Singapore strengthens corporate governance regime with updates to company laws

The latest move comes after Parliament passed the Corporate Registers (Miscellaneous Amendments) Act. ST PHOTO: LIM YAOHUI

SINGAPORE - Companies in Singapore will soon be required to keep registers of nominee shareholders and their nominators, and update their registers within seven days of being informed by the nominee, in line with international standards.

This will address the lack of transparency on the identity of these persons who actually control the shares in the companies, which is an area of concern internationally.

The latest move comes after Parliament passed the Corporate Registers (Miscellaneous Amendments) Act on Monday (Jan 10), which amends the Companies Act and Limited Liability Partnerships (LLP) Act.

The amendments further strengthen Singapore's corporate governance regime to combat money laundering, terrorism financing and other threats to the integrity of the international financial system. The updates also bring Singapore into closer alignment with international standards set by the Financial Action Task Force (FATF), of which Singapore is a member, said Second Minister for Finance Indranee Rajah.

Both local and foreign companies in Singapore will be required to keep a non-public register of nominee shareholders and their nominators, and to update their register within seven days of being informed by the nominee.

These are situations where a shareholder holds shares on behalf of another person - the person holding the shares is known as the nominee shareholder, while the person for whom the shares are being held is known as the nominator.

Current regulations do not require nominators to be identified as they are not the shareholder on record.

However, the lack of transparency over the identity of these persons who actually control the shares - as the nominee shareholder typically acts on the instructions of the nominator - is an area of concern internationally, Ms Indranee noted.

The changes passed on Monday aim to address these concerns and align Singapore's legislation to FATF recommendations, she added.

At the same time, new requirements were also introduced to enhance the transparency of beneficial ownership and the control of companies in Singapore.

The amendments also clarify the timelines for local and foreign companies to update their various registers.

Speaking during the debate on the Bill, Workers' Party MP Leon Perera (Aljunied GRC) said the Bill is a step in the right direction for Singapore.

"(It) underlines our commitment to being a responsible global player in financial services, one that is committed to a transparent rules-based global order and hence able to derive economic benefits from that order," he said.

Mr Perera also asked about Singapore's plans to improve compliance with other FATF recommendations, noting that the Republic was found to be only partially compliant with several recommendations.

The FATF is an inter-governmental organisation that sets international standards to prevent global money laundering and terrorism financing, and the harm these activities cause to society.

In reply, Ms Indranee said: "We continually review our regulations and our practices to make sure that we are in line with international practice. Some things may take a little more time, some things need to be studied."

She added that Singapore will continue to work towards greater transparency and make sure it is in alignment with international frameworks.

The minister also addressed Mr Perera's question on whether there can be more guidance on certain definitions in the law, such as what is a "nominee shareholder". Such guidance would be given "as soon as reasonably practicable", she said.

Mr Louis Ng (Nee Soon GRC) also asked how the Ministry of Finance would help and support small businesses in complying with the new regulations, for which the rules may be complex and require proportionally larger costs to comply with.

To this, Ms Indranee said the new requirements are unlikely to increase compliance costs, noting that these changes apply only to companies and LLPs, and small businesses that are set up as sole proprietorships or general partnerships will not be affected by them.

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