The Accounting & Corporate Regulatory Authority (ACRA) implemented new requirements on 4 October which make it mandatory for both local and foreign companies in Singapore to keep a non-public register of nominee shareholders and their nominators.
The new requirements also make it mandatory for companies and Limited Liability Partnerships (LLPs) that are unable to identify a registrable controller who has a significant interest in or significant control in them to identify, all individuals with executive control over the company or LLP as registrable controllers by the same date.
The compliance deadline for both is 5 December 2022. Fines for non-compliance are up to SGD5,000 per offence.
These amendments, introduced under the Corporate Registers (Miscellaneous Amendments) Act 2022, which was approved by parliament on 10 January, are intended to strengthen Singapore’s corporate governance regime and bring it into closer alignment with the international standards set by the Financial Action Task Force (FATF).
The FATF, of which Singapore is a member, is an intergovernmental organisation that sets international standards to prevent global money laundering, terrorism financing and other threats to the integrity of the international financial system.
The Singapore Companies Act already requires companies to maintain a register of members – or shareholders – but in certain situations a shareholder may hold shares on behalf of another person. In such a situation the person holding the shares is known as the nominee shareholder, while the person for whom the shares are held is known as the nominator.
Previously Singapore law did not require the nominator to be identified because he or she was not the shareholder on record. However, because the nominee shareholder typically acts on the instructions of the nominator, the lack of transparency on the identity of these persons who actually controlled the shares was an area of concern internationally.
Under the amendments, both local and foreign companies in Singapore are now required to maintain a Register of Nominee Shareholders (RONS) at their registered office or at the registered office of their appointed Registered Filing Agent. The register is confidential and must not be disclosed to any member of the public, including the company’s auditors.
The definition of a nominee covers anyone who votes or collects dividends on behalf of the nominator. Nominees must notify the company of their status and the identity of the nominator either within 30 days of being appointed or the company’s incorporation, if incorporated after 4 October 2022.
The RONS will need to contain prescribed particulars of the nominator(s) of the company’s nominee shareholder(s). Companies must set up their RONS by 5 December 2022 and are further required to update this register within seven days of being informed by the nominee.
The rule is subject to some exceptions, which mostly relate to listing on a regulated stock exchange, although there is also an exemption for wholly owned subsidiaries of a foreign company that is a Singapore financial institution.
The second set of amendments introduces new requirements in relation to the identification of registrable controllers, for local and foreign companies and LLPs.
Previously, companies and LLPs were required to maintain a Register of Registrable Controllers (RORC) – individuals or corporate entities that have a significant interest in or significant control over the company or LLP – but there were situations where a company or an LLP claimed to have no registrable controllers with significant interest or control.
Under the new requirement, companies and LLPs that are unable to identify a registrable controller who has a significant interest in or significant control over them will be required to identify all individuals with executive control over the company or LLP as registrable controllers. Individuals with executive control are the chief executive officers, and directors or partners who exercise executive control over the daily or regular affairs of the company or LLP through a senior management position.
Companies and LLPs are now required to record the prescribed particulars of individuals with executive control in their existing RORC by 5 December 2022. The same information must also be lodged with the ACRA central RORC within two business days after any update(s) to their own RORC.
The Corporate Registers (Miscellaneous Amendments) Act 2022 also contained other amendments establishing a seven-day time limit for Singapore companies to update their registers of nominee directors and a 30-day time limit foreign companies to update their registers of members. These changes came into force on 30 May.