In line with the global push towards transparency and initiatives in various jurisdictions with regard to their legislation governing corporations, Singapore passed extensive amendments in March 2017 to the Companies Act. A key purpose of these amendments was to improve transparency with respect to the ownership and control of Singapore companies, to ensure they are not used for illicit purposes. On 24 August 2017, a lunchtime talk was organised to cover this topic. Mr Tan Choon Leng, Director of Singapore law firm JurisAsia LLC, took the audience through the various changes, as well as their practical impact. He also helpfully compared these changes with similar laws in place in the United Kingdom, Hong Kong and the British Virgin Islands, highlighting their major similarities and, in some cases, their subtle differences.
While some of the changes to the Companies Act serve only to deal with administrative burdens (such as the abolition of the need for a company seal, revised timelines by which Annual General Meetings should be convened, the possibility of dispensation with an AGM by private companies, the requirement to retain books for at least five years following a dissolution of the company, and so on), others address more substantive issues. There was greatest interest in the changes requiring the maintenance of a Register of Controllers and a Register of Nominee Directors, and how the law defines what controllers and nominee directors are. During the lively Q&A session, questions were raised as to the extent to which these changes affect the duties of service providers and the practical difficulties of implementation. For instance, how far back in the chain of ownership or influence does one go to determine if any – or every – party is considered a “controller”? If a professional director is given the mandate to act independently with fiduciary duties but is nonetheless influenced by its client in its decision-making process, does it still qualify it as a nominee? Can aggrieved creditors take an action directly against principals of nominee directors?
While it is unlikely that principals of nominee directors will be made directly liable to third parties for damages, Mr Tan agreed that the position with any given set of facts may not be all that straightforward, which is not surprising given how new these laws are. When in doubt, however, Mr Tan suggests erring on the side of caution.
Around 51 people attended the talk.
Click HERE to view event photos.
Mr Lionel Choi
Managing Director, Wealth Planning; LGT Bank (Singapore) Ltd