With the aim of mitigating the use of corporate vehicles for illicit purposes, Singapore has implemented enhancements to the transparency of Singapore’s corporate governance regime, which came into effect on 4 October 2022. These enhancements are in alignment with recommendations made by the Financial Action Task Force, and affirm Singapore’s pledge to combating money laundering, terrorism financing and other threats to the integrity of financial ecosystems at large.
This brief sets out a quick overview of the compliance measures that executives and in-house counsel should be aware of.
First: Register of nominee shareholders
Both local and foreign companies in Singapore will have to now keep a register of nominee shareholders and their nominators. This means that nominee shareholding arrangements will have to be disclosed to the company in question, a turn from the previous position in Singapore whereby such arrangements could be kept confidential as between the nominee shareholder and the nominator. However, this register would be a non-public register, only accessible by the authorities.
The law also provides a definition as to who would be taken to be a nominee shareholder – namely, one who is accustomed to or under an obligation to vote in accordance with the instructions of another person, and receives dividends on behalf of another person. For the purposes of this new rule, this envisages the existence of a steady pattern of one acting on the instructions of another for a nominee arrangement to be established.
Companies should note that they do not have the obligation to check for the existence of nominee shareholder arrangements; their obligation extends only to recording any such arrangements in the register of nominee shareholders as may be disclosed to them.
Second: Identification of registrable controllers
Companies here have been required to maintain a register of registrable controllers who have significant interest or control in the company. There have however, been instances where companies have claimed that they do not have any registrable controllers.
The law has now been amended to require companies that are unable to identify a registrable controller to list down all individuals with executive control over the company as registrable controllers. These would include CEOs or directors exercising day-to-day control over the affairs of the company. The intent is to ensure that persons having effective control are duly identified.
These enhanced standards of transparency should be seen as a boost to Singapore’s reputation as a responsible global player, which will in turn allow the economy to derive economic benefits. Companies will have to be clear on their obligations (and the extent of those obligations) under these new rules, and adjust their corporate governance procedures and practices to conform to the higher standards set.
For further information, please contact:
JTJB Singapore Office