ACRA Proposed Amendments
On 15 December 2022, Singapore’s Ministry of Law (MinLaw) announced the termination of “Alternative Arrangements for Meetings” (electronic meetings, or e-meetings), to be effective from 1 July 2023. The Alternative Arrangement for Meetings was introduced in April 2020 as part of the COVID-19 (Temporary Measures) Act 2020. The implication of this is that, as of July 2023, entities would no longer be allowed to convene, hold, or conduct meetings through electronic means.
In response to this, legislative amendments to the Companies Act 1967 (CA), Variable Capital Companies Act 2018 (VCC Act) and the Business Trusts Act 2004 (BTA) proposed by The Accounting and Corporate Regulatory Authority (ACRA), the Ministry of Finance (MOF), and the Monetary Authority of Singapore (MAS) will aim to facilitate the conduct of digital meetings and electronic communication. Furthermore, the proposal also includes the review of the threshold for the compulsory acquisition of shares under Section 215 of the CA.
ACRA and the Ministry of Finance published their responses to feedback from a public consultation conducted in 2020 thereby facilitating the path for legislative changes to be tabled and considered in Parliament.
Proposed Key Changes by ACRA
Some of the key changes proposed are:
1. Facilitating digital general meetings and digital board meetings.
Companies would be allowed to conduct digital meetings, unless expressly prohibited by the Constitution. The Companies holding digital meetings must ensure that the specific requirements are met. These include usage of technology that enables members to attend, listen, speak and vote at the meeting. Additional safeguards and requirements may be introduced subsequently via subsidiary legislation.
2. Clarifying the application of existing digitalisation provisions to documents under the CA.
To make further progress in the direction of digitisation, certain other provisions relating to sending notices to members, officers or auditors as well as keeping of company records were proposed and accepted. Further clarification would be provided on the operation of these provisions.
3. Review of the threshold for the compulsory acquisition of shares under Section 215 of the CA.
Under section 215 of the CA, a person (the “transferee”) has the right to acquire the shares of any dissenting shareholder on a compulsory basis if a scheme or contract involving the transfer of all the shares of a company (the “transferor company”) has been approved by at least 90% of the shareholders (“90% threshold”). Section 215(9) of the Companies Act further provides for the exclusion of shares held or acquired by (i) a nominee on behalf of the transferee; or (ii) a related corporation of the transferee or a nominee of that related corporation, from the computation of the 90% threshold for compulsory acquisition.It has been proposed to expand the exclusions in case of shares held by close relatives, corporate entities controlled by the transferee, the ultimate controller, as well as individuals or corporate entities controlled by the ultimate controller.
Of all the proposed changes outlined above, the amendments to the threshold for the compulsory acquisition of shares is gathering significant attention. If passed by Parliament, the proposed amendments would make it difficult for an individual seeking to exercise the right in view of the expanded purview of exclusions. There have been mixed responses to this proposal.
Refer to Annex A for MOF and ACRA’s responses to key feedback on the proposed amendments to the Companies Act.
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