Registrable Controllers and Its Significance
- Posted by admin
- 27 September 2018
- Company Secretarial, Tips
The Companies Act of Singapore was amended in 2017 under the Companies Act 2017. When the Act was passed, it was passed in an effort to improve the transparency of a business’ ownership and control.
The Act was put in place to conform to international norms, and it also:
- Enhances debt restructuring
- Improves business operation ease
- Reduces regulatory burdens
Singapore’s lawmakers passed the Act to help make business operations more transparent, lowering the risk of misuse of corporate entities. The Financial Action Task Force recommended the changes that will help with:
- Threats to business integrity
- Money laundering
- Terrorist financing
Authorities will also have an easier time meeting international standards for tax transparency as a result.
Maintenance of a Register of Controllers
Implemented on 31 March 2017, the Act requires all companies, including foreign companies unless a special exemption is made, to maintain what is known as a “register of registrable controllers.”
The register will include “beneficial ownership information,” and upon request, the information is to be furnished to public agencies.
Controllers are defined as a person or legal entity that has “significant” control or interest in a company. Under the law, this is a person that has 25%+ of shares in the business or more than 25% voting power. Control would include an individual that has the power to:
- Influence control over the company
- Remove or appoint directors
- Holds more than 25% of voting rights
Implementation of the register is required as of 31 March 2017. A register of registrable controllers must be maintained within 30 days of the business’ incorporation.
In an effort to reduce fraud, companies are required to take what is referred to as “reasonable steps” to obtain information about controllers and identify controllers in the business. Notice will also be provided to any potential controllers through hard or electronic copy.
Individuals may reply to the notice, but it’s not the company’s liability if these parties do not respond.
A reply to a notice will need to be entered into the register of registrable controllers within two days of receiving the notice. The register is to be kept in:
- Registered filing agent’s office, or
- Registered company’s office, or
- Prescribed place
Companies can ask for assistance in identifying controllers, through a notice, from:
- Other persons of importance
If a request is received, companies must furnish the registers to public agencies, including the Accounting and Corporate Regulatory Authority of Singapore. If a company does not maintain a register of registrable controllers in accordance with the amendment, a fine of S$5,000 may be assessed to the company.
Foreign Companies and Public Registers
Foreign companies that have registered in Singapore will be required to maintain public registers of all of their members. These companies will also be required to notify the Accounting and Corporate Regulatory Authority of Singapore of the address where the register is being kept.
The register is an attempt to bring foreign companies into the same requirements of local companies in respect to a public register.
All foreign companies are required to keep such a registrar.
Singapore Companies and Register of Nominee Directors
Companies incorporated in Singapore will also be required to maintain what is known as a “register of nominee directors.” These individuals, or directors, are persons that will act in accordance to the direction of any other person within the company.
This is done so that a nominee director, who may be appointed to the board of directors of the company, by a person with a shareholding in the company, is identified.
Nominee directors must disclose this information to their companies in an effort to reduce fraud and improper influence in a company. The goal is to:
- Reduce terrorist financing
- Reduce money laundering
Nominees, often acting on the directions of their appointee, hold too much power in a company to not be identified. The register will help reduce the influence of the person that appointed the register and make it transparent who the nominee is through the register.
Even if companies have wound up, they are still required to retain their records for a period of five years, an increase from just two years before the Act passed.
Struck off companies are not required to keep their records at this time.
What all of this does is ensure that Singapore’s businesses to fall in line with international standards. The United Kingdom and Australia, for example, have similar requirements in an effort to reduce risks inside of a company.
The register of registrable controllers also helps authorities and shareholders know which parties may be influencing a company's decision. The use of shell companies to engage in fraud or complex contract division will also be easier to identify when the register of registrable controllers is available.
Companies will no longer need to use common seals, and measures have also been taken to provide a timeline for annual general meetings and filing annual returns.