New 2023 key amendments on the Companies Act
Second Minister for Finance, Ms Indranee Rajah delivered the Second Reading Speech on the Companies, Business Trusts and Other Bodies (Miscellaneous Amendments) Bill in Parliament on 9 May 2023.
The 4 sets of amendments introduced to the Companies Act are:
1. Companies now have the permanent option of holding virtual or hybrid meetings in addition to physical meetings. Entities that want to hold physical meetings can still continue to hold them as they wish. The amendments are provided for under clauses 2, 6, 15 and 16 of the bill.
2. The compulsory acquisition framework under S215 of the Companies Act now allows a prospective buyer to acquire the shares of dissenting shareholders, on the condition that his offer is accepted by at least 90% of the company’s other shareholders who are unaffiliated with the buyer. This is also known as 90% threshold for compulsory acquisition. The amendments expand the definition of persons and entities who are considered to be related to a prospective buyer of a company and who are excluded from voting on the mandatory acquisition.
This provides greater protection to the minority shareholders.
3. Directors disqualified under section 155A can now apply to the Registrar for permission to act as a director of a company.
The disqualification period for first-timers is reduced to 3 years.
However the 5 year disqualification remains for non first-timers.
4. The Bill increases the maximum penalties for the failure to prepare and table financial statements in compliance with the accounting standards, to deter corporate malpractice.
The maximum penalty will be raised from the current S$50,000 for offences relating to not having true and fair financial statements that comply with the accounting standards will be raised.
The maximum penalty in cases where there is no intent to defraud will be raised to S$250,000.
The maximum penalty in cases where there is an intent to defraud will be raised to S$250,000 and 3 years’ imprisonment.