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2017.04.12 - Singapore: the requirement to keep the information about controlling persons

 

On 31 March 2017, the Singapore Companies Act (Cap. 50) was amended with a new requirement related to the compulsory keeping of information on controlling persons of companies, partnerships and other legal entities registered in the country.

By this legislative amendment, Singapore became one of the first jurisdictions outside EU where the obligation to keep the information on beneficial owners (controllers) of companies is stipulated not only by AML regulations - but also directly by the corporate legislation.

In particular, now the Singapore Companies Act is amended by a new article: Part XIA – “Register of Controllers and Nominee Directors of Companies”.

Some essential aspects of this amendment are given below.

  1. Pursuant to clause 386 AF of the Companies Act, a company must complete a register of its controllers not later than in 30 days after the date of the incorporation.
  2. For existing companies (i.e. - registered before the new regulation entered into legal force), the period for completing a register of controlling persons is determined until 31 May 2017.
  3. The conditions under which a private individual is recognised as a controlling person, in general are the same as in other countries, i.e. - a controlling person is a person who:
    1. owns more than 25% of company shares,
    2. has more than 25% of voting rights in the company,
    3. is directly or indirectly entitled to appoint or revoke directors of the company,
    4. is entitled to perform or actually performs a significant control over the company.
  4. Pursuant to clause 386 AG of the Companies Act, a company must take reasonable steps to find out and identify its controllers that qualify for registration - in particular, a company is entitled to issue a notice to any person whom it knows or has reasonable grounds to believe should be registered as a controller, and to demand a written confirmation on that fact. In its turn, the law provides that a person who has received such notice must give a reply within the period specified in the notice.
  5. Pursuant to clause 386 AI of the Companies Act, if a company knows or has reasonable grounds to believe that any of the particulars of a registered controller that are stated in the company’s register is incorrect, the company must give a notice to this controller to confirm whether the particulars are correct - and if not, to provide the correct particulars. In its turn, the law provides that a person who received such notice must give a reply within the period specified in the notice.
  6. In accordance with the amendments, the legislation also considers the status of nominee directors. Thus, clause 386AL of the Companies Act stipulates that a director who is a nominee must inform the company of that fact and provide such prescribed particulars of the person for whom he acts as a nominee. In case of registration of a new company, the period for provision of such information is specified as no later than within 30 days from the date of incorporation; but in the case of a company already existing at the time of the implementation of this provision – not later than the 31 May 2017.
  7. A company must keep the registers of nominee directors in its files under the provisions described above in ‘6)’.
  8. The Registrar of Companies or other competent institution of Singapore is entitled to check, analyse and copy the above stated registers being at the disposal of the company, and the company is obligated to present such registers upon the request of the specified institutions.
  9. In its current redaction, the legislation does not stipulate for submission of the above information or part of it to the Registrar of Companies or other state institutions. The information must be kept at the registered address of the company.
  10. For the failure to comply with any provisions in relation to the register of controlling persons, the company itself as well as each of its officials who committed such violation is a subject to a penalty of up to 5000 Singapore dollars. Also, an identical penalty may be imposed on persons specified in points 4), 5) above, i.e. - the persons who received the company’s notice but failed to provide a reply to such notice, or provided false information.

Comments by INTERNATIONAL OVERSEAS SERVICES:

By adopting this new legislative rule, Singapore confirmed its status of one of the most progressive and leading jurisdictions in relation to corporate law.

As is known, the registers of controlling persons will be implemented in EU countries during 2017, pursuant to Directive EU 2015/849. In this aspect, Singapore is following the same trend, but, on contrary of EU countries, the current stage of Singapore legislation does not determine a statutory obligation to file the information on controlling persons to a centralised state register.

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