New moves to improve corporate transparency

The reforms are aimed at making Singapore a more efficient place for businesses.
The reforms are aimed at making Singapore a more efficient place for businesses. PHOTO: ST FILE

Proposals could also bring down costs of compliance and ease burden on businesses

Sweeping reforms are on the way to lower companies' compliance costs as well as to improve corporate transparency.

The changes range from altering rules around whether annual general meetings (AGMs) should be held, to requiring companies to maintain registers of their beneficial owners or controllers.

The reforms are aimed at making Singapore a more efficient place for businesses while strengthening the sound regulatory framework that has made the country a financial powerhouse.

A total of 12 proposed amendments, which will mean changes to the Companies Act, the Limited Liability Partnerships Act and the Accountants Act, were tabled yesterday by the Ministry of Finance and the Accounting and Corporate Regulatory Authority (Acra) for public consultation.

One of the significant changes would exempt all private companies - those not listed on the Singapore Exchange - from holding AGMs if they fulfil safeguards such as releasing financial statements within five months of their financial year-end. Existing rules allow private companies to forgo AGMs only if all their members approve.

 

Another proposed amendment will simplify the deadline rules for these meetings.

Listed companies must hold AGMs no later than the last day of the fourth month after their financial year-end, while others have until the last day of the sixth month.

These are stripped down from the current rules, a convoluted set of requirements with two timelines and non-specific intervals.

Mr Robson Lee, a partner at global law firm Gibson Dunn, told The Straits Times: "Compared with listed companies, most private companies have a much smaller number of shareholders that are also on the board. For them, the legal requirement for AGMs does nothing except add to compliance costs."

The proposed changes also aim to raise the bar for transparency.

New requirements have been proposed to ask foreign companies and limited liability partnerships here to maintain updated information on their beneficial owners, who are often anonymous and indirect controllers of these entities.

These proposed amendments will help to close a gap that may be abused for money laundering, lawyers told The Straits Times.

TSMP Law joint managing director Stefanie Yuen Thio described a potential scenario: "If a BVI (British Virgin Islands) company is a major shareholder of a company here, the Acra records will only show that BVI company's name.

"But if you do a search on the public register in that BVI company, you would not find the identity of its shareholders - a dead end if you wanted to find out the effective ownership of the said Singapore company."

The public consultation will run until Jan 13.

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A version of this article appeared in the print edition of The Straits Times on December 28, 2016, with the headline 'New moves to improve corporate transparency'. Print Edition | Subscribe