) all filed financial statements should be made available to the public, except for filed documents relating to Gazetted exempt private companies which are wholly owned by the Government under section 12(2A) of the CA.

Proposed amendments from Other Review

9. ACRA has reviewed existing regulatory processes and requirements in the CA, in order to streamline filing and regulatory obligations and update regulatory requirements. The proposed legislative changes include the following:

(i) Streamlining and clarifying financial reporting requirements for companies and foreign companies

(a) Grant the Registrar the power to exempt a company from all the requirements in the Accounting Standards and to require the company to comply with other accounting standards instead.

(b) Grant the Minister the power to exempt classes of companies from compliance with any or all the requirements in the Accounting Standards and to require the classes of companies to comply with other accounting standards instead.

(c) Allow foreign companies preparing financial statements in accordance with accounting standards that are substantially similar to Singapore’s Accounting Standards to file these financial statements with ACRA, so as to reduce compliance costs.

(d) Allow foreign companies with insignificant operations in Singapore to file unaudited branch accounts, instead of an audited statement of assets, liabilities and profit and loss in respect of the foreign company’s operations in Singapore.

(ii) Removing outdated requirements and clarifying provisions in the CA

(a) Remove the requirement for public companies limited by shares to hold statutory meetings and their directors to forward a statutory report to members prior to the meeting.

(b) Grant the Registrar the power to update changes in appointments of directors and secretaries to enhance the accuracy of information in the registers of directors and secretaries.

(c) Clarify the date that the Registrar strikes a company off the register, or restores the company’s name to the register, such that it coincides with the date indicated in ACRA’s BizFile+ system instead of the date published in the Gazette.

Public consultation details

10. The public can access the consultation documents on ACRA’s website (www.acra.gov.sg) and the REACH consultation portal (www.reach.gov.sg). Members of the public can submit their comments via email to “ACRA_Public_Consultation@acra.gov.sg”, by indicating “Public Consultation on proposed amendments to the Companies Act” in the subject line.

11. ACRA will publish a summary of the comments received. The summary will not disclose the identity of the respondents and will not separately address or acknowledge every comment received.

Documents for download

• Annex A: Members of the Companies Act Working Group
• Annex B: The Report of the Companies Act Working Group
• Annex C: Public consultation questions on the Recommendations of the CAWG
• Annex D: ACRA’s proposed amendments to the Companies Act and subsidiary legislation