Key Amendments to Singapore’s Companies Act 1967: Enhancing Shareholder Protection and Modernizing Meeting Practices

Singapore’s Companies, Business Trusts, and Other Bodies (Miscellaneous Amendments) Act 2023 (the 2023 Act) took effect on July 1, 2023, bringing about significant changes to the Companies Act 1967 (the 1967 Act). The amendments introduced by the 2023 Act encompass four main areas of modification.

Firstly, alterations have been made to the compulsory share acquisition framework. Previously, the 1967 Act allowed an offeror to compulsorily acquire all shares of a company if they achieved a 90 percent acceptance threshold for the relevant scheme. However, shares held by a nominee or a related corporation of the offeror were not considered when calculating this acceptance threshold. Nonetheless, offerors could exploit this exemption by including such shares in special-purpose vehicles established for the purpose of takeovers.

The 2023 Act broadens the exclusions in computing the acceptance threshold. Now, shares held by close relatives, corporate entities controlled by the offeror, the ultimate controller, or entities controlled by the ultimate controller are also excluded. These amendments are aimed at safeguarding minority shareholders.

Secondly, the 2023 Act introduces amendments relating to punitive measures for non-compliant directors, which encompass disqualification and penalties. The disqualification period for first-time disqualified directors has been reduced from five years to three years, while repeat offenders will be subject to the previous five-year period.

Penalties for non-compliance with accounting standards in the preparation and reporting of financial statements have also been revised. The maximum penalty, in cases where there is no intention to defraud, has been increased to SGD250,000. In instances where an intention to defraud has been proven, the maximum penalty will be SGD250,000 and/or three years’ imprisonment.

The fourth key amendment brought about by the 2023 Act introduces measures allowing companies to conduct meetings in a physical, hybrid, or fully virtual manner. Correspondingly, amendments have been made to the Business Trusts Act 2004, the Variable Capital Companies Act 2018, and the Singapore Labour Foundation Act 1977 to accommodate these changes.