Introduction

The Transport Sector (Critical Firms) Act 2024 (“Act”) is a legislation that aims to enhance the resilience of key firms in the air, land, and sea transport sectors and safeguard their provision of essential transport services in Singapore. The law came into force on 1 April 2025.

The Act empowers the Civil Aviation Authority of Singapore (“CAAS”), the Land Transport Authority (“LTA”), and the Maritime and Port Authority of Singapore (“MPA”) to designate key transport firms. CAAS, LTA and MPA will also provide their respective designated entities with sector-specific guidance on compliance with certain requirements.

A designated entity refers to a designated operating entity or a designated equity interest holder:

• Designated operating entity: An entity that provides any essential transport service in Singapore and are strategically important within the sector (e.g. if the services they provide are not readily replaceable due to significant market share or specialised expertise).

• Designated equity interest holder: An entity that holds an equity interest in a designated operating entity and has a strong nexus of control over the designated operating entity.

An entity that was formerly designated as a public licensee or a designated business trust, would now also be classified as a designated operating entity under the new law – this applies to PSA Corporation Limited (a designated public licensee since 15 January 2018). PSA International Pte Ltd, being a person who holds equity interest in PSA Corporation Limited is a designated equity interest holder.

In accordance with the Maritime and Port Authority of Singapore Act 1996, the essential transport services identified within the sea transport sector are bunker supply and delivery, salvage operations, monitoring and management of shipping traffic and passenger ferry operations.

PSA Marine (Pte) Ltd and Jurong Port Pte Ltd are key players in the Singapore maritime sector and they were specified as designated operating entities with effect from 15 April 2025. PSA Marine supports the operations of PSA International (which operates a global network of ports and terminals) in various locations around the world. Jurong Port is a leading international port operator which begun its operations ever since Singapore’s independence. These entities play a critical role in Singapore’s national security, providing essential services that facilitates global trade.

After consultation with the Minister, the MPA may also designate a licensee that is not a designated operating entity as a designated licensee if the MPA considers that the designation is necessary in the public interest. In this regard, the MPA listed Singapore Cruise Centre Pte. Ltd. as a designated licensee by way of a notification made on 25 March 2025.

 

Operations and Resourcing Controls

The implementation of these controls ensure that designated operating entities are equipped and able to provide essential transport services in Singapore under all circumstances, including during crises.

Designated operating entities are required to notify the MPA of an agreement for the outsourcing of a material function performed by the designated operating entity in the provision of any essential transport service at least 14 days before entering into the agreement.

Designated operating entities are also required to notify the MPA within 7 days after becoming aware of the occurrence of any of the following:

• Civil or criminal proceedings (whether in Singapore or elsewhere) instituted against the designated entity, or any event that materially impedes or impairs the operations of the designated entity carried out in the course of providing any essential transport service.

• The designated entity being or becoming, or being likely to become, insolvent.

• The designated entity being wound up or subject to any receivership or judicial management order or entering into a compromise or scheme of arrangement.

Upon receiving a notification in relation to an agreement or the occurrence of an event, the MPA may direct the designated entity to submit information relating to the agreement or event within a specified period.

Under the Act, the Minister can issue a special administrative order to direct that the affairs, business and property of a designated entity are managed by an appointed person (which may be the MPA) for the purposes of, amongst others, the security and reliability of the business, undertaking or activities of the designated entity in Singapore of providing essential transport service.

 

Ownership Controls

These controls are to ensure oversight of significant changes in effective control of the designated entities.

If a person becomes a 5% controller of a designated entity on or after the effective designation date as a result of an increase in the holding of equity interest, or in the voting power controlled, by that person or any associate of that person, that person must within 7 days after becoming the 5% controller give written notice to the MPA of that fact.

Except with the prior written approval of the MPA, a person must not as a result of an increase in the holding of equity interest, or in the voting power controlled, by that person or any associate of that person, become a 25% controller, 50% controller or 75% controller of a designated entity on or after the effective designation date. A person must not become an indirect controller of a designated entity on or after the effective designation date unless the person has obtained the prior written approval of the MPA. Approval may be given by the MPA if the following requirements are satisfied: 

1. Fit and proper: The requirements apply to the person who is to become a 25% controller, 50% controller, 75% controller or indirect controller of a designated entity and every associate of that person 

2. Ongoing prudent management and compliance with legal obligations: Having regard to the influence of the person referred to in 1. above and every associate of that person known to the MPA, the designated operating entity/ the designated operating entity in respect of which the designated equity interest holder is so designated will continue to conduct the business of the designated operating entity prudently and comply with the provisions of the Act. The designated equity interest holder will continue to comply with the provisions of this Act.

3. Reliable, efficient, economical and safe provision of the essential transport service: An example of when this requirement applies is where the essential transport services provide is a licensed service and the provision is by the designated operating entity of the designated operating entity of which the person is to become a 25% controller, 50% controller, 75% controller or indirect controller.

4. It is in the public interest to do so.

 

Management Appointment Controls

These controls ensure oversight of the key persons responsible for the management of the Designated Entities and operations affecting the continued provision of the essential transport service Designated entities must notify the relevant authority and obtain prior written approval for leadership changes and where the business of the designated operating as going concern.

Leadership changes include the appointment of key positions such as the chief executive officer, the chairperson of its board of directors or any of its directors. Approvals for appointments are granted subject to any conditions that the MPA considers appropriate to impose. The specific criteria guiding these approvals have not been made public.

In relation to ownership changes, prior written approval must be obtained by the MPA before the acquisition of the designated operating entity’s business of providing any essential transport service (or any part of such business). The application must be made jointly by the person intending to acquire the business and the designated operating entity or, if the designated operating entity is a business trust, its trustee‑manager.

 

Penalties

Individuals that contravene the aforementioned regulations could be subject to a maximum fine not exceeding $500,000 or to imprisonment for a term not exceeding 3 years or to both. In any other case, entities could be subject to a maximum fine of $1 million.

 

Conclusion

The introduction of regulatory controls over key firms, particularly in the maritime sector, is timely and necessary considering Singapore’s growing reliance on global trade to secure essential supplies and sustain economic growth. These measures strengthen national resilience and support the development of a more robust and secure maritime infrastructure while ensuring that our transport industry remains open, pro-business and investor-friendly.

Designated entities should carry out business continuity due diligence to ensure compliance with the applicable controls. A keen understanding of the applicable regulatory requirements is crucial for potential investors in order to avoid legal, financial, and reputational consequences due to non-compliance.

The controls introduced safeguard the provision of essential transport services in Singapore against major disruptions and mitigates the risk of our key transport entities falling under the control of hostile or unqualified parties, whilst promoting greater stakeholder accountability.

Prepared By: