Corporate Registers (Miscellaneous Amendments) Bill

Mr Louis Ng Kok Kwang (Nee Soon): Sir, this Bill gives effect to the Financial Action Task Force's recommendations on the prevention of money laundering and terrorist financing. Preventing the illicit movement of funds is key to Singapore's role as a respected international financial hub and I am glad we are taking steps to strengthen our protections. I have three points of clarification.

 First, can the Minister clarify the reasons why directors with executive control and the CEO must be listed in the register if no registrable controller is identified? Why are these two groups specifically listed? Does this mean that no other person can have executive control and is not relevant to be disclosed in the register? Further, this requirement seems repetitive, given that the information about directors and CEOs are already filed with ACRA.

Second, can Minister provide more clarity on the definition of "nominee shareholders"? What would be necessary before someone is considered "accustomed"? The amendment states that the nominee must also receive dividends on behalf of the principal shareholder. Is it sufficient that there is an agreement for the nominee to receive dividends, or must there be an actual distribution into the hands of the nominee? If it is the latter, this creates a problem where it is impossible to clarify nominee status for companies that do not issue dividends.

Third and finally, can the Ministry share how it will support small businesses in complying with these new regulations? The new regulations apply not only to multinational corporations or financial institutions but also small local businesses. For small businesses, these rules can be complex and require proportionally larger costs to comply with. How will the Ministry support our small businesses to ensure these regulations do not unfairly burden them?

In summary, I seek clarification on three things: the need to list directors or CEOs in the register, the definition of nominee shareholders and the ways the Ministry will support small businesses in complying with the new regulations. Sir, notwithstanding my clarifications, I stand in support of the Bill.

Ms Indranee Rajah (The Second Minister for Finance): Mr Deputy Speaker, I would like to thank Mr Louis Ng and Mr Leon Perera for speaking on the Bill and for their support. Mr Ng raised three points of clarification, which I will address in turn.

First, Mr Ng asked about the rationale for identifying CEOs and directors with executive control to be listed in the Register of Registrable Controllers, if a company is unable to identify a registrable controller. As I had explained in my speech earlier, there have been situations, where a company claimed to have no registrable controllers with significant interest or control. Currently, such companies would not be required to enter any particulars into the register of controllers.

The intent of the Register of Registrable Controllers is to increase the transparency of natural persons who have beneficial ownership and control of companies. In situations where no registrable controllers are identified, persons with executive powers within the company are effectively exercising control. It is therefore necessary to include these persons in the Register if no other controller can be identified.

Mr Ng also asked if it is necessary to provide particulars of the CEO and the directors in the register of registrable controllers, when ACRA may already have the information in other registers.

The reality is that a company can have many directors, but not all of them exercise executive control over the company. The purpose of the new requirement is to ensure that companies identify the directors and CEOs with executive control, so that the beneficial owners are properly identified.

Next, let me address Mr Ng's clarification on the definition of a nominee shareholder.

A shareholder is considered to be a nominee if he fulfils the following two criteria in respect of the shares that he holds.

First, he is accustomed to, or under an obligation to vote in accordance with the instructions of any other person. The word "accustomed" suggest some degree of habit – meaning that there must be some consistent pattern in behaviour of the nominee shareholder voting in accordance with the instructions or wishes of any other person and occasional instances of such behaviour would not be sufficient to constitute "accustomed".

The second criterion is that he or she receives dividends on behalf of his or her nominator. Practically, it would suffice if the nominee is expected to receive the dividends on behalf of the nominator even if the dividends are not eventually distributed.

Our amendments are in line with the FATF. I would also add that public companies listed in Singapore and their shareholders will not be subject to this new requirement, as provided for in the Fourteenth Schedule of the Companies Act.

Lastly, Mr Ng asked about the compliance cost of the new requirements and the support that Government will put in place. To be clear and as mentioned in my speech earlier, out of the four sets of amendments in this Bill, two are clarifications on timelines and only two are new requirements.

The new requirement to maintain a Register of Nominee Shareholders is unlikely to materially increase compliance costs, especially if the small businesses do not have nominee arrangements. Moreover, the responsibility on the company is only to maintain such a register based on declarations by nominee shareholders. Companies will not be required to send notices to check if shareholders are nominees.

The other new requirement is to identify individuals with the executive control of a company or LLP to be listed in the Register of Registrable Controllers, if they are unable to identify a registrable controller.

Again, this is unlikely to increase compliance cost. I would also like to highlight that these new requirements will only apply to companies and LLPs. Small businesses that are set up as sole proprietorships or general partnerships will not be impacted by them.

The Government will help companies and LLPs to comply with the new requirements. ACRA will issue a Guidance on the new requirement of maintaining a Register of Nominee Shareholders. The Guidance will contain detailed instructions to clarify and explain the new requirements. For example, it will provide details on how a nominee shareholder and nominator can be identified and include a model template to support the maintenance of the register.

ACRA will also update the existing Guidance on the Register of Registrable Controllers for companies and LLPs, to provide clarity on how these entities can identify persons with executive control as registrable controllers.

Mr Leon Perera had a number of questions. The first one, I believe, relates to the different time frames.

The 30-day time frame for foreign companies to update the Register of members is consistent with section 372 of the Companies Act, which requires foreign companies to update any changes in their particulars in ACRA's registers within 30 days. This also provides sufficient time for foreign companies to contact members, who are located overseas and update the Register, which is located in the registered office in Singapore.

In comparison, local companies are to update the Register of Nominee Directors within seven days of being informed of any changes by the nominee director. This provides sufficient time for local companies to update the register whilst ensuring that the registers are updated in a timely manner.

I think the general principle really is of the underlying assumption that if it is a local director, then it will be easier to contact the relevant persons and to do the updating.

This is not something which is particularly unique or startling, for the simple reason that there are many types of deadlines where more time is given to foreign companies, simply because they need to contact people who are overseas.

The second item that he raised was: what about items where we are partially compliant, rather than fully compliant? I think the answer is this, we continually review our regulations and our practices to make sure that we are in line with international practices. Some things may take a little bit more time. Some things need to be studied. So, for example, this latest set of amendments are a result of our review coming out of previous comments. So, it is a work in progress. But I think the Member can be assured that we will continue to work towards greater transparency and making sure that we are in alignment with international frameworks.

And finally, I think he asked when Guidance will be given on certain definitions. That will be done as soon as reasonably practicable.

Mr Deputy Speaker, I think that answers the questions and I beg to move.

Source: Hansard