Singapore opens public consultation on changes to Companies Act

The Accounting and Corporate Regulatory Authority (ACRA) is seeking public feedback on areas relating to digitisation, shareholder interest, financial reporting and other areas

The Companies Act Working Group (CAWG), which was set up by ACRA in 2018 to review several areas of the Companies Act, has reviewed 56 issues and recommended 36 legislative reforms. Of these reforms and proposed changes, many are in the areas of digitisation and streamlining of processes designed to ensure Singapore’s corporate laws and regulatory framework stay competitive.

The CAWG recommended a number of new proposals to the Companies Act. Among these is the use of digital media and technology and the de-materialisation of physical share certificates and the facilitation of digital meetings.

The concept of a new ‘micro-company’ was also introduced. A Micro-Company is one that has total assets and revenue of SGD500,000 or less and would be able to prepare simplified or reduced financial statements.

Additional recommendations include streamlining and clarifying financial reporting requirements for companies, giving the registrar the power to exempt some companies from reporting requirements, providing the Minister with the power to exempt some classes of companies from compliance from Accounting Standards among others.

Other proposed changes include allowing companies with ‘insignificant’ operations in Singapore to file unaudited branch accounts, instead of an audited statement of assets, liabilities and profit and loss. Having “insignificant operations in Singapore” means that none of the firm’s total revenue, total expenses, total assets, or total liabilities in its unaudited financial statements exceeds S$5 million.

ACRA is seeking feedback on its definition of ‘insignificant operations’ and if there are any concerns around allowing foreign companies to prepare reduced financial statements that are in accordance with accounting standards that are substantially similar to Singapore.

Further propositions include removing the requirement for public companies hold statutory meetings and their directors to forward a statutory report to members prior to the meeting. This would put Singapore in line with Australia, Hong Kong, New Zealand and the UK and reduce compliance burdens.

ACRA would also like to grant the registrar the power to update changes in the appointments of directors and secretaries in order to ensure the accuracy of information in those registers. It would like to ensure the dates that the registrar strikes or restores a company off the registrar is clarified and matches the date indicated in ACRA’s BizFile+ system, removing any ambiguity over the company’s legal status.

Consultation documents are accessible to the public via the REACH consultation portal and ACRA’s website. The consultation period runs from July 20 to Aug 17.

For more information on these proposed changes and the public feedback process, please contact Alpadis Group