WongPartnership looks at some of the latest legislative developments in Singapore's market
On the legislative and regulatory front, for companies incorporated, registered or listed in Singapore, there have been some significant amendments which have recently come into effect, or have been put forward for public consultation. Amongst the more significant of these are the comprehensive amendments to the Companies Act, amendments to the listing manual (“Listing Manual”) of the Singapore Exchange Securities Trading (SGX-ST), and extensive suggested amendments to the Securities and Futures Act including changes to the market conduct provisions.
Companies (Amendment) Act 2014
After an extensive consultation process spanning several years, in October 2014 the Companies (Amendment) Act 2014 (CAA) was passed. The last comprehensive review of the Companies Act was conducted in 1999, and the CAA makes wide-ranging amendments to the Companies Act, touching on all areas, from provisions relating to directors, shareholder rights and meetings, to shares and share-related provisions, accounts and audit, general company administration and registration of charges.
The amendments are to come into effect in two phases, with the first phase of amendments taking effect from July 1 2015. Some of the key amendments that have already come into effect include:
The introduction of a small company audit exemption. To qualify as a small company, the company must be a private company that meets the specified criteria as to the number of employees, revenue, and/or assets.
New exceptions to the giving of financial assistance, including an exception allowing a company to give financial assistance for the purchase of its shares where the giving of such assistance will not prejudice the interests of the company or its shareholders, or prejudice its ability to pay its creditors.
The prohibition against financial assistance has been removed for private companies (other than subsidiaries of public companies).
The second phase of amendments will take effect from January 3 2016. These include:
The introduction of a multiple proxies regime to enfranchise indirect investors.
The requirement of one-share one-vote for public companies will be removed, allowing public companies to issue shares with different voting rights and give public companies greater flexibility in capital management.
Numerous changes relating to foreign companies, which are required to be registered if they carry on business in Singapore.
Listing Manual
In 2015, the key amendments to the Listing Manual that took effect included most significantly, the establishment of three committees, a Listings Advisory Committee to review listing applications where novel issues or public interest is involved or specialist expertise is required, and a Disciplinary Committee and an Appeals Committee, set out in a new Chapter 14 of the Listing Manual on discipline and appeals procedures (set out in detail in the Chapter) and enforcement powers of the SGX-ST (which were also enhanced).
Also introduced was a requirement for issuers to state in their quarterly financial statements that they have procured undertakings from all their directors and executive officers to comply with the Listing Manual and relevant laws, etc., in the format prescribed by the Listing Manual.
New provisions also took effect requiring issuers to keep track of persons who have access to material information and a requirement to submit a “privy persons list” to the SGX-ST upon request, setting out information prescribed by the Listing Manual.
Scheduled to come into effect on March 1 2016 are provisions relating to a minimum trading price for SGX-ST Mainboard-listed corporations, though the SGX-ST also recently announced an extension of the review for compliance with the minimum trading price for corporations consolidating their shares, to September 1 2016.
Proposed amendments to the Securities and Futures Act
In February and August 2015, the Monetary Authority of Singapore (MAS) commenced public consultations on policy proposals to amend the regulatory regime in the Securities and Futures Act (SFA) with respect to market misconduct, short selling, and the recognition of foreign collective investment schemes.
Key areas of proposed amendment are as follows:
The market conduct provisions in Part XII will be extended to acts not just in relation to securities but also in relation to securities-based derivative contracts, units in collective investment schemes, and derivative contracts, which will affect quite a few provisions (including the insider trading provisions).
Part VII of the SFA relating to Disclosure of Interests will be amended to reflect the requirement on the part of directors or chief executive officers of listed corporations, managers of REITs, and trustee-managers of Business Trusts, and such managers and trustee-managers, to disclose interests in such securities-based derivative contracts as the MAS may prescribe, and to allow the MAS to extend the scope of the Division to any class of persons, securities, and interests, if it thinks it necessary in the public interest or to protect investors or enhance market transparency.
Section 199 of the SFA will be amended to clarify that there is no requirement of material price impact to establish a case of false or misleading disclosure.
A statutory definition of “persons who commonly invest” will be introduced to ensure that the standard market knowledge reflects the majority of market participants. The proposed definition provides that “persons who commonly invest” refers to members of the public who deal in the relevant asset class on a regular basis. The MAS intends to issue guidelines setting out the level of knowledge and qualities possessed by “persons who commonly invest”.
The civil penalty ceiling will be increased to the greater of S$2 million (currently, S$50,000) or three times the amount of profit gained or loss avoided by a person in breach of the insider trading provisions.
Conclusion
Singapore is always striving to ensure that its corporate regulatory regime is robust and supports Singapore’s growth as a global hub for businesses and investors. The recent legislative and regulatory changes, in particular, the changes to the Companies Act, will benefit various stakeholders, including public corporations, private companies, small-and-medium enterprises and retail investors, by reducing the regulatory burden on corporations, providing for greater transparency and business flexibility, and improving corporate governance, in Singapore.
WongPartnership
Singapore